BLM Approves Questar Proposal for Increased Pinedale Production

Questar Corp. reports that the Bureau of Land Management (BLM) has approved a proposal by Questar subsidiary Questar Market Resources (Market Resources) to increase gas production from its Pinedale Anticline leasehold in western Wyoming. Under the terms of the BLM's Order of the Authorized Officer issued on November 10, Market Resources subsidiaries Questar Exploration and Production (Questar E&P) and Wexpro will be allowed to supplement their previously approved Pinedale winter-drilling program and also conduct limited completion operations during the winter of 2005-2006. The company estimates that during 2006 alone, the approved proposal will add 8 billion cubic feet (bcf) of gross incremental gas supply to a very tight natural gas market, enough to heat roughly 96,000 average American homes for one year.

The current winter-drilling program, approved by the BLM in November 2004, allows Market Resources to drill with six rigs from three pads on its Pinedale leasehold beginning in the winter of 2005-2006 and continuing through the winter of 2013-2014. Under the new proposal, in exchange for additional environmental mitigation measures, the company will add a third rig to one of the previously approved winter pads this winter only, for a total of seven active rigs during the winter of 2005-2006, and will be allowed to complete and turn to production three wells that otherwise could not be completed until May 2006.

"Our proposal was made in response to a request from the U.S. Department of the Interior for ideas on how we and other Rockies producers could quickly increase natural gas production in response to hurricane-related curtailments in the Gulf of Mexico," said Charles Stanley, Market Resources president and CEO. "The prolific individual well production at Pinedale, coupled with our substantial existing environmental-mitigation efforts, allows us to increase production from these properties without compromising the environment. As part of the BLM's conditions of approval, we've committed to additional mitigation measures -- adding 250 acres to our existing 1,500 acre habitat enhancement project at Pinedale. In addition, we're voluntarily adding another 250 acres to continue to study the best way to enhance habitat to offset the impact of our development activity. We'll also take the opportunity to collect important scientific data on the response of wintering mule deer to winter completion operations."

Stanley also noted that the customers of Questar's natural gas-distribution subsidiary, Questar Gas, will benefit from an approximate 2.4 bcf increase in cost-of-service production in 2006. Wexpro develops and produces natural gas on behalf of Questar Gas under a long-standing contractual arrangement and currently delivers about half of the utility's natural gas supply on a cost-of-service basis significantly below current market prices.