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Cook Inlet drilling, gasline project boosting Unocal

Posted: Saturday, March 02, 2002

Unocal Alaska is looking toward another banner year by building upon the company's recent success in its Cook Inlet drilling operations.

For the first time since 1969, Unocal ended the year at a production rate 25 percent higher than when it began.

"During most of the second half of the year, we were running three company-operated drilling rigs concurrently," said Roxanne Sinz, manager of public affairs and communications for Unocal. "This is the first time ever Unocal has done that in the Cook Inlet."

It is also the first time since 1989 that Unocal has begun drilling for new wells in the Cook Inlet area. Unocal's gas operations are also growing. The company plans to continue gas development drilling programs to supply the Agrium Fertilizer Plant in Nikiski.

Unocal Alaska at a glance

Company headquarters: El Segundo, Calif.

Alaska manager: Chuck Pierce, vice president

Number of employees: 340 statewide with 258 on the peninsula

Net Unocal 2001 production in Cook Inlet: 12,800 barrels of oil per day and 104 million cubic feet of gas per day

Capital expenditures for 2001: $46 million

Local contact: 283-7505

Web site: www.unocal.com

Company outlook: In 2001, Unocal Alaska drilled the highest oil rate for the company in several decades and in conjunction with Marathon Oil formed a new company to move forward in the plans to pursue a gas pipeline on the southern Kenai Peninsula.

However, a big development in the future of gas on the peninsula is the partnership of Enstar Natural Gas, Homer Electric Association, Unocal and Marathon Oil Co. The latter two announced the formation of a new company, Kenai Kachemak Pipeline LLC, which will be the primary developer of a natural gas pipeline on the southern peninsula.

Under the initial plan, Alaska Electric Generation and Transmission Inc., of which HEA is the primary owner, would own the natural gas transmission line. However, roles have since changed. The pipeline company will own the pipeline, and Enstar will continue as the main operator of the line. HEA, though, will provide government and public relations support for the project.

Under the current timeline, production could be complete and ready for operation as early as 2005. The fulfillment of this goal was pushed closer to realization Jan. 22 when Unocal and Marathon announced significant discoveries at the Grassim Oskolkoff No. 1 well, the first exploration well jointly drilled by the two companies. It has been estimated to have the ability to produce 90 billion cubic feet of gross proven recoverable gas reserves.

"We've had huge success on this first exploratory well," said Sinz. "Ultimately, what we're doing is looking at building a pipeline. With this significant discovery, it has moved to the next step."

Unocal Alaska Vice President Chuck Pierce said that Unocal has begun a separate three-well exploration program on the southern peninsula. The wells began testing over a three-month period at the beginning of the year.

The current plan calls for the $45 million pipeline to be installed in phases between existing pipelines in the Kenai gas field and the Anchor Point area following the Alaska Department of Transportation right-of-way easements along the Sterling Highway.

According to reports, not only would the 75-mile pipeline bring natural gas service to southern peninsula residents, it also would transport and deliver gas from exploration sites on the southern peninsula to existing commercial and residential customers on the railbelt.

"We will continue to aggressively pursue the Kenai (Kachemak) gas pipeline project and related exploratory drilling for natural gas," Sinz said. "We feel there is a huge public benefit not only from a clean, environmentally friendly energy source, but as lower costs for the user -- you and me."

As well as expanding further into the natural gas industry, producing 2 billion cubic feet per day, the company is also focusing on smaller infrastructural improvements closer to home. These include upgrading pipelines, wells, platforms and other equipment, according to Sinz, who added that the company plans to continue investing in these areas "to upgrade it for growth and longevity."

Clarion reporter Marcus K. Garner contributed to this story.



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