Tax breaks revive interest in Cook Inlet drilling

Posted: Tuesday, May 18, 2010

ANCHORAGE - New tax breaks are reviving interest in drilling in Cook Inlet for natural gas.

The Anchorage Daily News reports Southcentral Alaska utilities will have to begin importing gas within a few years unless they can secure new in-state supplies for heating fuel and electricity. The law allows drilling companies to shave tens of millions of dollars off their taxes.

While major Cook Inlet producers Conoco Phillips, Marathon Oil and Chevron have not yet expressed interest in bringing a drilling rig into the inlet, two smaller companies are making plans to drill next year: Houston-based Escopeta Oil & Gas and Sydney, Australia-based Buccaneer Energy.

No contracts have been signed.

One of the world's biggest offshore drilling contractors, Houston-based Pride International Inc., is talking to Escopeta.

"We're certainly interested in the area," said Christopher Young, Pride's director of marketing for North America. For now, the company's rigs are in the Gulf of Mexico and offshore of Africa, the Middle East and Southeast Asia.

It's too late to bring a drilling rig to Cook Inlet this year, he said.

The offshore drilling rig suitable for the inlet is called a jack-up rig. These rigs are towed or carried on heavy-lift ships to a drilling location. Their legs are jacked down until they rest on the seafloor.

The last time a jack-up drill rig explored for oil and gas in Cook Inlet was about a decade ago.

Cook Inletkeeper, an environmental group, has raised concerns that the state no longer requires a relief drill rig to be available in the event of a major blowout like the one in the Gulf of Mexico.

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