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NEWS BULLETIN

October 25, 2010 --- Vol. 16, No. 95October 2010

USGS slashes its NPR-A oil estimate

In a revised resource assessment for the National Petroleum Reserve-Alaska, released today, the U.S. Geological Survey has reduced its estimate of undiscovered oil in the reserve from 10.5 billion barrels to 896 million barrels. The agency’s estimate of undiscovered natural gas has dropped slightly from 61 trillion cubic feet to just under 53 trillion cubic feet.

The revised estimates, coming as an update to an NPR-A assessment done in 2002, result from data now available from exploration wells drilled in the past decade. The data indicate an abrupt change from oil prone to more gas prone resources in NPR-A, just 15 to 20 miles west of the Alpine oil field in the Colville River Delta, USGS scientists think. Consequently, oil plays analogous to the Alpine field in NPR-A likely contain very little oil west of the area that ConocoPhillips and Anadarko Petroleum have been exploring around their Lookout and Alpine West prospects, USGS now says.

USGS now thinks that the best bet for finding new oil in NPR-A is in a relatively young and shallow sequence of rocks known as the Brookian, with these rocks also likely to hold substantial amounts of natural gas.

USGS attributes the apparent prevalence of gas in NPR-A to the pushing upward of rock strata between 60 million and 15 million years ago, a process that the agency says would have reduced the pressure on the rocks and, hence, caused degassing from oil deposits and an expansion of gas pools.

Linc spuds first Alaska exploration well

Linc Energy has spud its first Alaska exploration well, the company said yesterday.

The Australian company recently began drilling LEA No. 1, an onshore vertical well located just north of Point MacKenzie Road across Knik Arm from Anchorage.

“The well has been designed to target a number of stacked gas objectives whilst intersecting regional coal measures,” Linc Energy CEO Peter Bond said in a prepared statement.

Bond said the quick turnaround on the leases acquired earlier this year demonstrated Linc’s commitment to the U.S. energy market.

“These Alaskan assets will be a definitive part of the early cash-flow opportunities for Linc Energy in the months ahead,” Bond said. “I look forward to updating the market on the results from LEA No. 1 and the expansion of our operations and exploration activities within Alaska in due course.”

Linc previously said it hoped to use revenue generated from the traditional exploration program to fund underground coal gasification projects in the Cook Inlet basin.

Linc Energy entered Alaska in March, acquiring 122,000 acres from San Francisco-based independent GeoPetro. The acreage includes state and Alaska Mental Health Land Trust leases split between Granite Point on the west side of Cook Inlet and Point MacKenzie.

See stories in the Oct. 31 issue of Petroleum News, available to subscribers online at noon, Friday, Oct. 29 at www.PetroleumNews.com

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