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NEWS BULLETIN

May 28, 1999 --- Vol. 5, No. 27May 1999

Unocal brings in partner for Pioneer coalbed gas project

Unocal has brought in a 50/50 joint venture partner, Houston-based Ocean Energy Inc., which will operate the Pioneer unit in the Matanuska-Susitna Borough.

Ocean Energy merged with Seagull Energy Corp., parent company of Enstar Natural Gas Co., earlier this year.

Ocean Energy spokeswoman Susan Smith told PNA that the company has 1,400-1,500 employees and operates in three areas: U.S. onshore; Gulf of Mexico; and internationally — primarily offshore West Africa. In 1998, she said, the company had production of 1.12 billion cubic feet gas equivalent per day. The company’s production mix for 1998 was 55 percent gas and 45 percent oil; its reserve mix is 61 percent gas, 39 percent oil. At the end of the first quarter the company had assets valued at $3.3 billion.

Unocal looked for expertise

Representatives from Unocal and Ocean Energy explained the project to residents in the development area at an informational meeting in Houston May 25.

Kevin Tabler, Unocal Alaska Resources’ manager of land and governmental affairs, told the meeting that Unocal began to take an interest in coalbed gas in the 1980s and began assembling leases in the area in the early 1990s. But, he said, Unocal is not a coalbed methane company — we don’t really understand coalbed reservoirs, he said.

So the company went looking for a knowledgeable partner. More that 30 companies were interviewed, Tabler said, and Unocal selected Ocean Energy as the leading expert. The plan for this summer is to reenter the ARCO BLT 1 well and attempt to establish gas production, and to drill two coalbed gas wells with the goal, Tabler said, of determining if the prospect can produce gas in commercial quantities.

Ocean Energy recommended different well locations

Unocal had begun the permitting process for wells, but when Ocean Energy looked at the project, it recommended two wells close together and close to existing Enstar gas lines.

Representatives of Ocean Energy told the meeting that temporary drilling pads would be about 200 feet by 250 feet, but that the footprint for producing wells would be only 20 feet by 25 feet. The goal is the drill each well in three to five days, with a maximum of 15 to 30 days to be spent on each well. There will be minimum night traffic and roads will be watered if necessary to keep the dust down and the rigs will be small.

Unocal spokeswoman Roxanne Sinz told PNA that an exploration agreement between Unocal and Ocean Energy for the Pioneer unit was signed May 24. The agreement, she said, is a 50/50 joint venture with Ocean Energy as operator.

Tabler said that if commercial gas is found, Unocal’s share would go to the company’s Nikiski fertilizer plant. Ocean Energy said that their share would be sold to Enstar.

Local concerns

Gene Pavia of the Division of Governmental Coordination said that only about 30 percent of responses to public notice of the project favored it. But, he said, of the 70 percent opposed, 75 percent wanted more information.

Concerns expressed at the meeting included affects on the water table, drilling in residential areas, fear of gas explosions and noise.

A second public information meeting is planned for June 10 in Houston.

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