Gas now flows from Ninilchik

Posted: Thursday, September 11, 2003

Marathon Oil Co. and Unocal Corp. struck pay dirt, announcing on Wednesday the startup of their joint natural gas venture in Ninilchik.

With that cooperative effort begins the natural gas transport through the Kenai Kachemak Pipeline that eventually will deliver gas to Enstar utility customers on the southern Kenai Peninsula.

Unocal and Marathon said the Ninilchik gas source is producing at a current rate of 15 million cubic feet per day and is coming from two wells at the Grassim Oskolkof location, discovered in Ninilchik in January 2002. Two additional wells at a second location are expected to come online by October.

By year's end, Ninilchik production is expected to be about 40 million cubic feet per day.

"The successful development of the Ninilchik discovery is an important element of of Marathon's ongoing Cook Inlet natural gas business," said John Barnes, Marathon Alaska's asset team leader.

"We are also very pleased to announce the startup of the Kenai Kachemak Pipeline that will safely and efficiently transport Ninilchik gas to help meet the region's ongoing energy needs."

Marathon owns a 60-percent stake in the production unit and an equal percent of the pipeline company, Kenai Kachemak Pipeline LLC. Unocal owns the remaining 40 percent of the Ninilchik unit and holds 40 percent interest in the pipeline through a subsidiary.

Coinciding with the beginning of production, the two companies, in cooperation with Enstar as a part of Kenai Kachemak Pipeline LLC, began transporting the gas last week through the 32-mile pipeline that runs north from the Ninilchik unit to Kenai. Construction on the 12-inch diameter pipeline started at the beginning of this year and was completed ahead of schedule, said Enstar project manager John Lau.

"We just had a good team of people to work with and a motivated contractor," he said.

Gas currently being produced is being used to fulfill Marathon contracts. Lau said Enstar expects to bring south peninsula homes online by early next year.

"Hopefully, we'll have some folks hooked up in 2004," he said. "It will be dependent on tariff requirements and contributions by the local homeowners to run main extensions."

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