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Buccaneer Energy Limited has received full certification from the American Bureau of Shipping, but needs two more certificates before it can leave the Homer dock on the now mandatory deadline of March 20.
The Homer Port and Harbor gave Buccaneer the deadline in order to install a new fender at the Deep Water Dock before the heavy season of dockings ahead, said Harbormaster Bryan Hawkins.
“We’re really watching it close, because those fenders are supposed to depart China tomorrow or the next day. They’ll be shipped to Seward, then by barge to Homer,” Hawkins said. “There’s quite a few steps to it.”
The fenders are massive 22-foot wide, 45-feet long rectangular steel structures lined in three-inches of plastic in a smooth surface for ships to lean by. The old fenders to be replaced are 20 years old and were not up to the job of providing good moorage for the big vessels that Homer handles, Hawkins said. The replacement cost is $2.5 million, and will be done by Jay Brant Construction.
The Endeavour’s moorage at the dock damaged a 12-by-12 foot timber that Hawkins said had nothing to do with the fender replacement, which is being funded through a grant from the cruise ship head tax. The repair to the timber will be done by a contractor and then the bill will go to Buccaneer.
Once the Endeavour leaves the dock, it won’t be able to remain in Kachemak Bay. “It can’t put its legs down in the bay,” Hawkins said, referring to the Critical Habitat Area Plan that spells out prohibitions on jack up rigs. “They are really focused on getting to the site.”
Regulatory work is moving ahead. Buccaneer announced today it jumped a large hurdle in achieving the ABS approval. The ABS certification gives the bow of approval that the rig is seaworthy and able to operate in accordance with the requirements of its class. ABS certification is valid for five years.
But to be able to commence operations in Cook Inlet the Endeavour requires certification from an additional two organizations. Still needed are:
• The U.S. Coast Guard needs to sign off with certification that the rig is able to operate safely in U.S. waters.
The majority of the certification requirements are satisfied as part of the ABS certification process, Buccaneer said its announcement this morning. Spartan Drilling has prepared a scope of work of the additional requirements to achieve USCG certification and has commenced that work which is expected to be completed in late March 2013.
A hold up on this count goes back to the difficulties of losing its primary contractor, Archer Drilling, in a legal tiff that asks Buccaneer to pay $6 million in unpaid fees for work completed. That case remains unresolved in Texas District Court. Buccaneer denies all the allegations in the lawsuit, contending it has paid its bills to Archer and vendors they hired.
“The final USCG certification relies on getting access to technical drawings and inspection certifications that were completed during the shipyard work in Singapore and while in Homer. A dialogue with the previous contractor Archer Drilling is ongoing in respect to getting access to this documentation,” the release said.
• An Alaskan Oil and Gas Conservation Commission certification that affirms the rig is able to operate safely within Alaskan state waters. Since the Endeavour’s arrival in Homer, the jack-up rig has been undergoing work and regulatory inspections to allow the vessel to operate in the Cook Inlet.
“There has not been a jack-up rig with the operational capabilities of the Endeavour in the Cook Inlet since the early 1990′s, and the company has been working closely with local agencies to comply with the permitting requirements specific to this kind of vessel,” the release stated.
The AOGCC’s focus is on drilling safety systems and in particular pressure control systems that operate while drilling i.e. mud systems and blowout preventers. The Endeavour has a renewed mud system and has totally refurbished blowout preventers.
“AOGCC certification is being conducted concurrent with ABS and USCG work, but many of these drilling systems can only be fully tested when the rig has been mobilized to the Cosmo location,” the release said.
Drilling operations will commence as soon as all necessary drilling permits are received and the AOGCC has given approval to proceed.
Here is Buccaneer’s update on other permitting:
Cosmopolitan Project permitting update
The acquisition of the Cosmopolitan project was completed in late August 2012. The Cosmo project is located approximately 30 miles to the north west of Homer and is approximately 50-feet depth of water. The acquisition was made jointly with privately owned Fort Worth, Texas based BlueCrest Energy II, LP with Buccaneer acquiring a 25 percent working interest and BlueCrest a 75 percent working interest, with Buccaneer acting as operator on the project.
The Alaskan Department of Natural Resources approved the Land Use Permit (LUP) for the Cosmo location in mid December 2012. The LUP allows the Endeavour rig to mobilize to the Cosmo location and jack down its legs to pin to the sea floor.
In mid October the Company, in its role as Operator, lodged a Plan of Operations (“POO”) with the Alaskan Department of Natural Resources and a revised C-Plan with the Alaska Department of Environmental Conservation. The C-Plan is a plan of response in the event of an oil spill while drilling the well. Buccaneer has an approved C-Plan and POO in place for both its Southern Cross and North West Cook Inlet wells.
• C – Plan
Buccaneer lodged the revised C-Plan for Cosmo with ADEC in mid October 2012, seeking a minor amendment that would minimize the additional review process. ADEC subsequently determined that the revision is a major amendment that requires a longer notice and review process.
On Jan. 22, Buccaneer received a Request for Additional Information from ADEC, the Company’s reply to the RFAI included a requirement to complete a third party engineering study on the affect of ice load on some the Endeavour’s equipment which was only completed in the last week.
The RFAI was sent to the ADEC on Feb. 21. ADEC will now review Buccaneer’s responses and the current anticipated timing for issuance of the revised C-Plan is approximately 30 – 45 days.
Plan of Operations
The Company is tentatively scheduling the spudding of the first well in late March on the condition that the Endeavour jack-up rig and the Cosmo No. 1 well has received all the required certifications and permits by that time.
Spartan Drilling, LLC (“Spartan”) was selected to replace Archer Drilling and take on the role of drilling contractor to operate the Endeavour in the Cook Inlet. A Letter of Intent has been executed and a Management Agreement will be finalized shortly.
To fully man the Endeavour requires a crew of approximately 38 personnel, as rig crews work on a rotation basis a second crew will also be employed and Spartan is well advanced in this process. The Endeavour is fully crewed with Spartan Drilling now employing 76 personnel of whom 21 are local Alaskans.
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