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NEWS BULLETIN

March 17, 1998 --- Vol. 4, No. 15March 1998

ARCO ups Alaska spending

ARCO Alaska Inc. said March 17 that it expects to spend $2.5 billion on oil field development and exploration projects in Alaska over the next five years, an $800 million or 47 percent increase over the company’s 1997 five-year plan.

The $800 million increase will fund development of the recently discovered Tarn field, increased development drilling at the Kuparuk River field and continuing West Sak field development. The plan also funds development of the Alpine field and expansion of enhanced oil recovery efforts at Prudhoe Bay and Point McIntyre.

“This plan designates capital for projects that will make it possible for us to achieve ARCO Alaska’s production goal of ‘no decline after ’99,’” said Ken Thompson, chairman and CEO of ARCO Alaska. “Work is already under way on two new fields, Tarn and Alpine. Our satellite exploration program continues to be successful and the early results from our West Sak project are very encouraging.”

ARCO has allocated $135 million during the next five years to fully develop Tarn. The satellite field’s discovery was announced in April 1997. Located seven miles southwest of the existing Kuparuk oil field, Tarn will begin production in early 1999 with initial production of 15,000 barrels per day.

West Sak

The plan also allocates an additional $110 million to the West Sak field, where the first commercial production began in 1997. The initial 50-well Phase I development has already been approved. To date, the field is meeting its well rate and cost targets. The 1998 five-year plan will fund additional West Sak development drilling if Phase I is successful. Phase I West Sak development will yield 7,000 barrels per day and reserves of 50 million barrels. Phase 2 development would push production to 11,000 barrels per day in 2001 and 70,000 barrels per day in 2006, yielding reserves of 400 million barrels.

Alpine, existing assets

ARCO Alaska started construction this winter on the new Alpine oil field, with anticipated potential reserves of more than 365 million barrels of oil. Initial production of 30,000 barrels of oil per day is expected in mid 2000, increasing to 70,000 barrels of oil per day in 2001.

The 1998 five-year capital plan allocates $1 billion to existing assets, such as Prudhoe Bay, Greater Point McIntyre and Kuparuk; $800 million to new developments, such as West Sak, Tarn and Alpine; and $700 million to exploration. The $700 million includes $275 million for wildcat exploration and $425 for the exploration of new discoveries.

ARCO is working to stabilize and maintain its Alaska production above 350,000 barrels per day through 2005. ARCO Alaska’s 1998 capital budget is $515 million, an 87 percent increase from the 1997 capital budget of $275 million.

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