Unocal boosts oil and gas production with GOM and Alaska exploration and development drilling successes
El Segundo, Calif., July 25, 2001 -- Unocal Corporation (NYSE: UCL) today said that its Unocal Gulf Region USA unit recorded a 71-percent success rate in its Gulf of Mexico shelf exploration and development program during the first half of 2001. In addition, Unocal completed two significant development wells in Alaska's Cook Inlet, including one that is producing at the highest rate of any oil well in Cook Inlet history.
Unocal Gulf Region USA's continued successful exploration and development drilling program, coupled with production increases by Unocal's Pure Resources, Inc., subsidiary, have boosted Unocal's average Lower 48 natural gas production in the second quarter to 954 million cubic feet (mmcf) per day, a 14-percent increase over fourth quarter 2000.
GOM shelf production
Unocal's Gulf Region USA business recorded production increases despite the high natural gas production declines of more than 30 percent that are typical of new production on GOM shelf properties.
At the Muni field (Ship Shoal 295), natural gas production peaked at more than 230 million-cubic-feet-of-gas-equivalent per day, setting a new record for the field. Production is expected to remain stable through the third quarter. Unocal is operator and holds a 100-percent working interest in the field.
"Our accomplishments in the Gulf of Mexico this year continue to demonstrate the effectiveness of our investment strategy and the expertise of our highly experienced exploration team," said Ken Butler, vice president of Unocal Gulf Region USA.
On the GOM deep shelf, first production is scheduled for the end of third quarter from the previously announced Ladybug discovery on Garden Banks 409. Ladybug is expected to produce at an initial rate of 8,000 barrels of oil per day (bopd), with possible higher production depending on facility limitations. Unocal has a 50-percent working interest; ATP Oil & Gas Corporation (NASDAQ: ATPG) is operator and holds the remaining interest.
GOM shelf exploration
Unocal Gulf Region USA's exploration drilling program on the Gulf of Mexico shelf yielded 10 discoveries, which have already begun production or should go on-line later this year.
This exploration program included the East Breaks area, where Unocal scored a 100-percent success rate in a three-well subsea exploration tieback program. Through this deep shelf pilot program, Unocal employed subsea tiebacks to develop small-to-moderate discoveries in water deeper than the conventional shelf.
"This program allows us to take advantage of our existing infrastructure at two East Breaks blocks to achieve high profitability and quick turnaround," Butler said. "The successful results here will lead to a larger deep shelf exploration program in 2002."
Highlights of Unocal Gulf Region USA 2001 GOM shelf exploration program
|Well||Pay||Production Start Date||Production Rate||Participants (W.I.)|
|Mustang Island 748||124'||On-line||300 bcd||Osprey Petroleum (50%)|
|13 mmcfd||Unocal (50%)|
|Mustang Island 904||115'||August||10 mmcfd||Unocal (33.6%)|
|Osprey Petroleum (33.6%)|
|Guadalupe Peak||127'||October||20 mmcfd||Unocal (50%)|
|(East Cameron 257)||Callon Petroleum (50%)|
|Sniper||71'||November||15 mmcfd||Unocal (50%)|
|(East Cameron 294)||Callon Petroleum (50%)|
|East Breaks 114||35'||September||20 mmcfd||Unocal (100%)|
|East Breaks 205||35'||4Q 2001||20 mmcfd||Unocal (50%)|
|1100 bcd||Panaco (25%)|
|East Breaks 161||20'||4Q 2001||2000 bopd||Unocal (75%)|
Unocal plans to drill an additional 8-12 exploratory wells on the Gulf of Mexico shelf during the remainder of 2001. Butler noted that most of those wells will focus on opportunities that provide quick turnaround, high rate production.
Alaska Cook Inlet development drilling
Unocal drilled two successful, high production, development oil wells in the McArthur River field in the Cook Inlet, Alaska.
"We have refocused on oil production from our Cook Inlet assets, and we are achieving good success through the use of advanced drilling and analytical technologies," said Charles Pierce, vice president for Unocal Alaska. "We are already seeing the results of our $18 million drilling and workover program on the King Salmon platform this year."
The K-13 well, which came on production in early July, is producing 7,100 bopd. This is the highest rate from any oil well in Cook Inlet history and has pushed production from the King Salmon platform to the highest level in almost 20 years. The well confirmed a structure in the Hemlock horizon on the northern flank of the field that could contain more than 35 million barrels of oil in place.
The K-1 well, also drilled from the King Salmon platform, came on line in early May and is currently producing 1,100 bopd from the "G" zone.
Unocal holds a 56-percent working interest in the McArthur River Field Hemlock zone and a 49-percent working interest in the "G" zone. Forest Oil Corporation holds the remaining interests.
About Unocal Corporation
Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal operations are located in North America (Gulf of Mexico region, Alaska and Canada) and in Asia (Thailand, Indonesia, Myanmar and Bangladesh). The company is also pursuing exploration programs in West Africa and Brazil.
This news release contains certain forward-looking statements about Unocal's future drilling plans, expected production rates and schedules, oil in place and capital expenditures. Oil in place is a speculative estimate (including non-proved resource) based on engineering, geophysical, and geological studies and may include market risk. These statements are not guarantees of future performance. The statements are based upon Unocal's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Actual results could differ materially as a result of factors discussed in Unocal's 1999 Form 10-K and subsequent reports filed with the Securities and Exchange Commission. Copies of the company's SEC filings are available from the company by calling 800-252-2233. The reports are also available on the Unocal web site, www.unocal.com.
Updated: July 2001