press release

KKPL pipeline project announces revisions

The following news release was issued by Kenai-Kachemak Pipeline LLC.

Anchorage, April 25, 2002 - Kenai Kachemak Pipeline, LLC (KKPL) today announced that it is revising the scope of its project to reflect recently announced drilling results on the Kenai Peninsula. The revised pipeline will be approximately 33 miles and generally follow the Sterling Highway between Kenai and Ninilchik. As originally planned, the pipeline would have run between Kenai and Anchor Point.

"We are pleased that there have been several drilling successes in the Ninilchik Unit and look forward to expeditiously constructing the pipeline to deliver those supplies into the existing pipeline network. However, based on exploratory drilling results on the southern Kenai Peninsula, KKPL will not extend the pipeline beyond the Ninilchik Unit," said Unocal's Chris Keene, chairman of the KKPL Management Committee.

As revised, the proposed pipeline primarily will be used to transport gas from the newly-discovered Ninilchik Unit to the existing pipeline system serving the northern Kenai Peninsula and Anchorage. The pipeline also may be used to deliver gas to utilities that seek to serve communities within reach of the pipeline system. The estimated in-service date of the KKPL pipeline system remains January 1, 2004.

"KKPL will continue to be an open access pipeline," explained Marathon's Ben Schoffmann, a member of the KKPL Management Committee. "We anticipate that the shippers primarily will be producers who are developing gas along the route of the system and perhaps in other parts of the Peninsula who may want to build systems to attach to KKPL. Shippers may also include industrial customers, marketers and utilities."

In January, KKPL held an initial Open Season to determine preliminary interest in the pipeline.

KKPL will hold a second Open Season in early June to determine the final level of interest in the pipeline. At that time persons interested in reserving long term capacity on the system will be required to enter into binding agreements, so that KKPL can order pipe and enter into other commitments.

Based on the agreements made in the second Open Season, KKPL will seek final approval from the Regulatory Commission of Alaska (RCA) to construct and operate the proposed facilities and for final approval of a tariff and rates for the system. The final tariff and rates for the system are subject to review and approval by the RCA.

KKPL will hold an informational meeting for potential shippers in mid-May to discuss the revised pipeline system, available services and anticipated rates. Additional project information also will be mailed to potential shippers in early May. Potential shippers who have not yet indicated an interest in shipping on the pipeline should contact Jim Shew, Kenai Kachemak Pipeline, LLC, 909 West 9th Avenue, Anchorage, Alaska 99501 tel. (907) 263-7992, e-mail:

The Kenai Kachemak Pipeline, LLC is jointly owned by subsidiaries of Marathon Oil Corporation and Unocal Corporation.

Updated: April 2002