ARCO Alaska, Anadarko, Union Texas Announce Development Plans for Major New Oilfied on Alaska's North Slope

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02 October 1996

Plans to develop a major new oilfield in the western Colville area on Alaska's North Slope 34 miles west of the Kuparuk River oilfield were announced today by ARCO Alaska, Inc., Anadarko Petroleum Corp., and Union Texas Petroleum Alaska Corp.

The discovery well for the Alpine field was drilled by ARCO Alaska in 1994, but, until now, the discovery has not been declared commercial pending completion of field work.

A two-year delineation program, which included six wells, four sidetracks and a high-quality 3-D seismic survey, indicates that the 10-mile long, 40,000 acre oilfield has proven and potential reserves of 250 to 300 million barrels, with 800 million to a billion barrels of oil in place.

Pending issuance of local, state and federal permits, field construction and development would begin in the winter of 1997/98, with initial production of 30,000 barrels of oil per day (BOPD) expected in early 2000 increasing to 60,000 BOPD in 2001.

Total field development is expected to cost $700 to $800 million. Alpine is owned by ARCO Alaska (56%), Anadarko Petroleum (22%), and Union Texas Petroleum Alaska (22%).

(The three companies are the apparent high bidder on 5,900 acres adjacent to the Alpine discovery offered as part of State Lease Sale 86A yesterday (1 October). The partnership offered bonus bids of $2,026,247 for five tracts and was high bidder on all the tracts sought by the companies in the sale.)

ARCO Alaska is a wholly-owned subsidiary of Los Angeles-based ARCO (NYSE: ARC). Anadarko Petroleum (NYSE: APC) is a Houston-based independent oil and gas exploration and production company. Union Texas is a wholly-owned subsidiary of Union Texas Petroleum Holdings, Inc., (NYSE: UTH), a Houston-based independent oil and gas exploration and production company.

Four Alpine delineation wells were tested and, on separate tests, flowed high-quality, low-impurity, 40-degree API gravity oil. An unstimulated rate of 2,380 BOPD was achieved from the Alpine reservoir, a sandstone discovered at a depth of approximately 6,850 feet.
ARCO Alaska, as operator, has proposed a two-drill site, 100 to 150 well, 85-acre surface development with stand-alone processing facilities. Sales quality oil would move to market through an elevated 34-mile, 16 to 20 inch pipeline connecting the Alpine field to the Trans Alaska Pipeline via the Kuparuk Pipeline System.

"This is a well-delineated oil accumulation," said ARCO Chairman and Chief Executive Officer Mike R.Bowlin. "We have already begun our engineering design effort for field development and pipeline construction. Startup of this field in early 2000 will be a major step towards our goal of stabilizing ARCO's Alaska production after 1999."

"With this development project in the Western Colville area, Union Texas is excited about adding U.S. based production to our current portfolio of international oil and gas properties," said Union Texas Chairman and CEO John Whitmire. "Union Texas has participated in the exploration of the Colville area since 1984, and we are extremely pleased that this project is moving forward into the production phase."

Anadarko's Chairman, President and Chief Executive Officer Robert J.Allison said, "This announcement is truly good news for the state of Alaska, the US energy industry, and our stockholders. Production volumes from the western Colville area will have a significant impact on our domestic production volumes in 2000 and beyond. Anadarko looks forward to being a long-term player in Alaska."

"Alpine development is possible because we've been successful in reducing expected development cost by more than 30% compared to other North Slope fields," said ARCO Alaska President, Ken Thompson.

Only three miles of gravel road connecting the two drill sites are planned. Access during operation of the field would be provided by small plane and helicopter. Ice roads, constructed during winter, will be used to move construction equipment, production facilities, drilling rigs and drilling supplies to the site.
The Alpine field, located eight miles north of the village of Nuiqsut, is the first North Slope oil discovery on Native-owned mineral estate since passage of the Alaska Native Claims Settlement Act in 1971.

ARCO Alaska submitted a pipeline right-of-way application to the state of Alaska in mid-September. The company will soon submit necessary permit applications to the North Slope Borough, the U.S. Army Corps of Engineers, and other state and federal agencies.

Those applications will be based on a review of previous Colville area studies dating back 50 years and by five years of highly focused environmental and technical study in the Colville area. The environmental studies, which cost $4 million, guided conceptual development of the field, allowing engineers and environmental experts to locate drill sites, roads and facilities in areas where they will have minimal impact on wildlife, waterfowl, or the subsistence lifestyle practiced by Nuiqsut residents. ARCO is also including a comprehensive mitigation plan in its permit application to the Corps.

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