HomeMy WebLinkAboutResolution No. 2011-07KENAI, ALASKA
U
CITY OF KENAI
RESOLUTION NO. 2011 -07
Suggested by: Administration
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, SUPPORTING A
PROPOSED PROJECT BY ESCOPETA OIL TO UTILIZE A JACK -UP DRILL RIG FOR
NATURAL GAS AND OIL EXPLORATION IN COOK INLET.
WHEREAS, the producing fields in the Cook Inlet basin are mature and production of
oil and gas is decreasing; and,
WHEREAS, present demand for natural gas during winter months will soon exceed the
production in the Cook Inlet basin; and,
WHEREAS, increased exploration for oil and gas is necessary to meet the growing
demand in South Central Alaska; and,
WHEREAS, SB 309 was enacted and signed into law on July 7, 2010, and that
legislation authorized credits for drilling from a jack -up platform in the Cook Inlet;
and,
WHEREAS, Escopeta Oil, and possibly other companies, are preparing to acquire
and /or lease a jack -up drill rig to bring to the Cook Inlet; and,
WHEREAS, Escopeta Oil has proposed a schedule which would result in a Jack -Up
Rig being transported to Cook Inlet is 2011; and,
WHEREAS, increased exploration in the Cook Inlet basin is beneficial to the citizens of
the City of Kenai and the Kenai Peninsula.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, the City of Kenai supports the proposed project by Escopeta Oil to utilize a
jack -up drill rig for natural gas and oil exploration in Cook Inlet.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this second day of
February, 2011.
ATTEST:
Carol L. Freas, dity Clerk
PAT PORTER, MAYOR
KENAI, ALASKA
MEMO:
"Vi /lave with a Past, Gc with a Future"
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 wal
Telephone: 907- 283 -7535 FAX: 907- 283 -3014 lip I
TO: City Council
FROM: Rick Koch
DATE: January 18, 2011
SUBJECT: Council Resolution in Support of Escopeta Oil Project to Bring a
Jack -Up Drill Rig to Cook Inlet
The purpose of this correspondence is to submit for your consideration and discussion a
resolution supporting Escopeta Oil's proposed project to bring a Jack -Up Drilling Rig to Cook
Inlet.
The request for a resolution was made via an e -mail to the Municipality of Anchorage, Kenai
Peninsula Borough, City of Wasilla, City of Kenai, and other municipal governments, by Mr.
Bruce Webb. Mr. Webb was not identified as an employee of Escopeta Oil, but is the Office
Manager for Petro Services, Inc. located in Harrington, Delaware. I have not been directly
contacted by Mr. Webb or representatives of Escopeta Oil regarding this request.
Attached is a draft resolution that is very general in nature. It states the City of Kenai's support
for the transport of a Jack -Up Rig to Cook Inlet. I have intentionally not included any language
that addresses a waiver to Jones Act provisions. This is a complicated issue and one that will be
addressed by the appropriate authority.
If the Council desires to move forward with the attached resolution, or something similar, it
would reiterate past Council action for a competing project.
1992
Petro Service Inc Business Information. Harrington DE 19952 -0177 Page 1 of 3
Harrington DE Yellow Pages
BB1Q:mwu Harrington Delaware 1 Harrington, Delaware Jobs
Petro Service Inc Truck Eauionment Parts Wholesale in Delaware l
Harrington DE 19952 -0177
Petro Service Inc
17399 S Dupont Hwy
Harrington, DE 19952 -2461
Telephone: 302-398-3260
Web Site:
Contact: Bruce Webb Male
Petro Service Inc Business Information
Search
Petro Service Inc is categorized under Truck Equipment Parts Wholesale (SIC: 501302)
and is located in Harrington, DE. Harrington is a city in Kent County.
The physical size of Petro Service Inc's business in Harrington is in the following range: 2,500
9,999 SqFt. They also utilize about 0 1 PCs.
http://bb10.com/Delaware-Yellow-Pages/Ha ngton/Kent-County/Petro-Service-Inc/3023... 1/18/2011
Petro Service Inc Business Information. Harrington DE 19952 -0177 Page 2 of 3
Physical Address:
17399 5 Dupont Hwy
City: Harrington
State: DE
Zip Code: 19952 -2461
Carrier Route: R005
Telephone: 302-398-3260
Fax:
Web Site:
Alt Address: PO Box 177
Alt City: Harrington
Alt County: Kent
Alt State: DE
Alt Zip Code: 19952 0177
Alt Carrier Route: B002
Contact: Bruce Webb Male
Business Information (estimates only)
Employees: 2
Employee Range: 1 to 4
Number of Computers: 0 1 PCs
Credit Alpha Score: Contact Us
Credit Numeric Score: Contact Us
SIC Code: 501302
Business Description: Truck Equipment Parts Wholesale
Square Footage: Between 2,500 9,999 SqFt
Business Area: Dover, DE
Listing Id: DE69843
Copyright bbl0.com 2010 All Rights Reserved. Support lit 1 e al
http: //bb 10.com/Delaware- Yellow- Pages /Harrington/Kent- County/Petro- Service -Inc /3023... 1/18/2011
Governor Parnell, all Representatives Senators, Mayors and Alaska Lawmakers
State of Alaska
Re: Jones Act Wavier to move Escopeta's Spartan 151 Rig from Gulf of Mexico,
to Gook Inlet Alaska
Dear All,
I wanted to write to all of you together and keep you informed of Eseopeta's timeline to
transport its Jack -Up Rig to the Cook Inlet as planned. The 151 is presently in port in Galveston,
Texas, at the Gulf Copper Dock to began winterization. This work scope should take from 45 to
50 days with the jack-up being loaded out in late February or earty March to head to Cook Inlet.
The biggest obstacle we now face is the ratification of our existing Jones -Act
Waiver or the issuanace of another waiver. I am copying to each of you, correspondence
B'scopeta has had with Homeland Security and U.S. Customs and Border Protection, as well as
letters of support for the waiver. I do not think I need to expound on how important it is for alt
of us to get our jack -up to Alaska.
The future of additional large supplies of natural gas for Anchorage and the military
bases, as well as job creations, only become real when the jack-up arrives and drills,
We are on our way, but I need your help and support with Washington, D.C. to achieve
this goal. Please write to the address below your letter of support:
Mr. Glen E. Verb
Director, Board Security and Trade Compliance
Office of International Trade, Regulations and
Filings
U.S. Customs and Border Protection
Washington, D.C. 20229
January 17, 2011
oil
Oil Gas Develop nont
Mr. Richmond Beevers
Regulations and Rulings
0. S. Customs and Immigration
Mint Annex 799 9th Street NM
Washington, D.C. 20229
Please send your letters as soon as possible, this is a very serious matter, time is of
importance to us all.
Thank you,
Danny S. Davis
Mr. Danny S. Davis
Chief Executive Officer
Escopeta Oil Gas Development
5005 Riverway
Suite 440
Houston, TX 77056
Dear Mr. Davis:
Sincerely,
r
Glen E. Vereb
Director, Border Security and Trade Compliance Division
Office of International Trade, Regulations Rulings
U.S. Customs and Border Protection
NOV d 20f@
U.S. Department of Homeland Security
Washington, DC 20229
U.S. Customs and
order Protection
This is in response to your e -mail correspondence of November 8, 2010, attaching your
letter of November 5, 2010, in which you provide "advice and notice" to U.S. Customs and
Border Protection (CBP) of your intent to transport the Spartan 151 drilling rig from the Gulf of
Mexico for delivery to Cook Inlet, Alaska in the Spring of 201 1 aboard the Iron- coastwise-
qualified vessel, TAI AN KOU. You further state in your letter that you seek no ratification from
CBP based on your assertion that the waiver to the Jones Act, 46 U.S.C. 55102, granted to your
company in 2006, remains in full force and effect.
We hereby notify you that, inasmuch as Jones Act waivers address specific, vessels
undertaking specific voyages, they are neither open -ended nor transferable. Regardless of
whether the voyage contemplated in your 2006 waiver took place or not, it would not be
applicable to the present situation and your request must be processed as a new request for
waiver, under procedures established through CBP. To date, your request for a waiver is still
pending at the Department of Homeland Security and has yet to be either granted or denied. A
waiver to the Jones Act for your contemplated voyage is therefore not in effect at this time.
Accordingly, please be advised that the waiver issued in 2006 is i inapplicable to the
voyage now under consideration and will provide no protection from Jones Act penalties
assessed by CBP in the event that you elect to proceed absent the granting of a new waiver by
the Secretary of Homeland Security.
November 5, 2010
Mr. Riclunond Beevers
Regulation and. Rulings
U.S. Customs and Immigration
Mint Annex, 799 9 Street N.W.
Washington, D.C, 20229
Re: Formal Notice of Movement of Jack -up -Rig (Spartan 151) to Alaska Using the Vessel
TAI AN ICOU Pursuant to Jones Act Waiver Granted to Escopeta Oil Company LLC by
Homeland Security in June 2006
Dear Mr. Beevers,
011 Er Gas Development
Escopeta Oil Company LLC hereby advises that the vessel, TAI AN KOU, approved to transport
the captioned jack -up rig to Alaska pursuant to the existing, valid Jones Act Waiver granted to
Escopeta Oil Company LLC by Homeland Security in June of 2006, will transport the Spartan
151 from the Gulf of Mexico for delivery to Cook Inlet, Alaska in the Spring of 201 1. This
advice and notice seeks no ratification from US Customs based on the fact that the Waiver
granted in 2006 is in still in full force and effect.
The Waiver is still in effect and valid. It has never been cancelled, or revoked. Further, the
specific circumstances regarding the use of this vessel (the SAME vessel) and movement of the
rig have not changed, nor have the route, departure, and destination information. There is no
American vessel capable of moving the rig, winch was True in 2006 and stilt true today. Be
advised that the jack -up -rig, the Spartan 151, is an American manufactured rig that will be
manned and operated by resident Alaskan workers thus creating many new, direct jobs within the
area plus creating the normal, beneficial economic ripple effect of numerous support businesses
and personnel utilized throughout the Anchorage and greater southwest Alaska area.
Alaska's need and demand for natural gas have both increased and have now become critical.
Severe brown outs occurred last year. Also, for the second season, Anchorage area consumers
have been requested to participate in energy conservation drills to prepare for anticipated gas
production short falls.
As you are aware, Escopeta's drilling program is estimated to produce 4 +1 Trillion cubic feet
(TCF) of natural gas over the ensuing years, plus in excess of 400 Million barrels of oil
(MMBO). This will diminish if not eliminate the critical energy needs so necessary and
November 5, 2010
Mr. Richmond Beevers
Page 2
economidally important to consumers and the concomitant industrial and commercial growth
throughout the region. Further it will serve to alleviate national security concerns facing both
Elmendorl'Air Force Base and Fort Richardson. New facilities and programs at the bases, well
known to DIIF, make the need for reliable and abundant gas supplies from Cook inlet all the
more urgent,
Lastly, Escopeta's efforts will serve to keep natural gas prices relatively low in the Anchorage
area, though pricesthere are currently three tunes that of prices in the continental United States.
Please acknowledge receipt of this notification.
Thank you for your attention to this matter.
Sincerely,
Cc: The Honorable Janet Napolitano
Secretary
Department of Homeland Security
Washington, DC 20528
DEPARTMENT OF NATURAL RESOURCES
November 23, 2010
Mr. Richmond Beevers
Regulations and Rulings
U.S. Customs and Immigration
Mint Annex, 799 9th Street NW
Washington, D.C. 20229
Dear Mr. Beevers:
It is my understanding that Escopeta Oil Company, LLC Escopeta) is seeking a Jones Act waiver to
use a foreign heavy -lift vessel to bring a jack -up drilling rig from the Gulf of Mexico to the Cook
Inlet, Alaska. Escopeta is a small independent oil company who is attempting to explore for natural
gas and oil in state waters in the Cook Inlet basin. Because so nu.ch of the population of Alaska
lives in or near this area, new oil and gas resources are vital to our economy and livelihood.
Escopeta has evidently identified a foreign vessel capable of carrying ajack -up drilling rig. A Jones
Act waiver is warranted because there are no American flagged heavy -lift vessels available and
capable to do the job.
Please consider Escopeta's request and grant the Jones Act waiver. If you have any questions or
need more information about oil and gas exploration and development here in Alaska, please feel
free to call me at 907 -269 -8781.
Thank you.
Sincerely,
Kevin Banks
Director, Division of Oil and Gas
DIVISION OF OIL GAS
ce: John Katz, Director, State Federal Relations
Thomas Irwin, Commissioner, Department of Natural Resources
Da my Davis, Escopeta Oil Company, LLC'
SEAN PARNELL, GOVERNOR
550 WEST 7 AVENUE, SUITE 1100
ANCHORAGE, ALASKA 99501
PHONE: (907) 269 -8800
FAX: (907) 269 -8938
"Develop, Conserve, and Enhance Natural Resources for Present and Future AIasI'ans',"
DON YOUNG
CONGRESSMAN FOR ALL ALASKA
WASHINGTON OFFICE
2111 RAV9URN BUROING
TELEPHONE 202 -225 -5765
VISIT OUR WEISITI
imp: /)ooNVOOIIo, HOVSE oov
The Honorable Janet Napolitano
Secretary
Department of Homeland Security
Washington, DC 20528
Dear Madame Secretary:
Thank you for your service to this nation. At this time, I bring your
attention to an important issue that affects the energy needs of Alaska and
respectfully request your response to an attached letter from Escopeta Oil
Company, LLC Escopeta). Natural gas supplies in Alaska are dwindling and if
new reserves are not found, Alaskans may be forced to import additional
supplies to meet our energy needs.
Escopeta is attempting to transport a jack -up rig from the Gulf of Mexico to
Cook Inlet, AK to explore for new natural gas reserves. The rig is expected to be
loaded in a few months time for drilling in spring 2011. Please confirm that the
Jones Act waiver granted by the previous Administration is still in good standing
as there is no American flagged heavy -lift vessel available to transport a jack -up
rig of this size to Alaska.
DY /jp
Enc.
don s2 z Rf tttE !j2T[t"Eb$fatCR
1nuse zentnffheo
3fDIaetjulyytcue, 3OJ 20515
November 2, 2010
Thank you for considering my request.
510L STREET
SIAM 500
ANCHORAGE, ALASKA 99501
007 271-5978
Sincerely,
DON Y
Congressmanjfor all Alaska
10112w AVENUE 612 W. WILLau AVENUE, SUITE B 805 FRONTAGE ROAD
Box 10 P.O. Box 21247 SUITE 110
REMMERS, ALASKA 9971)1 JUNEAU, ALASKA 99802 KENAI,AL8SKA 99611
907 -456 -0210 907-580 -7400 907.283 -7701
COMMITTEE ON
RESOURCES
COMMITTEE ON
TRANSPORTATION
REPUBLICAN
POLICY COMMITTEE
CALE T019 -FREE
1-866- 990 -5970
Janet Napolitano
Secretary, US Department of Homeland Security
Washington, D.C. 20528
Oil Gas Development
Dear Ms. Napolitano,
September I, 2010
Re: Request for Ratification of Previous Waiver of Jones Act to
p Rig to Alaska
This letter is to request a ratification and reconfirmation of the Jones Act waiver granted
to Escopeta Oil Company LLC in June of 2006 by then Secretary Michael Chertoff to transport a
jack -up rig from The Gulf of Mexico to Cook Inlet, Alaska utilizing a foreign vessel. A copy of
the 2006 waiver letter is attached hereto as well as Escopeta's reply letter dated July 12, 2006
and November 10, 2008, which contain pertinent information.
Escopeta has recently executed contracts to move the Spartan 151 jack -up rig to Alaska
utilizing the offshore heavy lifting vessel MV Eagle or, as a back -up, the Falcon, both
Norwegian flagged vessels belonging to Offshore Heavy Transport. There are no American
flagged heavy lifting vessels in the world capable of moving the rig. These contracts are of
course contingent upon obtaining homeland Security's approval /ratification of its previous
waiver of the Jones Act. The total value of these contracts is in excess of $250,000,000. The rig
is scheduled to be loaded by February /March 2011 in time for drilling to commence in the Coolc
Inlet in the Spring, thus time is of the essence. As you may know, Alaska is anticipating brown
outs in its major cities to include Fort Richardson, Elnendorf Air Force Base, and Anchorage
due to a shortage of natural gas, which Escopeta will remedy with its drilling activities at Cook
Inlet.
The previous delay in moving Et jack-up rig to Alaska involved the failure of the company
previously engaged to get its jack -up rig rebuilt to Alaska standards and ready to move. In any
event, Escopeta now stands ready to go, subject to Homeland's ratification of its previous
waiver.
We respectfidly request your ratification as soon as possible and certainly within thirty
days so we can keep our schedule, our contracts in force, move the rig on tine, and find the
much needed supply of natural gas for the citizens of Anchorage.
Janet Napolitano
Secretary, US Department of Home
September 1, 2010
Page 2
d Security
Tf you or any of your staff need additional information please advise and we will provide
immediately.
Sincerely,
7a�ny S. Davis, CEO
Jeanne M. Grasso, Esq.
Blank Rome LLP
600 New Hampshire Avenue, NW
Washington, D.C. 2.0037
Dear Ms. Grasso:
June 27, 2006
Sotetary
U.ti, Department of Ilnawla ad Sent rll;'
\Ptahlivnn, UC 211 28
Homeland
Security
Thank you for your May 19, 2006 letter wherein you requested, on behalf of Escopeta Oil
Company, LLC "Escopeta"), a waiver of the Jones Act so that the TAI AN KOU, a foreign
owned and foreign -flag vessel, may be used to transport a jack -up drilling rig (the "Tellus rig
to Cook Inlet, Alaska, from Port Arthur, Texas,
We requested the views of the Department of Defense, the Department of Energy, and the
Maritime Administration with respect to your waiver request. Having carefully considered your
request in light of the factual circumstances that have been presented, along with the views of
these concerned Government entities, none orwhich have objected, and Congresspersons, we
find that such a waiver is in the interest of national defense. Therefore, your request for a waiver
of the Jones Act, as described below, is granted.
In your correspondence, you described certain pertinent facts, including:
Due to the declining oil and gas production and supplies in Cook Inlet, there is a need for
one -time movement of the Tellus rig from Port Arthur to Cook Inlet to facilitate the
exploration and production of natural gas;
Fon Richardson and Elmendorf Air Force Base rely on Cook Inlet natural gas for power
generation and heating;
tip of Africa, as the rig is l
R g too large to e transported the Panama Canal;
Only I 1 heavy -lift semi submersible vessels are currently active world -wide and that all
of these vessels are foreign -owned and foreign flagged;
By using the-Tellus rig, Escopeta will try to address the anticipated energy shortage
through exploration in several projects in the Cook Inlet area;
The movement of the Tellus rig is scheduled to begin in mid -Juty 2006 and to be
completed in September 2006; and
Senators Stevens and Murkowski and Congressman Young expressed support of the
above facts in letters sent to the Secretary of Defense, copies of which we have received.
Title 46, United States Code (U.S.C.) Appendix, section 883 (46 U.S.C. App. 883) provides in
part that no merchandise shall be transported between points in the United States embraced
within the coastwise laws, either directly or via a foreign port, or for any part of the
snv dhs
Page 2
transportation, in any vessel other than a vessel built in. documented under the laws of, and
owned by citizens of the United States.
The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three
nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters,
landward of the territorial sea baseline.
The navigation laws administered by U.S. Customs and Border Protection (including 46 U.S.C.
App. 883) can only be waived under the authority provided by the Act of December 27, 1950
(Pub. L. 81491, 64 Stat. 1120; note preceding 46 U.S.C. App. I). This statute provides that
"[t]he head of each department or agency responsible for the administration of the navigation and
vessel inspection laws is directed to waive compliance with such laws upon the request of the
Secretary of Defense land] [IJhe head of such department or agency is authorized to waive
compliance with such laws either upon his own Initiative or upon the written
recommendation of the head of any govenunent agency, whenever he deems that such action is
in the interest of national defense."
Thank you for your interest in the Department of Homeland Security.
cc: Michael Hokana, Administration
Mice Lippert, Department of Energy
Adam Yearwood, Department of Defense
Michael Chertoff