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Mobil Exploration & Producing U.S. Inc. decides not to pursue Clearview project.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Feb. 8, 1996--Mobil Exploration & Producing U.S. Inc. (MEPUS), Santa Barbara, Thursday announced that it had decided not to pursue the Clearview project.

MEPUS is the U.S. E&P affiliate of Mobil Corp.

In June 1995, the University of California, Santa Barbara (UCSB), decided not to allow Mobil to modify its current lease for the Ellwood Marine Terminal to use as the Clearview drill site. From this site, Mobil could reach the maximum amount of reserves. Only a portion of the reserves could be reached from any of the alternative drill sites considered.

With the reduction in the reserves, added to the uncertainty of getting an economic project approved in a timely manner, the decision was made to withdraw from Clearview.

Terry Laudick, area manager for Mobil, said: ``When you consider all the business factors, there are better opportunities for Mobil and our stockholders than the Clearview project. For this reason, we have decided not to go forward.

``Our next steps are to evaluate all options for our current Platform Holly operation. These options include: maintain operations, increase production by further development, market the asset or abandon operations.''

The project was estimated to produce 155 million barrels of oil using this state-of-the-art technology and create a model for environmentally sensitive oil projects.

The state of California could have realized up to $900 million in royalties. In addition, the county of Santa Barbara would have received $225 million of these royalties if pending legislation passed, along with another $184 million in taxes and fees over the life of the project.

In the fall of 1993, Charles Warren, then executive director of the California State Lands Commission, proposed the Clearview concept to Mobil. This concept would utilize extended reach drilling technology from an onshore site in Santa Barbara County to reach reserves in the South Ellwood Offshore Field. This field is currently being produced from Platform Holly.

MEPUS currently employs a total of 55 employees and 13 full-time contract employees in Santa Barbara County. -0-

COMMENTS TO THE MEDIA BY TERRY LAUDICK

MOBIL AREA MANAGER

FEB. 8, 1996

Thank you all for coming this morning. I have a brief statement I'd like to make, and then I'd be happy to answer any questions.

For me, the most exciting part of the oil and gas business is the challenge of finding new reserves and figuring out how to get to them. The greatest reward is producing the oil and gas in the most timely, profitable and environmentally sensitive way, using the newest technology and innovative ideas.

Yet the most difficult part about the business is knowing when to say which challenges present the best opportunity for you, your company and your stockholders when compared to all the other opportunities we have around the globe.

So, after extensive review of Clearview's economics and potential on a new drill site, we've chosen not to pursue the project.

I'd like to take a few minutes to tell you why.

In coming to Santa Barbara three years ago, our objective was to permit and operate the Clearview project.

Our original site for Clearview, the Ellwood Marine Terminal, located on land we lease from UCSB, allowed us to reach the greatest amount of oil reserves. It also provided the greatest financial benefits to the county, the state and Mobil.

For Mobil and its stockholders, Clearview was the chance to profitably produce 155 million barrels of oil using state-of-the-art technology and to create a model for environmentally sensitive oil projects.

The state would have realized up to $900 million in royalties. In addition, the county would have received $225 million of these royalties if pending legislation passed, along with another $184 million in taxes and fees over the life of the project.

Then UCSB announced last June that it would not modify our lease to allow Clearview. So we looked for alternate sites. Our studies showed that while there were other possibilities, none allowed us to reach the same amount of reserves as the Ellwood Marine Terminal site.

In addition to the reduced reserves, we realized just from managing our current Holly operation that getting Clearview approved was going to take longer and require more human and financial resources than we had originally anticipated.

When we started work on Clearview, we truly believed it was an incredible opportunity for the county and for Mobil. Yet, just like any business trying to stay competitive in a worldwide economy, we have to constantly look at every opportunity, and for each one compare our human resources and dollar investment against the expected outcome.

And, simply put, there are better opportunities out there for us and our stockholders than Clearview when you consider the uncertainty of getting an economic project approved in a timely manner.

For these reasons, we've decided not to go forward with Clearview.

Instead, we will evaluate our options for our current Platform Holly operation. These options include maintaining current operations, increasing production by further development, marketing the asset or abandoning operations.

I can't begin to tell you how much we appreciate the community's interest, input and, above all, the incredible support Clearview has received.

I'd like to thank everyone who gave us their time and worked so hard to try and make this project happen -- our team here in Santa Barbara, our Community Advisory Committee who helped us early on in the project, and everyone in the community who has offered us their encouragement and support.

Our next steps, as I said, are to evaluate our current operations. We don't know how long the evaluation will take, but, as we've done in the past, we will continue to keep you informed of our progress.

I'd like to take this opportunity one more time to thank all of those who supported us and worked so hard on this project for the last three years. And thanks to all of you for coming today. -0-

MOBIL FACT SHEET

Mobil Corp. is a major oil, gas and petrochemical company with operations in more than 100 countries. A Fortune Five company, it employs 58,500 people worldwide and has total assets of $41,542 billion.

The Exploration & Producing division searches for and produces natural oil and gas. Total proven reserves are the equivalent of 6.6 billion barrels of oil; production is 1.7 million barrels a day. Natural gas accounts for roughly half of reserves and production.

In California, one area where Mobil Exploration & Producing U.S. conducts business is the South Ellwood Offshore Field, off the coast of Goleta in Santa Barbara County. Operations include Platform Holly, the Ellwood Onshore Facility, the Ellwood Marine Terminal, the barge ``Jovalan'' and various oil and gas pipelines.

The South Ellwood Offshore Field was leased from the state of California by an ARCO and Mobil partnership, with ARCO as the designated operator in 1964 and 1965. In 1966, Platform Holly was placed approximately 2.5 miles off the coast of Goleta in 211 feet of water.

The platform has 30 well slots, 27 of which are active wells, and produces more than 4,000 barrels of oil and 3 million cubic feet of natural gas every day. Production of the field to date has been 52 million barrels of oil and 42 billion cubic feet of natural gas.

Platform crews work 12-hour shifts and are transported by a crew boat from the Mobil dock at Haskells Beach, just north of the Ellwood Onshore Facility.

Platform Holly's wells produce a mixture of oil, water and natural gas. This oil-and-water mixture is separated from the natural gas on the platform.

The natural gas produced at Holly is brought to the Ellwood Onshore Facility via three pipelines that lie on the ocean floor. The Ellwood Onshore Facility, located on 4.5 acres of land owned by Mobil just north of Sandpiper Golf Course in Goleta, was built in 1966 and modified to process H2S or ``sour gas'' in 1977.

When the natural gas arrives at the Ellwood Onshore Facility by pipeline, it is stripped of sulfur, making it a ``sweet gas.'' The sweet gas is dehydrated, compressed and then put into a Southern California Gas Co. sales line. The sulfur byproduct is trucked off-location and used in the agricultural industry for fertilizer.

After the oil and water are separated, the water is pumped into a depleted natural-gas formation and the oil is shipped by onshore pipeline to the Ellwood Marine Terminal for storage.

The Ellwood Marine Terminal is on 17.5 acres of land currently leased from the University of California, Santa Barbara, for use as a marine terminal until 2016. This site has been used as an industrial site for oil and gas operations since 1928 and can currently store up to 130,000 barrels of oil in two tanks.

About three times a month, 55,000 barrels of oil are off-loaded onto the barge ``Jovalan.''

One additional operation currently associated with the South Ellwood Offshore Field is the Seep Tents. In 1982, two huge pyramidlike steel structures, each 100 by 100 feet and 50 feet high, were placed over an area on the ocean floor where natural gas and oil seep from below the ocean floor.

This naturally occurring seepage has been going on since the earliest recorded history of Santa Barbara County.

The seeping gas contributes to local air pollution, and the oil contributes to tar on the beaches. Each day, the tents capture emissions equivalent to the pollution from more than 35,000 cars -- about the number of vehicles on the road each day in the county. The gas collected by the tents is sent to the Ellwood Onshore Facility by an offshore pipeline.

Platform Holly and its associated operations employ 39 Mobil employees and 10 full-time contract employees.

In the fall of 1992, Charles Warren, then-executive director of the California State Lands Commission, proposed the Clearview concept to Mobil. The concept was to reach reserves in the South Ellwood Offshore Field from onshore using extended reach drilling technology.

In April 1993, Mobil became full owner and operator of the South Ellwood Offshore Field operations. Mobil opened an office in Santa Barbara to house the team it brought in to design and permit Clearview. The team consists of 16 Mobil employees and three full-time contract employees. -0-
 CLEARVIEW CHRONOLOGY
 February 1996


1964/65 Leases on the west portion of the South Ellwood
 Offshore Field are granted to ARCO and Mobil, 50
 percent each.


1966 Platform Holly is placed. Ellwood Onshore Facility
 is established for processing ``sweet'' oil and
 gas produced at Holly.


1977 The Monterey Formation, highly prolific ``sour''
 (H2S) gas and oil, is discovered and becomes the
 primary producing zone. The processing plant is
 modified to handle the ``sour'' gas.


Fall 1992 Charles Warren, executive director of the State
 Lands Commission, proposes the Clearview concept to
 Mobil.


2/25/93 SLC approves royalty reduction and lease assignments
 from ARCO to Mobil.


4/93 Mobil acquires ARCO's 50 percent interest in the
 leases on the western portion of the South Ellwood
 Onshore Field, Platform Holly, the Ellwood Onshore
 Facility and the Ellwood Marine Terminal, thereby
 becoming 100 percent owners.


6/93 County staff present their report on Clearview to
 the Santa Barbara County Board of Supervisors. The
 board votes 5-0 that the Clearview concept is worthy of
 pursuing. Mobil opens the Santa Barbara office and
 begins the evaluation of Clearview.


2/9/95 Mobil submits the Clearview application to the county
 of Santa Barbara.


2/24/95 SB 1187 is introduced in the state Senate by state
 Sen. Maddy regarding royalty sharing.


5/11/95 Mobil enters into an agreement to acquire Ocean
 Meadows Golf Course.


6/22/95 UCSB sends Mobil a copy of a letter to the county
 informing them that UCSB does not intend to modify
 Mobil's existing lease to allow Mobil to use the
 Ellwood Marine Terminal as the drill site for
 Clearview.


6/23/95 Mobil begins a search for a new site for the Clearview
 project.


10/14/95 Santa Barbara County Board of Supervisors votes to
 add the ``Voter Approval Oil Initiative'' to the March
 election.


2/8/96 Mobil announces its decision not to pursue Clearview.
 The company will evaluate options for current
 operations.


CONTACT: Mobil Exploration & Producing U.S. Inc.

Darlene Taylor, 214/951-4425

Shauna Clarke, 805/899-1711 (office)

800/207-4194 (pager)
COPYRIGHT 1996 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 
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