SOURCE: Magellan Energy Ltd.

December 22, 2008 10:15 ET

Magellan Energy Addresses BTU Situation in Tennessee

TORONTO--(Marketwire - December 22, 2008) - Magellan Energy Ltd. (PINKSHEETS: MGLG), an independent oil and gas company, wishes to address both public, and shareholders' inquiries, regarding our wells being "shut in" due to high levels of BTUs (British thermal unit).

Gas coming off of an oil well usually has a high BTU count which by Federal Regulatory standards is considered too dangerous to put into lines going directly into residential and commercial use. The gas needs to be "stripped" cooled or compressed. The gas coming off the Burville area (which we are in) is unusually high, and needs to be compressed to 350pnds.

Over the past 20 plus years, the only market for locally produced natural gas in the Fentress, Scott and Morgan County area has been Citizens Gas Utility District.

Now the federal government, through the agency FERC, has decided that any gas with a BTU higher than 1100 is unsafe and should not be transported in interstate pipelines or sold to customers. Many producers have had their wells shut in by Citizens over the past six months for high BTUs.

Producers like ourselves, including the ones we are working with, are in the process of building or acquiring a pipeline that will take the gas directly to market. In the process, they will have to be able to strip the gas to meet the new BTU requirements. The Robert Anderson, the Thomas Martin, and the Thomas Davidson Wells are currently "shut in." We have been working closely with the operators, and Citizen's Gas Utility District, and fully expect that this situation will be resolved as soon as possible, so that Magellan can "sell off" the gas that has been capped, due to this "shut in."

Until then, the Thomas D. Martin Well in Morgan County, Tennessee continues to produce oil at a rate of 3BOD. The oil from this lease is being sold to "Barrett Oil Purchasing," a trucking company that hauls the oil to "Ashland Oil Refinery," operated by "Marathon" on the Kentucky-West Virginia border.

About Magellan Energy:

Magellan Energy is a publicly traded independent oil and gas company (PINKSHEETS: MGLG). The company is actively acquiring oil and gas leases, producing properties, mineral rights, and surface interests in Tennessee and Oklahoma. Once acquired, the company intends to develop each property to maximize the income from each property by re-establishing production, refurbishing and improving the existing production and operations.

Forward-Looking Statements: The statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including but not limited to, the effect of economic conditions, the impact of competition, the results of financing efforts, changes in consumers' preferences and trends. The words "estimate," "possible," and "seeking" and similar expressions identify forward-looking statements, which speak only to the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, because of new information, future events, or otherwise. Future events and actual results may differ materially from those set forth herein, contemplated by, or underlying the forward-looking statements.

Contact Information

  • Contact:
    MAGELLAN ENERGY LTD.
    Member of the Tennessee Oil and Gas Association
    Apolinar V. Carcasona
    Website: http://www.magellan-energy.com
    Phone: 1-866-365-4724