Drill Baby Drill Hits Roadblock

Danny Davis, the president of Escopeta Oil, a small Texas company, is trying to drill for natural gas in the Cook Inlet next spring, but he says the state of Alaska is not helping him do that.

“I truthfully think they've set us up to fail and we haven't failed yet and it's kind of bothering them,” Davis said.

He owns leases in Cook Inlet with a partner company Pacific Energy, but they expire at the end of the month. Together they were trying to get a jack-up rig to Alaska

to start drilling.

But while Davis was in Alaska on Monday, testifying before a joint House Committee hearing, Kevin Banks, the director of the Division of Oil and Gas, sent a letter to Pacific Energy and Davis' company Escopeta saying their contract to get the jack-up rig to Alaska was unacceptable. “The contract was not effective unless several leases on-shore and off-shore that Pacific Energy owned and that Escopeta owned were extended for two years,” Banks said.

Davis said the contract the state wanted them to go with was asking too much. “They said, ‘You put $5 million down and we may give you your leases back.'”

Davis wants his assets covered before he commits more money to the Cook Inlet. “You cannot make a financial decision without having all your ducks in a row,” he said. “To know everything is supposed to work out like it's supposed to.”

But if he doesn't get his lease extended and a jack-up rig on the way, Davis will be out of luck and development of natural gas in the Cook Inlet could be set back for several more years. “You need to pick up the phone when it gets real cold and you're having a brown out in Fairbanks or somebody gets

cut off there in town,” he said. “You need to call ol' Kevin late at night wake, him up and go ‘Hey where's our gas going to come from?'”

But Banks says it could come from Escopeta and Pacific Energy if they fix their contract and soon. The Oil and Gas Division said Pacific Energy has 90 days to fix the contract and get back to the state.

Lawmakers weren't real happy on Monday with the state during the hearing. Rep. Jay Ramras, who ran Monday's hearing, said Banks was “less than candid” to not mention anything about the letter sent to Escopeta and Pacific Energy on Monday. Also saying as recently as Monday Gov. Palin was stumping for energy independence in the Lower 48, but back at home, the DNR is doing the opposite of what she is saying.

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