- Associated Press - Thursday, February 20, 2014

ANCHORAGE, Alaska (AP) - A petroleum company will apply for state Cook Inlet drilling credits to offset its expense in drilling a natural gas well near Homer that came up dry.

Buccaneer Alaska LLC will plug and abandon West Eagle No. 1 well 20 miles northeast of Homer, part of a drilling program that cost more than $9 million, the Anchorage Daily News (http://bit.ly/MeXanw) reported.

Drilling was stopped at 3,700 feet in an area that had shown promising seismic data.

The Australian company with offices in Kenai and Anchorage announced Monday it will file for nearly $3.1 million in credits under state incentives for drilling in Cook Inlet. The company also wants two $600,000 performance bonds returned from the state.


Alaska Department of Natural Resources Commissioner Joe Balash in a Dec. 17 letter told Buccaneer the state would keep one of the $600,000 bonds because the company missed a Dec. 1 deadline to start drilling.

The second bond, Balash said in the December letter, would be forfeited if Buccaneer failed to test or plug and abandon the well by Jan. 31. He said the department would consider an extension if Buccaneer had made progress.

Buccaneer said it started drilling Jan. 22. Spokesman Richard Loomis said Buccaneer is appealing the state decision on the first bond.

Buccaneer has no plans to drill again at West Eagle, Loomis said, and has fenced off the drilling pad. Temporary buildings on the site will be moved, he said.

The company has other Cook Inlet projects, including its offshore Tyonek Deep project and on-shore wells at Kenai Loop, which Cook Inlet Region Inc. claims are illegally producing gas.

The wells are on Alaska Mental Health Trust Authority lands. CIRI claims in a civil court case and administrative proceeding that Buccaneer wells are draining gas from CIRI wells without a “pooling agreement” on how to split royalties.

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Information from: Anchorage (Alaska) Daily News, http://www.adn.com