Marathon & Unocal Begin Production From Ninilchik

Marathon Oil and Unocal have started up natural gas production from the Ninilchik Unit in Cook Inlet, Alaska.

The companies have commenced production at a current rate of 15 million cubic feet of gas per day (mmcfd). The gas is being transported through the recently completed Kenai Kachemak Pipeline (KKPL), which connects Ninilchik to the existing natural gas pipeline infrastructure serving residential, utility and industrial markets on the Kenai Peninsula, Anchorage and in other parts of south-central Alaska.

The Ninilchik discovery, announced in January 2002, is located on the Kenai Peninsula approximately 35 miles south of the City of Kenai, Alaska. Current production is coming from two wells at the Grassim Oskolkoff (GO) location. Two additional wells at a second production location are expected to come online in October. By year end, Ninilchik production is expected to approach 40 mmcfd. Marathon operates the Ninilchik Unit with a 60-percent working interest. Unocal holds the remaining 40 percent interest.

"The successful development of the Ninilchik discovery is an important element of Marathon's ongoing Cook Inlet natural gas business," said John Barnes, Marathon's Alaska Asset Team Leader. "We are also very pleased to announce the startup of the Kenai Kachemak Pipeline that will safely and efficiently transport Ninilchik gas to help meet the region's ongoing energy needs."

KKPL is a regulated 32-mile, 12-inch diameter gas transportation pipeline. Construction of the pipeline began in January 2003 following an open season in which Marathon and Unocal committed to transport gas for a 15-year period and agency approvals were provided for the construction permits. Marathon holds a 60 percent interest in Kenai Kachemak Pipeline LLC, the company formed to build and operate the pipeline. The remaining 40 percent interest is held by GUT, LLC, a Unocal subsidiary.

"The start-up of the Ninilchik Unit and the Kenai Kachemak Pipeline is a major milestone in Unocal's efforts to commercialize its South Kenai gas position," said Charles Pierce, vice president, Unocal Alaska. "We are making significant investments to grow this business to help meet the increasing need for new sources of natural gas in south-central Alaska."