Aurora Gas Progresses in Effort to Bring More Cook Inlet Gas to Market

Aurora Gas reports that significant progress has been made in the company's efforts to develop gas reserves on the West side of Cook Inlet for delivery to markets in Southcentral Alaska. The company reports that midway through 2005, it has completed testing an apparent discovery at Three Mile Creek Unit, and drilled successful development wells at Moquawkie and Lone Creek Units. Additionally, the installation of production facilities and gathering lines necessary to bring the Three Mile Creek Unit on production are nearly complete.

Three Mile Creek Unit #1 well was drilled and partially tested during the winter of 2004-5. Aurora returned to the well in June of this year with its recently acquired well testing module to finalize the testing. Several Beluga sand intervals were tested for a combined flow rate of approximately 5 MMCF/D. Aurora owns a 70% working interest in the well and is operator; Forest Oil owns the remaining 30%. The partners have nearly completed construction of a five mile gathering line which will connect the field to an existing gathering line that runs from Lone Creek Unit to the Beluga Pipe Line. The possibility of extending the gathering system to the south where the gas could be delivered directly to CIGGS is being evaluated. Aurora plans to drill at least two development wells on the structure by year end 2005 and possibly two additional development wells in 2006.

Aurora Gas Vice President, J. Edward Jones, said "We are obviously excited about our new gas field at Three Mile Creek and the flow rates achieved during testing. Our analysis of the well test data did not indicate any obvious reservoir depletion, so while it is too early to accurately determine reserves, this appears to be a commercial discovery. We have therefore commenced work on our gathering line and production facilities, expecting to have this field on production by the end of the 3rd quarter, 2005."

Moquawkie #3 well was drilled to a depth of 2,560 feet and completed in the Tyonek and Beluga sands. The company tested combined flow rates of approximately 5.5 MMCF/D from several of the Upper Tyonek sands. The well is situated on the same pad as Moquawkie #1 and targeted reserves that were going to be difficult to access in that well. Aurora plans to have this additional production on stream by August 1, 2005.

Aurora spudded the Lone Creek #3 well on July 3rd and drilled to a total depth of 3,025 feet. In what the company describes as its best well to date, combined flow rates of approximately 16.4 MMCF/D were tested from several upper Tyonek sands, with several apparently productive sands yet untested. The company will immediately commence work on a short gathering line to tie the new well into the central production facility at Lone Creek #1 well pad.

Company President, G. Scott Pfoff, said, "Aurora is very pleased with the results achieved thus far during our 2005 work program. We are not even half way through the work we plan to do, and we have added a significant amount of production to the system prior to this coming winter. There is much left to be done this year; we are in the process of mobilizing the AWS #1 Rig to our Aspen prospect to drill what we hope will be another new discovery. After drilling Aspen #1 well, we will drill at least two, maybe three development wells before year end."

The company has applied for permits to drill the Aspen #1 and the Kaloa #3 wells; and is currently preparing applications for Three Mile Creek Unit wells #2 and #3.

"Keeping things in perspective, gas production in Cook Inlet averages about 550 MMCF/D these days making Aurora less than ten percent of the total; however, we have proven a small company can successfully operate in Cook Inlet. If we are to be successful in solving the looming shortage of natural gas supply in Southcentral Alaska, I believe we must have more companies like Aurora out there looking for gas" said Pfoff.