June 28, 2001 --- Vol. 7, No. 72June 2001

Unocal, Marathon spar over well location

Unocal Alaska Resources and Marathon Oil Co. are sparring over the location of a gas exploration well Unocal wants to drill on the Kenai Peninsula.

Because Unocal wants to drill closer than 1,500 feet to a property line, it needs a spacing exception from the Alaska Oil and Gas Conservation Commission. Unocal applied for the exception for the 1 Albright well at the south Ninilchik drilling pad April 17; and Marathon, which has interest in adjacent land, objected.

The commission held a hearing June 28 and heard from both companies and took the matter under advisement.

Kevin Tabler, Unocal Alaska's manager of land and government affairs, told the commission the proposed location is the best available to evaluate proposed objectives and said areas farther from the property line are unsuitable either because they are wetlands, because other property owners will not cooperate, because there are access problems or because a well drilled lower on the structure would only confirm a well drilled in the 1960s, and not identify new reserves.

Unocal's goal is to certify sufficient additional reserves to support a gas pipeline south to Homer. Unocal, Homer Electric and Enstar have signed a memorandum of understanding for the gas pipeline, and Unocal's role in the agreement, he said, is to prove up enough gas reserves to justify financing for the pipeline.

Tabler said it is Unocal's hope that Marathon will soon join the gas pipeline project, but said the companies were unable to reach an agreement on a joint well.

Tabler said that drilling locations proposed by Marathon would result in a well that was a "twin" of a well drilled by Mobil in the 1960s, and would only confirm gas reserves from that well, not identify additional reserves.

Tabler said that Unocal had two-dimensional seismic shot over the prospect in May, but has not yet received that information back. Unocal's mapping of the prospect is based on public well data and on older seismic shot by Unocal or purchased from others.

Marathon asked for more detail on why Unocal believes this is the only place to drill. David Brimberry of Marathon said Marathon's seismic may be better than what Unocal has. "Our interpretations do differ," he told the commission. Unocal's proposed location would encroach on Marathon's correlative rights, he said, and told the commission that the Unocal well should be 1,500 from the lease line.

Tabler said Unocal is not asking anyone for help in picking a location and is not asking anyone for money to help drill this well. There could be allocation issues, he said, and those would be addressed when there is production.

BLM selects Argonne National Laboratory for TAPS right of way EIS

The Bureau of Land Management said June 28 that it has selected Argonne National Laboratory as the prime contractor for preparation of the environmental impact statement on renewal of the right of way for the trans-Alaska pipeline system.

BLM is the lead federal agency in the Joint Pipeline Office, a consortium of six federal and seven state of Alaska agencies that oversee the pipeline.

Gary Reimer, BLM's deputy authorized officer, said, "Argonne has extensive experience in credibly assessing complex projects of national and regional importance, a significant consideration for us."

Argonne will begin work immediately. Current plans call for a draft EIS to be published in July 2002 and a final EIS in November 2002.

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