Ky/Tenn Report

Volume 17, Number 1 JANUARY 2009

BIG SOUTH FORK TO PLUG WELLS - The Big South Fork National River and Recreation area has released for public view and comment, its plans for dealing with known abandon oil and natural gas wells in the park. The park plans to plug at least 45 abandon wells, using funds from the American Recovery and Reinvestment Act. No list of wells has to be plugged has been provided. The public has until February 8, 2010 to comment on the plugging plan. Comments may be made online at the NPS Planning, Environment, and Public Comment site at http://parkplanning.nps.gov//bos.
There are now more than 300 oil and gas wells in the park but there has been no drilling since about 1990. In some cases, the federal government chose not to buy the mineral rights when it bought the surface rights for the park from landowners. Although drilling is allowed on tracts on which the minerals are privately-owned, operators find dealing with the park officials difficult and very slow when it comes to getting permission to drill or even rework existing wells.

SOMERSET REFINERY MAKES CHARGES AGAINST MARATHON - In an open letter to local officials, the Kentucky Congressional delegation and the media, Somerset Energy Refinery charged that Marathon is paying truckers incentives to deliver crude oil to its Catlettsburg refinery. The letter asked Marathon to cease the practice and play fair. The letter also said that if Marathon relinquished deliveries of local crude, it would allow Somerset to "keep our jobs and our business alive." Somerset said in the letter, "we need to process 1,200 barrels of crude a day to keep our doors open, and that's about all we can get. We need to buy more and could hire more people and increase production.

MARATHON RESPONSE TO SOMERSET'S CHARGE/PLEA - Marathon said it denied the allegations and pointed out that Somerset's proposal violates anti-trust laws and that Marathon is not going to engage in any discussions regarding where it buys oil. "Our company pays the market price," a company spokesman pointed out.

MILLER PETROLEUM ACQUIRES ALASKA RESERVES, OPERATONS- Miller Petroleum, Inc. dba Miller Energy Resources ("Miller"), (OTC BB: MILL:OB) announced that it has acquired Alaskan oil and gas assets, valued at $325 million, from Pacific Energy Resources ("Pacific Energy") through a Chapter 11 U.S. Bankruptcy proceeding in Delaware. Miller acquired total reserves of over 13.2 million barrels of oil and 15.5 BCF of natural gas, including total proved reserves of 5.6 million barrels of oil and 3.7 BCF of natural gas The discounted net present value of the Alaska reserves that Miller acquired is over $325 million dollars, including $119 million dollars of proven reserves, $185 million of probable reserves and $23 million of possible reserves. In addition, Miller has acquired onshore and offshore production and processing facilities, an offshore energy platform, over 600,000 net acres of land with thousands of acres of 3-D geologic seismic data, miscellaneous roads, pads and facilities all of which originally cost almost $300 million to build and install over the last 5 years. Miller will operate the facilities through its 100% owned subsidiary, Cook Inlet Energy LLC ("Cook") "Our initial Alaskan production is estimated to be 280 barrels of oil a day. Our three month target is over 800 barrels a day with a goal of pushing production over 1,100 barrels daily by the fourth quarter of 2010 which would generate more than $30 million dollars annually in gross revenue for Miller," said Miller CEO, Scott Boruff.

EXHIBITOR PACKETS MAILED FOR 2010 CONVENTION - THE TOGA office staff is in the process of mailing pre-convention packets to potential exhibitors for the 2010 TOGA convention, scheduled for May 12-14 at the Hyatt Hotel in Knoxville. Individual registration information is being prepared and will be in the mail to TOGA members and guests in the very near future.

TVA'S NATURAL GAS PLANS STIRS ENVIRONMENTALISTS - TVA's announced plans to start using more natural gas to produce electricity has sparked criticism from environmentalists who say drilling could endanger water TVA sees one promising new source of natural gas is the Chattanooga shale that is blanketed across east Tennessee. But environmental groups say the "chemical-laced drilling process used deep underground to break up the shale and release the gas could present as many problems as it solves. Oil and gas industry officials point out that the chemicals used in the treatment of the wells are not as strong as chemicals used in every home. The treatment is 99% water and has been used in the oil and gas industry for more than 60 years without damage to the environment, they note.

TENNESSEE DECEMBER PERMITS: Campbell County - Atlas America, Lyme Tennessee Forrest Co. KN-71, 3500', Jellico East/ Clay County - T & C Exploration, LLC, Danny Collins etal #1, 2000', Dale Hollow Res SE/ Fentress County - T & C Exploration, LLC, Tommy Robbins, elvx #1, 2000', Jamestown; Johnnie Ringley #1, 2000', Riverton; James Frogge #1, 2000', Pall Mall; Lucky Production Oil Expl., Charles Huddleston #1, 2000', Moodyville/ Morgan County - Knox Energy LLC, Emory River LLC HH-1004, 2337', Pilot Mountain; Knox Energy LLC, Walls Properties WH-1008, 3472', Petros/ Overton County - Hornet Oil & Gas Corp, William C. Haley #1, 2000', Livingston; Riverside Oil & Gas, William Sells #4, 2000'; Overton Oil & Gas, Charles & Lynda Anderson #1, 2000', Alpine/

KENTUCKY DECEMBER PERMITS: Allen County - Oil Valley Energy, LLC, Steven Burnett, #5, #6, #7, #8, #9, #10, #11, Corniferous/ Barren County - IAT, Inc., Randy Pierce, #2, Sunnybrook/ Clinton County - Rick-Rod Oil Company, Inc., Welby Neal, #R3, Knox Gp/ Harlan County - Daugherty Pet, Inc., Kentucky River Properties, LLC, DPI 1541, Huron Mbr, Ohio Sh; Creech, ET Heirs, DPI 1287, Maxon Sd/ Leslie County - Daugherty Pet, Inc., Kentucky River Properties, LLC, DPI 1254A; WPP, LLC, DPI 1283, DPI 1274, DPI 1288, Huron Mbr, Ohio Sh/ Letcher County - EQT Production Company, EQT Production Company, #569366, #567768, #569734, #569931,Cleveland Mbr, Ohio Sh; #569367, #569733, #569932, Huron Mbr, Ohio Sh/ McLean County - EWM Services, LLC, Gough, Bill S. LLC, ET AL, Daniels 2, Daniels 5, O'Hara Lime/ Whitley County - Vinland Energy Operations, LLC, Jennifer Vanover, #1, Clinton Sh; Champ Oil Co, Inc., JL White, #1-B, Murfreesboro; ##2B, Knox Gp/

KY/TENN REPORT
750 OLD HICKORY BLVD, #150-2
BRENTWOOD, TN 37027