Atlantic Richfield - Contracts Signed

RNS No 6173r
ATLANTIC RICHFIELD CO
29th June 1998

PRODUCTION SHARING CONTRACTS SIGNED BY ARCO FOR COALBED
METHANE PROJECT IN CHINA
 
Beijing - ARCO and China United Coalbed Methane Corp. today
signed production-sharing contracts under which ARCO will evaluate
the commercial potential of three coalbed methane prospects in
Shanxi Province in the People's Republic of China.
 
ARCO China Inc. and ARCO Ordos CBM Limited, wholly-owned
subsidiaries of Los Angeles-based ARCO, plan to initiate a piloting
and appraisal program this summer. Development would proceed if the
piloting efforts are successful, with start-up possible by 2003.
Gross development costs of the Phase I piloting and appraisal
program are expected to total US dollars 52 million. ARCO currently
owns a 49% interest in the prospects.
 
''We know that the area is rich in coal seam gas,'' said James
Weeks, President of ARCO China Inc. ''We must now determine whether
the volumes and rates of recovery are sufficient to make this
project commercial over the long-term. We must also find a market
for the gas, so concurrent with the drilling programme we will
pursue various marketing options, including power generation,
compressed natural gas vehicle fuels, industrial fuel, and town
gas.''
 
The three concessions, known as Sanjiao, Sanjiao Bei, and
Shilou, cover about 5,000 square kilometers (1,930 square miles) in
the Hedong Coal Basin about 370 miles southwest of Beijing.
 
''The Hedong basin fields are excellently positioned to support
China's industrial growth and provide the kind of cleaner-burning
fuel that will improve the quality of life for millions of people in
the region,'' said ARCO Chairman and Chief Executive Officer Mike R.
Bowlin, who was in Beijing for the signing ceremony.
 
''ARCO has been involved with China for almost 20 years and we
hope to play an increasingly important role as a provider of
environmentally-preferred fuels for years to come.''
 
Bowlin noted that ARCO has been in the coalbed methane business
for more than a decade, operating the most efficient coalbed methane
project in the San Juan Basin / Four Corners area of the United
States. ''We intend to build upon our creative technology in
China,'' he added.
 
China United Coalbed Methane Corp. was established in 1996 by
the Ministry of Coal Industry, the Ministry of Geology and Mineral
Resources, and the China National Petroleum Corp. to supervise and
administer the development of coalbed methane industry in China.
 
Note to Editors: For a menu of ARCO's news releases or to
retrieve a specific release, visit our website at
http://www.arco.com on the Internet.
 
Contact: Tom Goff of ARCO tel California 00 1 213-486-2456
Web site:  http://www.arco.com
 
 
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