press release

PGI undertakes $12MM resource optimization program at Mak-Ban

Manila, May 20, 2002 -- Philippine Geothermal, Inc, (PGI), is embarking on a program to optimize the performance of its geothermal projects in the country. PGI's program dovetails with current efforts to improve the performance of the Tiwi and Mak-Ban geothermal projects, which PGI pioneered in partnership with its customer, the National Power Corporation (NPC). Specifically, NPC is undertaking a two-year power plant rehabilitation at Tiwi and Mak-Ban scheduled to commence in 2002.

PGI is supporting this rehabilitation using new technology in upgrading its steam field development program to improve surface facilities and reservoir management of the geothermal resource in both areas.

At Mak-Ban, PGI is set to begin a $12 million drilling program from July to December of this year. According to PGI, the project will enhance the steam capability of Mak-Ban to support 30 megawatts (MW) of power from the project to adequately meet the projected capacity of the rehabilitated power plants. The three-well project, which will involve new technology to drill into the deep reservoir of the steam field, is the first of its kind in the Philippines and a breakthrough in enhancing the life of the country's oldest geothermal resources.

The drilling technology involves new techniques and electronic equipment via Pressure While Drilling (PWD) and Measurement While Drilling (MWD) processes to help discover and tap additional geothermal resources at depths of up to 13,000 feet, exceeding previous standards of 8000 - 9000 feet.

This project will also create employment opportunities for 120 people, 70 percent of which shall be sourced from the local community. The 2002 drilling rig services contract has recently been awarded to DESCO, a private Philippine company.

PGI is currently evaluating an expanded drilling program for 2003 to meet the future energy requirements of both Tiwi and Mak-Ban. Both projects currently supply clean, indigenous and reliable energy to meet fifteen (15%) of the electricity needs of Luzon, the country's most populous island.

PGI is a wholly owned subsidiary of Unocal Corporation. Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's oil and gas activities are in North America, Asia, Latin America, the North Sea, and West Africa. Unocal is one of the world's largest producers of geothermal energy with operations in the Philippines and Indonesia.

Updated: May 2002