alaskaman2030's  Instablog

We all love the "Blame" game, but who really stalled Buccaneer Energy's Endeavour.

Recently I had the opportunity to sit with one of the guys that Archer let go and I got to hear the story of how the Endeavour got stuck. It seems that Archer was hired because they knew a lot about how to refurbish rigs, well maybe someone over there does but not the crew that worked on this one.

When he was hired he was told the rig would be moving into the Inlet in about three weeks with just a couple of remaining items on board to "adjust" when it got to the Cook Inlet. Now my guy has been working on equipment for a very long time, but mostly on platforms, so he knows when something is done and when it isn't. He was telling me about the day that the rig arrived and he was just walking around doing a mental checklist of things to be done and things to be checked. Well let's just say that by the end of the day even he knew it wasn't the short list he had been told about.

It seemed the deeper they got into it the more stuff they uncovered and it just got worse and worse. Of course every time he brought up that this was supposed to have been done already he was told just to soldier on and not to bring that up to the company man. It seemed the Archer boys were all about covering up. Now eventually that catches up with you, you know someone has to pay the bill and the rig has to go out and drill. Eventually even the Pirates were going to notice.

Now that the rig has been moved on site and it looks like things are going to start happening I decided to look into why the Pirates keep getting tripped up by deadlines and extensions while constantly saying something was just about to happen. I get the rig delay but it seems they constantly make this mistake. I know its Alaska and we expect everything to take a long time, so why did Buccaneer think they were going to be different?

I suppose its all relative, but I decided to look into some of the past announcements from the company and see just who is driving this. Nothing new there of course, we see our Chief Pirate in Charge (Curtis Burton) and his first mate Dean Gallegos but neither is really an Alaska guy and while Burton may be great at making deals he certainly doesn't appear to be a land man.

So what has been holding these guys up? They entered the Inlet in 2010 and got first production on line in 2012, not terrible but it doesn't match the timeline. Well, who is in charge of watching over that part of the business (timing)? I did find a bunch of video done about the company, pretty good stuff, and I find that that's not Curtis, that's this Jim Watt fellow, President of Buccaneer Alaska. A veteran according to him, so certainly he would have warned Curtis and Dean that everything moves slowly around here and even the very best plans experience delays. Then I came across some old video from the World Energy guys featuring Jim. And there he is in all his glory telling the reporter about the difficulties and the reputation Alaska has. He says things have changed and that they are going to drill… in 2010?

http://www.youtube.com/watch?v=fbwoDs5lmfg Don't take my word for it, watch the video.

Sometimes you can forgive a couple of "deal" guys for getting the numbers wrong (If they are close) or using the "best guess" that they like, but Jim ought to know better. If he told the Buccaneers that he could do a deal with them in April and be drilling by the end of that year (2010) he would have needed a boatload of permits in his pockets. He says he has spent over 15 years of his career working up here, but what has he done. At one point in the 90s he developed the Alpine field. I would guess that had a little bigger budget and a whole lot more bodies were thrown at it, because since then most of what he has done is buy leases and trade leases. That is until the Buccaneer's came to the Inlet. The Pirates must have been salivating over the lease position and believing in his ability to deliver quick.

Jim doesn't stop there he tells us in the video that he brought with him all the guys that know how to get this done. He even suggests that there are stacked rigs he can get by snapping his fingers. I think after 15 years in the Inlet he would know very well that anything that's been stacked for any period of time is going to be pretty much useless.

Now don't get me wrong, I love the Buccaneer story and I have written about it numerous times. (especially like the name) I like the acreage position they have, I like the pluck they have shown in getting in early, buying a couple of rigs (I guess the stacked ones didn't work) and getting down to business at Kenai Loop. From my perspective they did a pretty good job, but I didn't set the expectations back in 2010 that they would be drilling that year. Trust me, up here nothing moves like that and he should have known it. So why tell management and others that they could do it?

Well I thought this was interesting so I began to dig a little deeper, made some calls and dug into some of the bios on the website. If you look at the staff he brought with him they are mostly geologists with one engineer thrown in there. Now that would have been a red flag to me and I'm not sure why the CPIC (Chief Pirate In Charge) didn't pick up on that. Although I am sure, that like he does in the video Jim would have told him that everyone would be available to work once the gas was located and all he needed was a GEO team. But that also meant he wasn't bringing anyone who could counter the story or might bring up that these deadlines might be hard to meet without production guys in the wings.

Now I see that Buccaneer has added a bunch of people to back fill these guys. I guess they don't want to wait anymore, or perhaps Curtis has realized that Jim will tell him anything he wants to hear and not what he needs to hear. I can only imagine what would have happened in my day if I kept telling my CEO that we were going to have something done by xxx date and he reported it to the market and we continuously missed the deadline. He'd have had our heads.

I know with the Jack-up rig the guy was telling me that as one of the workers it was blatantly obvious that Archer hadn't done what they were supposed to do in Singapore and that now that company consultant was gone and Rike was directly working on this, the shit was hitting the fan every day. When they would tell him, just 10 more days he would get hotter and hotter. Once even saying this is the longest 10 days I have ever seen and it's becoming Ground Hog day around here.

Perhaps that is what we see here. Archer thought they could slide one under the rails and Jim over sold the Pirates on what he could deliver, but once he got started on Kenai Loop he got himself a reprieve. Then his "great" team steps over the fault and screws up on KL 3 and drills on the wrong side of the fault.

CPIC orders extensive seismic and brings in new people to evaluate it and the next well is successful, it even goes on production when they said it would. I looked at the new website and I see this video of Jim is not featured anywhere. Nice presentation from Curtis, but this Jim guy is only seen on the people page with an ever-increasing number of "others".

In reality there is always a learning curve when companies come to the Inlet. Some don't survive long enough to get through the process, for instance Pacific Energy came in with big plans, but they over bought and were pretty much blasted out of the water by a Volcano. So from where I am sitting the Buccaneers have had a pretty good run, even if they were obviously painted a very different picture of what life is like up here. This doesn't take away from the fact that the Buccaneers got in early, they secured an excellent position and have bought the right stuff since, they brought the assets in that are needed and they have managed to get production on line.

I have to give Burton some credit here, even when the sky was falling last year and the vendors were screaming they needed money he still managed to keep the company going, others would have said screw it and gone home. I wonder what he said to Jim when he was told that they really didn't have any projects to drill in 2010. For that matter, I wonder what the conversation with Archer was like when he told them to get stuffed. Of course we get a peek into the ramifications for misleading Curtis by reading the lawsuit. That's gonna be fun.

I guess in the end if you can make it through the learning curve and begin to figure out who is telling you the straight story you can do great things in Alaska. Production and sales tend to fix the problem over time, lets hope our band of Pirates can survive long enough to get their bounty.

I guess I am new to the social media scene. I have a twitter account that I constantly forget that I have, but why does a company need a facebook account?

I find i curious that Apache (APA), Shell Oil, Linc energy, ConocoPhillips (COP) and even Buccaneer Energy (BCC:ASX) would need a facebook account.

I rather like the look of the Buccaneer page, and I see that it is new and gaining followers, but who has the time for such things? Personally, if Buccaneer Energy needs some ideas of what to put on their page I would like a virtual tour of the Endeavour.

I guess it is all in the eye of the beholder, I like to get my Google alerts, I like to get press releases, I guess a facebook update could be one more way to get information. Perhaps we could get Steve Ferris at Apache to come on Facebook and answer questions. That would be fun for the Pirates as well, where is our CPC (Chief Pirate in Charge) Curtis Burton. Since his trip to Alaska last year I haven't seen him. Apparently it is more important for him to be in London, Singapore and Australia than up here freezing in the winter.

For that matter, since those brief presentations I haven't seen any Buccaneers running around. I talked to some of my contacts that suggest that management is hunting money (reason for London), Jim Watt has been on a constant vacation and Mark Landt has been so busy chasing permits that he hasn't been able to get to the office. I find it interesting that the people in Kenai are more familiar with Andy Rike and Curtis Burton than they are with Jim Watt and Alan Huckabay.

This is where Alaska really needs to help these new comers out, if they spend all of their time chasing permits, no oil or gas ever get's produced.

I talked to one of the boys over at Shell, he didn't even know they had a facebook account. His own is dedicated to the family and trying to stay connected with his kids from the previous and keep up with antics of the current.

One has to wonder how this tool really relates to a companies communication strategy. Companies really don't have kids, but hey do have employees and shareholders. Sometimes those could be considered as such.

Well, looking for comments here..Does anyone have any ideas whether a facebook page helps or hurts a company?

Want More Oil in the Pipeline, change the rules, speed up permitting and get serious about exploration on Alaska's North Slope.

As I watched the President of United States tout our energy production as a good thing, the song I started singing was "North to Alaska..North to Alaska..!"

But the sad song that is being sung up here now as oil production declines and oil and gas jobs disappear, is an old classic Rock and Roll song, here is how it goes,

"Another One Bites The Dust, ha ha Another One Bites The Dust... ha ha"

Sometimes I wonder if anyone is watching the same reports I am and wondering what happens when the oil runs out, or runs from somewhere else. I have been hearing reports that the United States is on its way to being the world's largest producer of oil by 2020.

Unfortunately, Alaska is heading in the other direction. So we really should be asking ourselves if we are going to be a part of the solution or become part of the problem? Are we going to become importers of energy in a state that has some of the richest resources and one of the smallest populations? Just how did we get here?

I think I can sum it up in one word, "fear". When the Exxon Valdez accident happened we succumbed to fear, perhaps a little justified, but our reaction was an over reaction. We were all very upset at Exxon (one of the biggest of the "majors") for soiling our great state that we set up a regulatory, permitting and bonding scenario that only the "majors" could meet. Thus we doomed ourselves to working with the very type of company that caused the problem.

At the same time, we have built our revenue models around oil, even giving our citizens a dividend on the production every year. Almost like taxing cigarettes to pay for healthcare. As the number packs being sold goes down, so does your subsidy. We assumed we were safe with the majors and oil would continue to flow. Well, now oil production was 593,298 barrels on November 12, 2012. Sounds like a lot until you realize that in 1988 the pipeline had over 2 million barrels a day traveling down it.

Our benefactors, the "majors" seem content to leave the oil in the ground and spend their money on low hanging fruit in someone else's garden. Yet, when smaller players express interest, after looking at our requirements they tend to shy away. Remember that word, "fear", and believe me no independent wants to get hit with a multi-billion dollar fine like BP.

Under Governor Parnell, the state has done some things right, in the Cook Inlet we have used the ACES program to attract some smaller players like Apache, Armstrong, Buccaneer Energy, Hillcorp, Miller Energy, Linc and a handful of others. We used the Stampede bill to attract some Jack-up rigs and that worked. But on the North Slope we still have that little word stopping us, "fear". Fear of a major spill caused by a small company that cannot afford to clean it up, so we stay with the companies that caused us to be afraid in the first place.

Here's an idea, let's self-insure and spread the risk. Not to beat a dead horse but Alaska has some sort of spill cleanup fund since 1976, currently it is capped at $50 million and it goes up and down depending on activities. Taking 5 cents off of every barrel produced and suspended when the fund hits $50 million funds it. Now, I am not saying that this is the answer, bond the smaller companies just using the $50 million.

Let's start streamlining the permitting process around here. In the Gulf of Mexico if you want to drill, you apply for your permits and within 30-60 days you got em. I have heard it is even faster in Oklahoma and North Dakota.

Alaska can change the rules and bring the smaller independents that drill in the lower 48 here. We can be a big part of what makes the United States the biggest producer in the world, and we could do it as a partnership between the State and the Independents. Let's look seriously at how much would need to be skimmed per barrel to eliminate the need for independent billion dollar bonds and use the 470 fund to clean up spills as they occur. Maybe that needs to be $1 or $2 but it wouldn't take much. Then don't put a cap on it and let it grow. Then if we have a spill take the perpetrators in front of a jury, and if they are at fault make them pay the fund back. If they can't pay up front, make them contribute more from their production but don't run them out of Dodge.

Lets get this permitting issue under control. Taking the better part of two years and over a million dollars to permit one small gas well on shore is insane. Other states can permit wells in a quarter of the time and have very good environmental and safety records. If we emulate Texas, Oklahoma, Louisiana, even California we can greatly increase our efficiency here.

Lets create a one-stop oil and gas agency that issues permits but isn't involved in enforcement. Let's have them work with the companies to get the job done, one spill plan that can apply to the entire region. Then amend it when something really changes. Then separately allow for "due process" if someone violates screws up, law enforcement can take action if required. If we are worried about transparency let's put all the hearings on the Internet streaming or put them on TV. By reducing the permitting time period by even a few months, the independents will be able to compete in this market and end the near monopoly the majors have on this state with 700,000 people with 25% of the nations oil. Our nation needs Alaska to get its act together.

If we make these changes, in addition to the changes we have all ready made the people in SouthCentral Alaska will have more high paying oil and gas jobs and have hope that this massive oil & gas decline will stop and maybe cause an increase in wealth for all the good people of Alaska.

If these Alaskan investors and smaller oil competitors are not priced out of business they will fill Alaska's near empty pipelines and provide a future where Alaskans don't have to pay the highest fuel cost in the nation and be in fear of a natural gas shortage causing Alaskans to freeze in the cold winter nights.

End the "fear".