Lately, like others that follow Buccaneer (BCC on the ASX) I have been reading about the Endeavour, Spirit of Independence as it sits at the Deep-water Dock at the end of the Spur. It is quite a sight, with 400-foot legs and technology just dripping off the deck.
I like Google alerts, they ping me at all hours and I get to see what people are saying. Some seem to see big problems, not really sure why, I see is opportunity. Some write about huge environmental issues, I see a very stable drilling platform that doesn't seem to move now that the legs are down. Some fear that the legs won't come back up, based on what?
The George Ferris was a Jack-up rig that stayed near Homer for nearly two years. It was a really old rig and not much fun to work on according to my friends. It had been parked and left and was hoping to get some work some day. Comparing Endeavour to the George Ferris is like comparing a 1970s rusted pickup that's been sitting in the yard for years with a new Ford Ranger the neighbor just picked up.
But let's get real; Buccaneer Energy entered the Inlet when others were exiting badly. When others were filing bankruptcy like Pacific Energy they were buying Stellar Oil and Gas (Renaissance). Some feel they were being opportunistic, I would say they were stepping up when others were stepping out.
I've read that this company is referred to as a "foreign company" and yes the company is traded on the Australian Stock Exchange but the people and operations are here. The CPO (Chief Pirate In Charge) Curtis Burton, is a US citizen, has been working in the Industry for 30 plus years. President, Jim Watt, spent the last 20 years working in Alaska. Mark Landt has been running around shaking hands for years. If you look at the website the entire Alaska team has either lived here or worked here. I can only find two people listed on the website that appear to be Australian, so I see an American company that went to Australia to raise money. (Not a bad thing, just a fact. I like money no matter where it comes from)
I have read several articles that question the company's financial outlook. The reality is that the company trades between 6 and 10 cents on the ASX and has an $80 million dollar market cap (I guess Gordy Vernon can't read a stock summary page). How many of our public companies in Alaska have an $80 million dollar market cap? Better yet how many of those have spent over $50 million in the Cook Inlet. That's not money they owe; they paid that much to us local guys.
But to characterize these guys as a group that is unprepared and rushing things isn't really giving Buccaneer enough credit. The company was established in 2006 and had production on-line in the Gulf of Mexico beginning in 2007. If they hadn't decided to come spend money in Alaska they would probably still be producing in the Gulf of Mexico. The company has also drilled and produced oil onshore in Texas. This is hardly their first time turning a drill bit. Since records count lets look at theirs. The company has never been sited for any safety or environmental violations according to the Texas Railroad Commission.
I found out about them when they showed up in the Cook Inlet and I couldn't believe we had Buccaneers on the high seas.
You could argue that $80 million is small for an oil and gas company but they still managed to get a Jack-up rig from Transocean and transport it to the Cook Inlet. Granted they needed the help of AIDEA and Ezion Holdings to get it done, but the rig is here.
Questions about safety abound. Will Buccaneer be safe, will Buccaneer be able to handle a spill. Again, lets look at the record. The company has consistently delayed operations in favor of increased safety. The rig remained in Singapore through the summer for additional upgrades. It has continued to be upgraded since it arrived in Homer (I can't imagine how frustrating that must be for guys). To maintain safety the legs were lowered and now the harbormaster says they are going to be paying even higher rent. In my day anytime we were not under way, we were jacked down. That is how the thing works.
In Kenai the have been producing natural gas since July without incident. Additionally, the company delayed drilling operations at Kenai Loop by a week to install a bigger blow out preventer on the well they are drilling right now.
As others have come to the Inlet they have imported their workforce. For the most part this company hires locally and provides high paying jobs. I saw one report that said a low paying job was $57k with others getting as much as $175k.
You can certainly point to the troubles the company had earlier this year paying bills. However, the company has made sure that every vendor in Kenai was paid, even after it's lender exited the market. How many companies do you know that can arrange to replace a $50 million dollar credit line within 30 days? And how many other companies would have gone belly up and reopened as someone else. (I wonder what Escopeta would say about that?)
Much has been said about what a bad corporate neighbor this group is but I would point out that they take us seriously, when Larry Smith picked up a shell on board they didn't kick everyone off and leave for the well location. They hired URS (I'm thinking that cost a bit) and had the matter thoroughly studied. When the community questioned their actions at West Eagle what did they do? The hired a local consulting firm HDR and scheduled community outreach meetings. (I can only imagine how many of you took the time to come down and yell at them, at least it was therapeutic, right?)
I really have to laugh when I read Gordy's complaint that the company could not even get to Homer at the end of the summer. Perhaps he didn't notice that ERA had stopped flying that week. I know a lot of people who couldn't get to Homer or Kenai for that matter.
My point is that if you are going to deride Buccaneer for wanting to do business in Homer you really ought to have a good reason. Pointing to what happened with the George Ferris just isn't going to fly for me. With that kind of logic we would have cancelled the space shuttle program after the first crash.
Bottom line, Alaska needs the energy. Preferably clean natural gas instead of coal and we cannot wait for expensive renewable energy to be affordable or even productive. Personally I like Homer, I would hate to see you guys put up a sign that says "No New Business Allowed", or if you come to Homer you are "Guilty Until Proven Innocent". You guys are better than that and you should be giving Buccaneer a chance to prove themselves. I bet the next article after the rig leaves will be "Where did all the jobs go?"