Outlook for Unocal is stable says Standard & Poor’s

Unocal’s Morrell says oil production should remain fairly stable and a natural decline in reserves would be offset with a summer drilling program and remedial well work

Tom Hall

PNA staff writer

Citing “numerous internal growth opportunities in core operating areas” that are expected to increase both reserves and production, Standard & Poor’s, on May 10, upgraded the outlook for Unocal Corp. from negative to stable.

Martin Morrell, the company’s oil and gas operations manager for Alaska, echoed that assessment. He told PNA on May 12 that oil production should remain fairly stable and that a steady but natural decline in reserves would be offset with a summer program of drilling and remedial work on wells.

Morrell said that recent higher prices have provided more cash flow to justify project work and added, “If oil prices hold, the second quarter of 1999 should be much better than the same period last year.”

Morrell also said that Unocal is planning a limited exploration program with a partner (to be identified when an agreement is finalized) on a specific property. Unocal picked up some acreage surrounding that property in April’s Cook Inlet oil and gas lease sale.

New drilling technology, called coil tube drilling has the company excited. Perfected on the North Slope, the technique uses a continuous coil of pipe instead of standard drill pipe. “It’s fairly flexible, but rigid enough to support a drilling assembly,” said Morrell.

Unocal tried the new technology last year on one well and after assessing the results, “We found a three-fold increase in production (after production had stabilized),” he said.

The company has plans to use the technology on five wells this year and Morrell said that if Unocal is successful, they want to keep going with as many wells as they can.