NEWS BULLETIN

November 09, 2001 --- Vol. 7, No. 140November 2001

State approves Marathon-operated Ninilchik unit

The Department of Natural Resources Division of Oil and Gas has approved an application by Marathon Oil Co. for formation of the Ninilchik unit. Marathon is the unit operator, Unocal is the other majority working interest owner.

The unit consists of approximately 25,167 acres, both onshore and offshore, between Clam Gulch and Ninilchik. It includes some 18,999 acres of state lands (10 state oil and gas leases and approximately 420 acres of unleased state lands), approximately 222.67 acres of federal land, 661.35 acres of University of Alaska lands, 1,528.17 acres of Cook Inlet Region Inc. lands and 3,336.34 acres of patented fee lands.

Eight wells were drilled in the area in the 1960s and 1970s.

Marathon drilled and logged the Grassim Oskolkoff 1 well in 2000 and plans to test the Tyonek interval late this year. By the end of 2001, Marathon also plans to work over the Socal Falls Creek 1 well so that the well can be re-completed when facilities are in place to produce gas from the well.

Marathon plans to drill the Grassim Oskolkoff 2 well in 2002 as a southern offset to the Grassim Oskolkoff 1. Marathon also plans to re-enter the Union Ninilchik 1 well and attempt to establish a sustainable completion in the Tyonek reservoirs.

Future unit plans include a well on the northern fault block of the Ninilchik anticline to delineate gas potential within both the Tyonek and overlying Sterling reservoirs.

Unocal applies for two new units on Kenai Peninsula

Unocal has applied for two new units on the Kenai Peninsula: the South Ninilchik unit uplands and tied and submerged lands northeast of the town of Ninilchik and bordered on the east by the Ninilchik River and the Deep Creek unit uplands that parallel the Cook Inlet coastland approximately five miles inland from Ninilchik and Happy Valley. Both units would be jointly managed by the state and Cook Inlet Region Inc.

Unocal has 100 percent working interest ownership in the Deep Creek unit, 40 percent of which is on state leases and 60 percent of which is in Cook Inlet Region Inc. leases; it covers approximately 22,216 acres.

Unocal has a 97.02 percent working interest in the South Ninilchik unit; the remaining acreage is unleased. Approximately 55 percent of the unit is on state leases and 24 percent is on CIRI leases. The remaining royalty ownership is divided among the Kenai Peninsula Borough, the Bureau of Indian Affairs, and numerous estates, trusts, and private individuals. The proposed unit covers approximately 9,328 acres.


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