press release

Unocal exploration program yields 7 oil and gas discoveries offshore Indonesia

Sugar Land, Texas, Sept. 9, 1996 -- Unocal Corporation today said that its Unocal Indonesia Company subsidiary had drilled seven successful oil and gas exploration wells in the Mahakam Delta area offshore East Kalimantan in Indonesia. Four of the drilling successes came in the first phase of Unocal's innovative Saturation-Exploration (S-X) program.

"Based on the drilling to date, we currently estimate that these discoveries contain more than 40 million barrels of oil equivalent (BOE) of recoverable oil and gas with a finding cost of about 50 cents per BOE," said Charles R. Williamson, Unocal group vice president for International Operations. "The S-X program is a revolutionary way of doing business in Indonesia. It maximizes the drilling dollars and reduces up-front costs by using a keep it simple,' optimized risk approach."

The S-X program employs slim-hole wellbores and a specially modified rig to drill the wells. The company uses wireline formation testing to obtain necessary reservoir information, thus avoiding the traditional, high-cost test methods.

"A typical S-X well costs about $1 million and takes under 10 days to complete," Williamson said. "This compares with $4.3 million and more than 50 days for a conventional exploration well."

The company expects to drill 20 S-X wells this year, the first phase of a three-year, 60-well program. So far, Unocal has completed 12 wells in the S-X program, yielding four discoveries.

Five of the discoveries will be developed using Unocal's Stacked Template Structure (STS) technology that allows the company to significantly reduce the cycle time from discovery to first production to just 5-10 months.

Unocal introduced the STS technology in the Seguni field development work earlier this year. In that case, excluding wells, development cost just $4 million -- compared with an estimated $10 million for an equivalent subsea system, or $17 million for a conventional platform-supported production system.

The STS technology involves three or more stacked templates that are positioned over the discovery well. The templates are clamped at various elevations between the mud line and the surface depending on the water depth. The upper two templates are elevated and clamped in position, while the lower template is clamped at the mud line. The templates and well conductors form a small trussed tripod platform, with the uppermost template capable of supporting limited facilities. Unocal has applied for patents on the STS system.

Unocal 1996 East Kalimantan Drilling Program Successes:
(Through August 1996)

Well name Data:
Sesumpu-3 Measured depth: 12,570'
Total oil and gas pay: 69' (Well bore abandoned)
Plans: Recover reserves from STS set on Sesumpu-Central discovery
Sesumpu Central-1 Measured depth: 10,070'
Total oil and gas pay: 171'
Plans: Temporarily suspended; to be developed using STS
Subur-1 Measured depth: 12,990'
Total oil and gas pay: 176'
Plans: Complete using STS facility; production by first quarter 1997
Attaka #34
(S-X well)
Measured depth: 10,895'
Total oil and gas pay: 226'
Plans: Currently setting STS facility; on production by Oct. 1996; expected rate--5,000 barrels of oil per day from 3 wells
Attaka #35
(S-X well)
Measured depth: 11,574'
Total oil and gas pay: 161'
Plans: Install STS facility; production by late 1996
(S-X well)
Total vertical depth: 7,339'
Total oil and gas pay: 92'
Plans: Expect to develop with STS facility
(S-X well)
Total vertical depth: 12,934'
Total oil and gas pay: 485'
Plans: Expect to develop with STS facility

Updated: September 1996