ARCO Alaska Starts Operation of Kuparuk Large Scale EOR Project

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04 September 1996

ARCO Alaska, Inc., has started operation of the Kuparuk Large Scale Enhanced Oil Recovery (LSEOR) project. The project will increase ultimate Kuparuk oil recovery by 200 million barrels while helping to offset the natural decline in Kuparuk field production rates through the turn of the century.

Incremental production of 12,000 barrels per day is expected from the LSEOR project in 1997, increasing to 36,000 barrels per day at its peak in 1998/1999.

"This major enhancement in recovery will have an almost immediate, positive impact on production," said ARCO Alaska President Ken Thompson. "It's like finding a new oil field inside Kuparuk that's larger than any North Slope discovery since Pt McIntyre in 1989."

ARCO Alaska is a wholly owned subsidiary of Los Angeles-based ARCO (NYSE: ARC).

ARCO Alaska began testing miscible gas enhanced oil recovery on two of Kuparuk's 42 drill sites in 1989. The pilot project was successful, leading field owners to approval of the LSEOR project and expansion of the process to 20 drill sites in the southern half of the oil field.

Miscible Injectant (MI), a high-tech solvent used in the EOR process, will be manufactured at Kuparuk using 25,000 barrels a day of natural gas liquids (NGL) imported from the nearby Prudhoe Bay Field. The MI will be injected into the reservoir, where it will mix with and sweep residual oil into producing wells.

The $175 million project included the construction of an NGL pipeline within the Kuparuk field, the installation of additional NGL pumping capacity and the recommissioning of the Oliktok pipeline to move NGL from Prudhoe Bay to Kuparuk. This initial work will be followed by the drilling of approximately 100 wells over the life of the project.

Fabrication of the necessary production modules and construction of the NGL pipeline was done by union and non-union Alaska-based companies. The project created jobs for more than 100 Alaska construction workers.
The LSEOR project was made more competitive when the state of Alaska adopted regulations preventing the double taxation of natural gas liquids produced in one field, but used for enhanced oil recovery in another.

"This is an example of the state and the oil industry working together to make investment in Alaska attractive," Thompson said.

Taxes and royalties on incremental LSEOR production are expected to yield $800 million in state revenue.

The Kuparuk River field is owned by ARCO Alaska, Inc., (55%), BP Exploration (39%), Unocal (5%), Mobil, Exxon and Chevron.

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