April 24, 2002 --- Vol. 8, No. 45April 2002

Marathon announces two more successful gas tests at Ninilchik unit

Two more wells at Marathon Oil Co.’s Ninilchik exploration unit south of Kenai have been successfully tested for natural gas, the company said today. Earlier this year the company announced a discovery at the Grassim Oskolkoff No. 1.

Marathon is operator of the Ninilchik unit, which is 35 miles south of Kenai. The company holds a 60 percent working interest in the unit; Unocal Alaska holds the remaining 40 percent.

The recently drilled Grassim Oskolkoff No. 2 well, drilled off the same pad as the Grassim Oskolkoff No. 1, “separately tested three sands at a combined restricted gas rate of 11.9 million cubic feet per day,” the company said. “The three tests were from a total perforated interval of 169 feet, ranging in depth from 8,048-9,440 feet.”

The Falls Creek Unit No. 1 redrill tested gas at a restricted rate of 6.8 million cubic feet per day from 36 feet of perforations in a single sand at a depth of 8,714 feet. Several promising intervals shallower in the well were not tested,” Marathon said. The smaller Falls Creek unit, which lies in the northern third of the Ninilchik unit, is completely surrounded by Ninilchik unit acreage and has been incorporated into the Ninilchik unit, John Barnes, manager of Marathon’s Alaska business unit, told PNA April 24.

“Marathon is very encouraged by three successful wells at Ninilchik, which have tested at a combined gas rate of nearly 30 million cubic feet per day. Additional exploratory drilling is expected in 2002 and 2003 in preparation for first gas sales by the beginning of 2004,” Barnes said.

As reported in the April 21 edition of Petroleum News Alaska, Marathon plans to begin gas development activities at the Grassim Oskolkoff drill pad approximately nine miles north of Ninilchik in August and start producing gas from the pad in December 2003.

Ninilchik gas will be transported to existing or new markets through the proposed Kenai-Kachemak Pipeline, a company jointly owned by Marathon and GUT, a subsidiary of Unocal.

Heavy oil tax incentive amendment passes U.S. Senate

The United States Senate today approved an amendment to the energy bill which includes language by Alaska Sen. Frank Murkowski that will encourage production of viscous oil from Alaska’s North Slope and help Alaska coal to be used to produce synthetic fuels, the senator’s office said.

The amendment calls for Alaska heavy oil to receive a $3 per barrel federal tax credit, an incentive designed to encourage production of an additional 200 million barrels of heavy oil from Phillips Alaska Inc.’s West Sak field over the next decade.

The amendment also provides a $3 credit (equivalent to oil-produced energy) for low-pollutant synthetic fuels to be produced from coal. The measure specifically expands and extends an existing tax credit to apply to fuels produced from either tar sands, brine, biomass or coal before 2007.

The Murkowski language was included in the tax portion of a Finance Committee amendment to the energy bill.

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