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NEWS BULLETIN

August 10, 2001 --- Vol. 7, No. 97August 2001

Phillips Cosmopolitan project gets final consistency determination from DGC

The state Division of Governmental Coordination has issued its final consistency determination for Phillips Alaska Inc.’s proposed Cosmopolitan exploration unit. DGC found the lower Cook Inlet project consistent with the Alaska Coastal Management Program. This determination allows other state and federal agencies to proceed with issuing permits for the project.

The proposed unit includes seven state leases, totaling approximately 24,250 acres, and two federal OCS leases, totaling 9,765 acres. Working interest owners are field operator Phillips and Forest Oil.

One modification the state requested and Phillips agreed to was to build a containment berm around two sides of the pad to contain a potential spill. Phillips has also agreed to have a relief drilling rig nearby. Nabors 160 was mentioned in the determination.

The 4.6 acre Cosmopolitan drilling pad will be built this summer approximately five and a half miles north of Anchor Point and a half mile west of the Sterling Highway.

Phillips is permitting two wells with sidetracks from private surface and offshore bottom holes within the proposed unit. The bottom hole location is on state lease 384403 in Township 3 South, Range 15 West, Section 33, Seward Meridian.

Drilling is expected to begin on the Hansen #1 well in September and continue for 150 to 240 days.

Access to the site will be primarily by existing gravel roads and by a new 0.4 mile road.

A final application from Phillips to unitize the lower Cook Inlet leases is expected to be filed today or early next week with the state Division of Oil and Gas. The U.S. Minerals Management Service said it is expecting a federal unit agreement application in the near future.

AOGCC issues Meltwater oil pool injection and conservation orders

This week, in response to a March 12 application from Phillips Alaska Inc., the Alaska Oil and Gas Conservation Commission issued area injection and conservation orders allowing underground injection of fluids for enhanced oil recovery and establishing pool rules for the development of the Meltwater oil pool in the Meltwater participating area of the Kuparuk River field on Alaska’s North Slope.

Phillips, the field operator, has drilled three exploratory wells into the proposed oil pool; the Meltwater North 1, 2 and 2A. The scope of the Meltwater drill site 2P development involves drilling 26 wells.

Phillips recommended both the Bermuda and the Cairn intervals be included in the Meltwater oil pool but the commission concluded that there was” insufficient information available” to include the Cairn interval in the oil pool “at this time.”

Exception from the gas-oil-ration limitations was approved, provided enhanced recovery operations begin within six months of regular production.

The commission also concluded that commingling of Meltwater fluids at the surface with fluids from Tarn and Kuparuk was appropriate “provided there are adequate well tests to assure accurate production allocation.

Phillips has applied to the Alaska Division of Oil and Gas to expand the existing Kuparuk River unit to encompass the southern half of the proposed Meltwater oil pool and approve a Meltwater participating area. State officials told PNA Aug. 8 that a “partial decision was being circulated between agencies” and would likely be released by Sept. 2.

The Bermuda interval is expected to hold 132 million barrels of oil with between 47.5 million and 52 million barrels expected to be recoverable. Production is expected to begin at the end of this year, with peak production in early 2002.

Phillips, BP Exploration (Alaska) Inc., Unocal Corp., ExxonMobil and Chevron U.S.A. Inc. are working interest owners in the field.

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