NEWS BULLETIN

October 03, 2003 --- Vol. 9, No. 97October 2003

Unocal applies to extend Kenai-Kachemak Pipeline to Deep Creek unit

Unocal has applied to extend the Kenai-Kachemak Pipeline approximately 13.5 miles to its Happy Valley drill site in the Deep Creek unit southeast of Ninilchik. The company told the state in Sept. 30 paperwork that the proposed Happy Valley extension will connect Unocal's Happy Valley drill site to the southern end of the Kenai-Kachemak Pipeline near the Susan Dionne pad in the Ninilchik unit some five miles north of Ninilchik.

Unocal has permitted two Happy Valley wells in section 22 of township 2 south, range 13 west, Seward Meridian. Petroleum News reported in June that the first well had been spud and that Unocal was in the process of permitting a second well in the same area. Director Mark Myers of the Alaska Division of Oil and Gas told Petroleum News in August that Unocal was drilling the second well and was in the process of permitting a third well that it hopes to drill yet this year. A Unocal source told Petroleum News today that Unocal is looking at drilling another four wells in the Deep Creek unit.

The permitted Happy Valley wells are south-southwest of the Deep Creek NNA No. 1 which Unocal completed in early 2002. That well, in section 11-T2S-R13W, SM, had gas shows according to the Alaska Oil and Gas Conservation Commission completion summary for the well.

Unocal said in April 2002 that activities had been suspended on the NNA No. 1, the Pearl No. 1 east of Ninilchik and the Griner No. 1 in Anchor Point. Unocal said the three-well drilling program "failed to encounter commercial quantities of natural gas."

Unocal told the state in its September filing that it is developing natural gas wells on the Happy Valley drill site and plans to permit, design and construct the gas pipeline over the course of the next year.

The Happy Valley extension will be buried along Oilwell Road and then along Cecilia Street, and then be horizontally directionally drilled under the Ninilchik River to the Sterling Highway right of way, Unocal said. It will then follow the Sterling Highway to the current termination point of the Kenai-Kachemak Pipeline near the Susan Dionne pad in the Ninilchik unit north of Ninilchik.

Unocal said it expects to clear for the project in the late winter and early spring of 2004, construct the pipeline in the summer and fall of 2004 and begin pipeline operations in the fall of 2004.


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