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Homer wants Endeavour jack-up rig to spend winter in city harbor again

Naomi KloudaHomer Tribune
Buccaneer Energy's Endeavor jack-up rig in Homer last year. Courtesy Peter Law

HOMER -- The Buccaneer jack-up rig Endeavour Spirit of Independence likely will be docked at the Homer harbor again this winter, a deal not completed yet but embraced by city officials.

City Manager Walt Wrede told the Homer City Council and the public he is involved in talks with the jack-up rig owners about winter dockage. He wrote a letter of approval to the Alaska Department of Fish and Game as part of Buccaneer's permit application to spend another winter in the harbor.

“This is in discussions again this year. I took from our discussions last year that the Homer Port is open for business,” Wrede said.

The Endeavour spent from late August 2012 to late May of this year at the Homer Deep Water Dock while completing preparatory work on the rig to make it suitable for Alaska’s harsh environment and deal with other safety requirements. “Fish and Game did require a study by a third party that concluded there was no long-term harm to the environment generally. I wrote a letter to Fish and Game supporting Buccaneer’s proposal -- this is the safest place for it to be,” Wrede said.

Last winter’s lesson regarding Shell’s rig Kulluk, a giant oil-drilling platform used in Arctic drilling, illustrated what could happen if one of these pieces of equipment got caught in heavy windstorms while traveling to winter storage, Wrede said. The Kulluk broke free and grounded on Sitkalidak Island near Kodiak. 

“They could tow it to Seward. Or they could put it at Port Graham, which would require a lot of daily support service. Maintaining the rig in safety is in the best interest of Lower Cook Inlet, and I think this is the best place for it to be,” Wrede said. “That’s the way (Harbormaster) Bryan (Hawkins) and I intend to proceed.”

The Endeavour reported a successful drilling season at both the nearby Cosmopolitan offshore Cook Inlet prospect and northern Cook Inlet’s Southern Cross natural gas wells, according to announcements this summer by Buccaneer CEO Curtis Burton. The company intends to supply natural gas to southcentral Alaska utilities.

“Cosmo has turned out to be substantially nicer than we had ever hoped for,” Burton said in a Sept. 10 conference with shareholders. Buccaneer moved the Endeavour jack-up rig from the Cosmopolitan site in early summer to its Southern Cross prospect in north Cook Inlet, then back to the Cosmo Unit, where it is located now. Buccaneer is part-owner of the Endeavour rig along with Ezion Holdings of Singapore and the Alaska Industrial Development and Export Authority, the state development finance corporation.

The Coast Guard requires rigs to curtail their work during heavy ice-pan conditions in the inlet, around Nov. 1.

“What I’ve heard is they plan to come out of the inlet Nov. 1. There’s nothing for sure about their coming to Homer yet,” Harbormaster Hawkins said. “They’ve been making inquiries. The plan is to stay about four months.”

Wrede emphasized to the council that the rig won't be “stored” at the dock. That implies it’s just sitting there. In fact, crews will be working on the rig like last year, efforts that boosted Homer’s economy. “This is for maintenance and repair -- ours is a working dock, not a storage yard. We don’t want to impede commerce just because someone is parked there,” he said. The arrangement proved lucrative to the City of Homer and the Homer Port and Harbor. Last spring the city transferred revenues generated above what it budgeted.

Buccaneer’s dockage fees of $577,000 were deposited into the Port and Harbor Reserves. More revenue flowed in this summer that has not yet been calculated for tugs’ supply wharfage and dockage. The City of Homer collected the rig’s property taxes of $181,087, now set aside as savings for rainy-day use. Another $9,054 went to the Homer Foundation, which supplies funds for the city’s nonprofits, for investment.

“Business was brisk all winter long. It wouldn’t have been as brisk without the jack-up rig,” Hawkins said. Lessons learned last winter will be taken into this next season, he added.

“We have no illusion that the rig can stay at the dock in any other configuration than with the legs down. That is something we learned last year. When winds started coming up, we had no choice but to put the legs down,” Hawkins said. The 40-story high rig lowered the legs at least 18 feet, and often more, during big tides for stability.

A Kachemak Bay Critical Habitat Plan forbids setting jack-up rig legs down in critical habitat, though there was some debate about whether the harbor itself is part of the critical habitat area.

“The main takeaway for us is the environmental assessment of having the legs down. The result is that there was no lasting environmental impact,” Hawkins said, referring to a study completed when Buccaneer hired URS Environmental Consultants for an independent study.

The city will learn more about a possible winter docking lease in the weeks ahead as Fish and Game considers permitting.

This story first appeared in the Homer Tribune and published here with permission.