Escopeta says fine possible for moving rig

Aug. 31, 2011 at 4:59 PM
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HOUSTON, Aug. 31 (UPI) -- Oil drilling firm Escopeta Oil and Gas Co. said it is negotiating a potential fine for using a Chinese service to move a drilling platform to Alaska.

The Alaska Journal of Commerce reported Wednesday Escopeta, which is based in Houston, used a Chinese vessel to move a Spartan Drilling Co. Blake 151 jack-up rig from the Gulf of Mexico to Vancouver, British Columbia.

Under the U.S. Jones Act, it is illegal to move cargo from one U.S. port of call to another with a service that is not owned and operated by a U.S. company.

The law applies even if the cargo -- in this case a drilling rig -- is dropped off at a foreign port on its way to its U.S. destination.

The drilling rig operated by Escopeta was first dropped off in Canada for service work before making the remainder of the trip to the Cook Inlet in Alaska.

The final leg of the journey involved a U.S. towing service.

Escopeta said Chief Executive Officer Danny Davis is leaving his position due to the reaction to the incident, which has involved Homeland Security Secretary Janet Napolitano and various U.S. senators.

Sen. Mark Begich, D-Ala., has intervened asking that the fine not cripple the company.

"Napolitano was always supportive of our efforts to get more exploration in Cook Inlet, particularly for natural gas, which we need," Begich said recently.

Escopeta was set to move the rig in 2006 and received a Jones Act waiver at the time, saying there were no U.S. companies available to move the rig. That trip was postponed, however, and a second waiver was not granted.

"A violation of the Jones Act has occurred but we don't want the penalty to bankrupt the company," Begich said.

Topics: Mark Begich
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