Marathon Makes Discovery in Alaska

Marathon Oil Company announced a significant natural gas discovery on its Ninilchik Prospect on the Kenai Peninsula, approximately 35 miles south of Kenai, Alaska. Marathon currently estimates 90 billion cubic feet (bcf) of gross proven recoverable gas reserves on the structure. Marathon is operator with a 60 percent working interest, while Unocal Alaska holds the remaining 40 percent. The discovery well, Grassim Oskolkoff #1, was drilled to a depth of 11,600 feet and encountered several gas-bearing sands. The test of one 39-foot interval at 9,822 feet flowed gas at 11.2 million cubic feet per day with a flowing tubing pressure of 1,565 psia. Three additional wells are completed on the structure and await testing. Additional drilling is planned to delineate the structure's upside potential. "The Ninilchik discovery, together with our recent Wolf Lake production coming on-line, demonstrates Marathon's continuing commitment to the Cook Inlet natural gas market," said John Barnes, Manager of Marathon's Alaska Business Unit. "In the last five years, Marathon has drilled six successful gas exploration wells in the Cook Inlet, and we remain committed to continued investment to establish the full potential of this gas-prone region." Marathon expects further field development in anticipation of first gas sales in late 2003. A new gas transmission line, the Kenai Kachemak Pipeline (KKPL), plans to deliver the natural gas to existing Cook Inlet infrastructure for local market consumption throughout the South Central Alaska region, including the city of Anchorage. Design and permitting for KKPL, a venture between Marathon and Unocal Alaska, is currently in progress. Marathon's Alaskan operations are based in Anchorage. Marathon is one of the largest gas producers in the Cook Inlet with more than 40 years of exploration and production activities. Marathon currently supplies more than 60 percent of the natural gas consumed by South Central Alaska utility markets.