press release

Unocal ends 1999 with gas sales, condensate production records in Thailand

Unocal ends 1999 with gas sales, condensate production records in Thailand

El Segundo, Calif., Dec. 22, 1999 -- Unocal Corporation today said it has set new one-day gross gas sales and condensate production records in Thailand and is on track to post all-time highs in gross average daily output for 1999.

Unocal Thailand, Ltd., Unocal's Thailand subsidiary, set a new daily gross gas sales record on Nov. 15 of 1,118 million cubic feet per day (mmcfd). The gross condensate production record was set on Nov. 2 with 42,965 barrels, mainly due to higher yield from the Pailin field, which started production in August. For the full-year 1999, Unocal Thailand expects its average gross daily natural gas and condensate output to reach record levels, with close to 1,000 million cubic feet of gas and 34,600 barrels of condensate (Unocal net: 625 mmcfd of gas and 20,900 barrels of condensate).

"These records not only reflect Unocal's continued effectiveness as a major energy provider for the Kingdom, but also its ability to meet the increased demands for clean-burning natural gas as the economy rebounds," said Randy Howard, Unocal Thailand, Ltd., president. "We are pleased to see the continued economic growth in the Kingdom and an associated 10% increase in overall natural gas demand over the last year."

Also In 1999, Unocal Thailand started production from the Trat and Pailin fields. Pailin was Unocal Thailand's largest and most complex single project ever undertaken, with an estimated cost of $375 million to date. Gross gas sales volume from the Pailin field is at 165 million cubic feet per day (mmcfd).

Howard projected that in 2000, the company's gas and condensate sales to the Petroleum Authority of Thailand (PTT) will be similar to 1999 levels. He anticipated Thailand's total domestic gas demand to continue to grow next year, with additional demand potentially coming from the Electricity Generating Authority of Thailand (EGAT), industrial use and small, independent power producers.

"Unocal stands ready with substantial natural gas resource potential to increase the amount of gas we are providing to the Kingdom if necessary," Howard said. "With our supply of gas, a low-cost, clean, and efficient fuel, we can provide a substantial portion of the energy Thailand needs to accelerate its economic recovery."

Drilling success

In 1999, Unocal Thailand drilled 89 gas production wells and 14 exploration wells, for a total of 103 wells. For 2000, the company plans to drill approximately 80 wells. Unocal also installed one platform this year and expects to install two more next year.

Of the 14 exploration wells drilled in 1999, 13 struck gas and condensate with some oil. "We are very proud of our exploration success rate of over 90 percent," added Howard.

Other 1999 highlights for Unocal Thailand include:

  • In February, the company successfully completed the first horizontal gas well (Trat A-07) in the Gulf of Thailand, which enabled it to gain access to gas-producing sands of greater productivity.
  • In June, four wells confirmed the viability of the Pakarang gas fields.
  • In October, the company announced a major oil discovery in Blocks 10A and 11A, further evidence of the potential for both oil and gas resources in the Gulf of Thailand. Of particular note was the success of the Yala-3 well, with close to 500 feet of oil and gas sands. If tests verify that the resource is commercial, the company will look into ways to bring the oil to market.
  • Earlier this month, Unocal participated in the Arthit gas and condensate discovery made by PTT Exploration and Production Public Company Limited (PTTEP) on Block 15A.

Howard stressed Unocal's confidence that Thailand is well on its way to economic recovery, as evidenced by the year-on-year power demand figures, which have been positive for the past four months. "Thailand can use much more natural gas," he said, "and, according to some sources, estimates of domestic growth in consumption range between 10% and 20% over the next year.

"It makes good economic sense to use gas," Howard continued. "Gas translates into low-cost electricity, compared with coal or fuel oil. What's more, gas-fired plants are more efficient and more environmentally friendly than coal-fired or oil-fired plants. The gross resource potential of gas in Thailand will meet domestic demand for at least 50 to 60 years, and we keep finding more and more to replace the produced volume."

Unocal Asia-Pacific Ventures Ltd. also holds a 24-percent interest in the 700-megawatt power plant in Si Racha, which is operated by Independent Power (Thailand), Ltd., Thailand's first independent power producer, and due to come on stream by early next year.

Capital Spending

Unocal Thailand and its co-venturers in the Gulf recorded $176 million in capital spending (Unocal net: $116 million) in 1999, with plans to invest $202 million (Unocal net: $144 million) in 2000. For operating expense, the company will be maintaining approximately the same level as it did in 1999.

Unocal first supplied gas and condensate to the Thai market in 1981, helping Thailand lessen its dependence on energy imports. Today Thailand is about 33% self-reliant in energy supply. The gas produced by Unocal Thailand and its co-venturers provides electricity to one of every three domestic homes and buildings in Thailand. Unocal operates 13 gas and condensate fields for its co-concessionaires Mitsui Oil Exploration Co., Ltd., PTT Exploration and Production Public Company Limited (PTTEP), Amerada Hess (Thailand) Ltd., and Moeco Thai Oil Development Co., Ltd.

Forward-looking statements regarding reserves replacement, future production rates, other exploration activities and capital expenditures in this news release are based on assumptions concerning operational, market, competitive, regulatory, environmental, and other considerations. Actual results could differ materially as a result of factors discussed in Unocal's 1998 Form 10-K report filed with the Securities and Exchange Commission.

Updated: December 1999