Plans for Tarn Oil Field Development Announced by ARCO Alaska, BP Exploration

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30 April 1997

Plans to develop the previously announced Tarn oil discovery on Alaska's North Slope were made public today by ARCO Alaska, Inc., and BP Exploration (Alaska) Inc .

Tarn is located adjacent to the southwest corner of the Kuparuk River Unit, Alaska's second largest oil field.

Pending issuance of local, state and federal permits, field construction and development will begin in early 1998 with initial production of 10,000 to 15,000 barrels of oil per day in late 1998 or early 1999.

Evaluation of a 3-dimensional seismic survey and data from a three-well, one-sidetrack delineation drilling program completed earlier this month indicates that the northern area of Tarn contains estimated proven and potential reserves of 50 million barrels.

ARCO Alaska, Inc., a wholly-owned subsidiary of Los Angeles-based ARCO (NYSE: ARC), holds an approximate 58.5% interest in the Tarn field. BP Exploration (Alaska) Inc., a wholly-owned subsidiary of BP America, holds an approximate 41.5% interest.

The companies first announced the Tarn discovery on 10 March after testing of the Tarn #2 well yielded a steady, stimulated flow rate in excess of 2,000 barrels per day of 38-degree API gravity oil from a sandstone reservoir discovered at a depth of 5,200 feet.

Field development is estimated to cost about $120 million.

"Oil from Tarn will be moving to market in about 18 months," said Ken Thompson, President of ARCO Alaska, Inc., "This demonstrates the kind of immediate, positive impact that exploration success near existing fields can have on the North Slope. We and our partners have identified numerous satellite prospects near Prudhoe Bay and Kuparuk with significant reserve potential."

"Tarn is an example of new opportunities to grow production from Alaska's North Slope," added BP Exploration (Alaska) President Richard Campbell.

"The development of the new Tarn oil field on the North Slope is great news," said Alaska Governor Tony Knowles. "It shows once again that Alaska's partnership with ARCO and BP will pay dividends for Alaska in terms of jobs, new revenues and a healthy economy. My administration will be working with the companies to bring this new field on production as quickly as possible."

ARCO Alaska, as operator, has started engineeering for a one or two drill site development that could include up to 50 wells. The development scenario includes a nine-mile pipeline to move Tarn production to existing processing facilities in the Kuparuk field.

Construction of the drill sites, pipeline and necessary power lines will begin in early 1998 with development drilling starting during the summer of 1998. Plans for fabrication and installation of necessary drill site production facilities are still being worked. ARCO Alaska will work with Alaska companies to minimize the cost of Tarn development while maximizing the use of Alaska suppliers and contractors.

Tarn field development could create as many as 200 construction jobs.

ARCO Alaska expects to operate and maintain the field without increasing the size of the Kuparuk workforce.

Production resulting from Tarn development will generate over $100 million in additional revenue for state and local governments in Alaska.


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