Happy in the valley

Unocal excited about gas find

Posted: Friday, November 21, 2003

Unocal Corporation announced Thursday that an exploration well in its Happy Valley prospect has hit a commercial pocket of natural gas and the company likely will drill three development wells next year.

A discovery well found 110 feet of natural gas about seven miles southeast of Ninilchik. An ap-praisal well then was drilled. Roxanne Sinz, spokesperson for Unocal, said the wells, called Happy Valley 1 and Happy Valley 2, both were capable of handling gas flows of greater than 5 million cubic feet per day.

Three development wells are to be drilled next year, followed by six more over the proceeding two years, Sinz said. Total development cost is expected to be $50 million over two years, she said.

"This is an important discovery for us and for our customers," Charles Pierce, vice president of the Unocal Alaska business unit, said Thursday in a press release. "We now have the basis for growth in this play (where the gas is trapped) as we have developed an attractive inventory of on-trend prospects. Having this kind of exploration leverage is a key element of our business unit's and the company's exploration strategy."

According to the press release, the field is thought to contain some 75 to 100 billion cubic feet of recoverable gas with finding and development costs averaging around 50 cents per thousand cubic feet. Average production from the field is expected to be 20 to 25 million cubic feet per day during 2005.

Unocal holds a 100-percent working interest in the gas, the press release said. Unocal will sell the gas under an agreement with Enstar Natural Gas. That contract, signed in 2000, covers the first 450 bcf of gas that Unocal can deliver.

The new find is the second discovery Unocal has made during its current exploration program on the lower Kenai Peninsula. In 2000, Unocal, along with Marathon Oil Company, discovered gas at its Ninilchik Unit, about 35 miles south of Kenai.

In September, Unocal announ-ced the startup of production activities at the Ninilchik Unit and that gas would be flowing at a rate of 15 million cubic feet per day.

That gas is shipped north through the recently completed Kenai Kachemak Pipeline, which connects Ninilchik to the existing gas pipeline infrastructure serving residential, utility and industrial markets on the peninsula, in Anchorage and other parts of Southcentral Alaska.

Pierce said in September that Unocal was "making significant investments to grow this business to help meet the increasing need for new sources of natural gas in Southcentral Alaska."

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