Atlantic Richfield - Gas Development Agreement

RNS No 5459t
ATLANTIC RICHFIELD CO
11th August 1998


Sponsor Group to Advance North Slope Gas Development

ANCHORAGE, Alaska, Aug. 11 /PRNewswire/ -- ARCO Alaska, Inc., Foothills
Pipe Lines Ltd., Marubeni Corporation, Phillips Petroleum Company and CSX
Corporation through its subsidiary, Yukon Pacific Corporation, today announced
the signing of a new Alaska North Slope (ANS) Gas Project Sponsor Agreement.

The agreement calls for significant engineering, permitting and commercial
work over the next four years to advance the prospects of exporting Alaska
North Slope natural gas to East Asia as liquefied natural gas (LNG).  The goal
is to achieve breakthroughs in many areas of the project so the cost and risks
can be significantly reduced.

The agreement is the result of discussions initiated nearly six months ago
by ARCO (NYSE: ARC).
"Participation in this new sponsor group demonstrates a strong desire to
advance the LNG option from this huge gas resource," said ARCO Executive Vice
President Ken Thompson. "This is the right group, at the right time, with the
right focus."

The primary work team will be located in Alaska, and the agreement calls
for staged activities to begin immediately.  The first stage of the work
program will cost about $20 million.  The sponsor group will authorize, as
appropriate, the work scope and budget for successive stages of the program.
Under the agreement, total expenditures for the entire program could be
$100 million over a four-year period.
"It's time to roll up our sleeves and see if we can make a project
commercially viable," said Phillips Alaska Manager Arne Holhjem.

The sharing arrangements are ARCO 37%, Foothills 22%, Marubeni 17%,
Phillips 12% and CSX 12%.

"We couldn't be more pleased to be part of this effort," said Yukon Pacific
President Jeff Lowenfels. "Yukon Pacific has been working for many years
accumulating permits and licenses to support an Alaskan LNG export project.
We're looking forward to demonstrating the value of what we've done."

"As a Canadian partner, we are pleased to participate in this world scale
project," said Terry Cameron, Foothills' Senior Vice President. "We are eager
to contribute our northern pipeline experience."

"This sponsor group has excellent fundamentals and the practical
experience to put together a venture to acquire North Slope gas and sell LNG
in East Asia," said ARCO Alaska President Kevin Meyers. "We have
representation form the ANS gas owners, international pipeliners, current
Alaskan LNG players, permit holders, and a major trading house in the East
Asian marketplace."

Passage and signing of the Alaska Stranded Gas Development Act by the
State of Alaska had a positive impact on efforts to assemble a sponsor group.
"Discussions among potential sponsors immediately intensified when it was
clear the Act would become law," said Meyers of ARCO Alaska. "The efforts of
the Knowles administration and Alaska Legislature really made a difference."

"Passage of the Stranded Gas Act was an essential signal that the State
wants to encourage the project in a positive and appropriate way," said
Cameron, of Foothills.

     "Now the market can see firm progress from Alaska," said Marubeni's Deputy
General Manager, Energy Division-II, Mr. Ito.

     With the signing of the sponsor agreement completed, a formal
introduction of the new group to Alaska is planned for the near future. 

     ARCO Alaska, Inc., based in Anchorage, is a wholly-owned subsidiary of
Los Angeles-based ARCO, an integrated oil and gas company that operates
globally with 1997 revenues of over $19 billion.  ARCO Alaska, Inc.
operations include exploration and production of oil and gas in Alaska.

     Foothills Pipe Lines Ltd. is a privately held pipeline company based in
Calgary, Alberta, Canada, and jointly owned by Trans Canada PipeLines Ltd. of
Calgary, Alberta, and Westcoast Energy Inc. of Vancouver, British Columbia. 
The Foothills' system transports one-third of the total Canadian natural
gas exported to the United States. 

     Marubeni Corporation is a major Japanese trading house engaged not only in
the trade of all kinds of products, materials and goods, but also in investment,
financing, and developing various kinds of projects, including energy resources.
It has a total of 167 offices outside Japan and total annual trade activities of
around $100 billion (US). 

     Phillips Petroleum Company is an integrated oil and gas company with global
operations and 17,200 employees worldwide.  Founded in Bartlesville, Okla., in
1917, the company has $14 billion of assets and $13 billion of revenue on an
annual basis. Phillips operations in Alaska include exploration and production
of oil and gas and operation of the Kenai LNG plant. 

     CSX Corporation, headquartered in Richmond, Va., is an international
transportation company offering a variety of rail, container-shipping,
intermodal, trucking and contract logistics services. CSX holds a majority
interest in Yukon Pacific Corporation, based in Anchorage.

For information, contact:

ARCO Alaska, Inc.
George Findling          [phone]

CSX Corporation
Elizabeth Gabrynowicz    [phone]

Foothills Pipe Lines Ltd.
Sandra Munnoch           [phone]

Marubeni Corporation
Shinichiro Uemiya        81-3-3282-3041

Phillips Petroleum Co.
Arne Holhjem             [phone]

SOURCE ARCO Alaska, Inc.
                               08/11/98
/CONTACT: George Findling, 907-263-4174 of ARCO Alaska, Inc.; Elizabeth
Gabrynowicz, 804-782-6775 of CSX Corporation; Sandra Munnoch, 403-294-4465 of
Foothills Pipe Lines Ltd.; Shinichiro Uemiya, 81-3-3282-3041 of Marubeni
Corporation; or Arne Holhjem, 713-669-7463, Phillips Petroleum Co./
/Web site: http://www.arco.com/
(ARC)


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