BUCCANEER ALASKA OPERATIONS, LLC. BUCCANEER ALASKA OPERATIONS, LLC Cook Inlet Exploratory Drilling Program. Community Outreach: KPB Assembly

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1 Community Outreach: KPB Assembly Agenda 1. Project Overview Waste Management 4. Environmental Management 5. Permits Required & Processing Schedule Processing 6. Q & A / Agency Feedback 2

2 Project Overview Buccaneer Alaska Operations, LLC (Buccaneer) is an Alaska limited liability company wholly owned by Buccaneer Energy, Ltd. based in Sydney, Australia Buccaneer is operating on behalf of Buccaneer i b h fb Alaska, LLC Buccaneer plans to drill 4 offshore oil and gas 4 offshore oil and exploration wells in upper Cook Inlet: Southern Cross Unit #1 (SCU #1) #1) Southern Cross Unit #2 (SCU #2) Northwest Cook Inlet Unit #1 (NWCU #1) Northwest Cook Inlet Unit #2 (NWCU #2) 3 4

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5 Project Schedule & Timeline Drilling operations during three Open Water seasons (April to November) Move jackup rig south to lower Cook Inlet at the end of each to at the end of each season Begin operations July 2011 (Geohazard Survey) and end August Drilling Operations Use Marathon LeTourneau Class 116 C, cantilevered jack up drill rig capable of drilling to 25,000 ft. in water depths from 15 to from to 300 ft. 10K psi and 15K psi Blow Out Preventers (BOP) for drilling in in higher pressure formations known in the Cook Inlet Variable deck load to accommodate the increased drilling loads load accommodate the increased drilling loads and tubulars for deeper drilling 10

6 Drilling Operations Riser tensioning system to system to adequately deal with the extreme tides/currents in up to 300 ft. WD Steel hull designed to withstand 10 C to eliminate risk of steel failure during operations in the Cook Inletin the Proven history of successfully operating in arctic conditions in the North Sea Jones Act waiver not required to mobilize 11 Drilling Operations Rig Mobilization Jackup rig will be transported to Cook Inlet by Heavy Lift Vessel Jackup rig will be towed between drilling locations by USCG certified ocean going tugs tugs Rig mobilization will minimize potential safety, cultural or environmental impacts by: Working with aquatic associations and Southwest Alaska Pilot Association to avoid commercial fishing openings Implementing marine mammal monitoring program to avoid I l i l it i t id effects to Beluga whales and other marine mammals 12

7 Drilling Operations Site Clearance Geohazard surveys will be conducted at each site (before and after at each site and after drilling) on a survey grid approved by AOGCC Existing 2D and 3D seismic data will be used to supplement the geohazard surveys Examples of What is Required for Geohazard Surveys Activity Before Drilling After Drilling 2D and/or 3D Seismic i Surveys: Yes No Sea Floor Imagery: Side-scan sonograph Yes Yes Bathymetry: High frequency sea floor profiling Yes No High-Resolution Seismic Profiling System: Yes No Magnetometer Survey: Yes Yes Tide/Current Survey: Yes No 13 Drilling Operations Logistics & Field Support Most service contractors have offices, shops, & additional equipment located in the Kenai and Nikiski area Tugs will be staged at the Nikiski OSK dock for additional rig staged at the dock additional rig support, anchor handling & ice management (if required) Helicopters will provide transportation for personnel, groceries, & supplies Jackup rig will take on a maximum fuel load prior to operations to reduce fuel transfers during drilling transfers during drilling 14

8 Casing /Cementing Programs Casing and cementing programs will be approved by AOGCC Conductor & surface casings will be cemented from total depth to surface to Deeper casing strings will be cemented to cover length of any hydrocarbon bearing zones plus extra 500 ft. above All casings will meet AOGCC requirements for internal burst pressure to provide adequate well control 15 Blowout Prevention Program Operating procedures are designed to prevent a loss of well control Primary method of well control will be hydrostatic pressure y y p exerted by drilling mud of sufficient density to prevent formation fluid from flowing into the well bore In the unlikely event that primary control is lost, surface blowout event that is lost surface prevention equipment (BOPE) would be used for secondary control Buccaneer will use a 10,000 psi and 15,000 psi BOP stack BOPE testing will meet API Recommended Practice No. 53 & AOGCC specifications and procedures p 16

9 Cook Inlet Exploratory Blowout Prevention Program AOGCC Rig Inspection Focus Areas: Diverter Diverter Vent Line BOP Stack Choke Manifold Choke and Kill Lines Accumulator System (Primary and Back ups) Mud Gas Separator BOPE Control Panels Mud System (Mud Logging; Conditioning Equipment; Testing; Communications) Gas Detection and Alarms Top Drive/ Rotary Condition of Drawworks, Rig Engines fd i Structural Certifications for Derrick 17 Well Plugging & Abandonment When drilling is completed, the wells will be suspended or plugged and abandoned (P&A) according to AOGCC regulations P&A includes cutting the casing below the sea floor & g g retrieving the stub Each well string is sealed & cemented to prevent flow to the Cook Inlet and the movement of reservoir fluids between the of fluids strata P&A procedures will be approved by AOGCC prior to implementation 18

10 Waste Management Drilling Waste mud & cuttings, drilling fluids & formational water No drilling wastes will be discharged into Cook Inlet will discharged into No water will be discharged into Cook Inlet, except for: Uncontaminated deck runoff; if storm water is not used for deck if is not used for makeup water (preferred) Uncontaminated Cook Inlet sea water used as pre loading ballastwater ballast water by the jackup rig marine vesselby the rig 19 Waste Management Solid Waste Classify, segregate & label all waste as general, universal, segregate label all general & RCRA exempt or non exempt Store waste in labeled containers at designated accumulation areas Package & palletize waste for transport offshore for disposal at regulated facilitiesat 20

11 Waste Management Hazardous Waste No listed hazardous wastes will be generated will Universal wastes will be limited to batteries & light bulbs Separate, label & then temporarily store in approved then temporarily in approved containers at Satellite Accumulation Areas Transport for offshore disposal at regulated facilities 21 NON COMBUSTIBLE UNIVERSAL COMBUSTIBLE WASTE GLASS BOTTLES METAL TIN CANS AEROSOL CANS METAL SCRAP LIGHT BULBS BATTERIES GALLEY WASTE PLASTIC PAPER PACKING MATERIAL WOOD SLUDGE BAND/CONTAINER Designated Waste Basket Designated Waste Basket Designated Waste Basket Designated Waste Basket PUNCTURE IDENTIFY & LABEL COMPACTOR CRUSHER COMPACTOR CONTAINER* LOOSE BALED CONTAINER CONTAINER CONTAINER CONTAINER Yellow Green White Orange OFFSHORE DISPOSAL at APPROVED FACILITY Note: Colors Refer to to Color Code Labels *Container Dimensions 415 x 380 x 270 Pallet Red Red OFFSHORE DISPOSAL at APPROVED FACILITY 22

12 Environmental Management Endangered Species Beluga Whale Buccaneer is consulting with the National Marine Fisheries ith th l i h i Service (NMFS) on how to proceed under the Endangered Species Act & Marine Mammal Protection Act Buccaneer is coordinating with NMFS to prepare a marine mammal monitoring plan for project mobilization & operations that will: that Provide trained & qualified marine mammal observers during geohazard surveys and rig moves Monitor and document marine mammal sightings Take measures (such as avoidance or temporary shutdown) to avoid any effects to marine mammals 23 Environmental Management Spill Response CISPRI will be contracted as spill response contractor as spill response contractor O Brien s Group/RM will be contracted to manage spill response Cook Inlet wells surrounding Buccaneer s leases have historically produced less than 1,500 barrels per day from any single zone Buccaneer will develop a plan to respond to a blowout capable of discharging 5,500 barrels per day The jackup rig can drill in any conditions found during the can in any conditions during the Cook Inlet Open Water season however, drilling will cease if conditions do not allow CISPRI to respond to a 5,500 barrel per day blowout 24

13 Permits Required & Processing Schedule Processing Permits Required ADNR ACMP Consistency Determination Lease Plan of Operation SHPO Section 106 Historic Preservation Report ADEC Air Quality Minor Permit Oil Discharge Prevention & Contingency Plan Alaska Pollutant Discharge Elimination System Permit NOAA National Marine Fisheries Service Endangered Species Act Section 7 Consultation on Beluga Whales Marine Mammal Protection Act Coordination Biological Assessment & Marine Mammal Monitoring USACE Section 10 Individual Permit Endangered Species Act Section 7 Consultation on Beluga Whales AOGCC Geohazard Survey Permit Permit to Drill Permit for Annular Injection USCG Security and Response Plan S dr USEPA Cook Inlet NPDES General Discharge Permit KPB Coastal District Consistency Review 25