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ENSTAR Responds to Announcements of Recent Drilling Results on Kenai Peninsula

ANCHORAGE, Alaska, April 25 /PRNewswire-FirstCall/ -- ENSTAR Natural Gas Company is excited about recent announcements of gas exploration success on Alaska's Kenai Peninsula made by Unocal Corporation (NYSE: UCL) and Marathon Oil Company (NYSE: MRO). Both companies announced the successful completion and testing of two exploration wells in the Ninilchik Unit. In January 2002 Unocal-Marathon said that they had discovered a new gas reservoir in the unit, located about 35 miles south of Kenai, Alaska. Both Unocal and Marathon are suppliers of natural gas to ENSTAR.

"We are quite pleased that new gas has been discovered and that work is proceeding to bring it to the South Central Alaska market," said ENSTAR President Tony Izzo. "One of the primary reasons that we entered into a new gas supply contract with Unocal in December 2000 was to encourage new natural gas exploration such as this in Cook Inlet."

Unocal and Marathon have formed Kenai Kachemak Pipeline LLC to develop a natural gas pipeline that would connect new natural gas supplies with the existing South Central Alaska pipeline system. Upon completion of the pipeline, newly discovered resources would serve commercial and utility markets in South Central Alaska. Design work and permitting is currently underway, first production is anticipated to occur in late 2003. ENSTAR is assisting with the project, and has entered into a contract to operate and maintain the pipeline for Unocal and Marathon once it is completed.

Unocal also announced that a related three-well drilling program on the southern Kenai Peninsula failed to encounter commercial quantities of natural gas. The wells were near the communities of Ninilchik and Anchor Point.

"We are disappointed, as Unocal is, that their additional exploration on the southern Kenai was not successful," said Izzo. "We were looking forward to working with Unocal to bring gas distribution service to Homer, Anchor Point and the other southern Peninsula communities. Based on these results, we are reviewing all of the supply options for these communities."

"Unocal has assured us that although this southern Kenai exploration program was not what everyone had hoped, they are still quite positive on the Cook Inlet area," stated Izzo. "Unocal has announced that it will continue to pursue exploration and development opportunities to supply gas to ENSTAR and its other customers."

This is a "Safe-Harbor" statement under the Private Securities Litigation Reform Act of 1995. This release contains forward-looking statements that involve risks and uncertainties. Statements that are not historic facts, including statements about the Company's outlook, beliefs, plans, goals and expectations, are forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to, the effects of weather, the economic climate, competition, commodity prices, changing conditions in the capital markets, regulatory approval processes, success in obtaining new business and other risks detailed from time to time in the company's Securities and Exchange Commission filings.

ENSTAR Natural Gas Company distributes natural gas to over 108,000 customers in South Central Alaska, including the Anchorage area. It is a division of SEMCO ENERGY, Inc., (NYSE: SEN) a diversified energy and infrastructure company that also distributes natural gas to more than 260,000 customers in Michigan. In addition, SEMCO owns and operates businesses involved in pipeline construction services, propane distribution, intrastate pipelines and natural gas storage in various regions of the United States. It also provides information technology and outsourcing services, specializing in the mid-range computer market.

SOURCE ENSTAR Natural Gas Company
Web site: http: //
CONTACT: Media Contact: Alaska: Daniel M. Dieckgraeff of ENSTAR Natural Gas Company, +1-907-264-3661, Fax: +1-907-264-3671; Other: Francis R. Lieder of SEMCO Energy, Inc., +1-810-987-2200, ext. 4186, Fax: +1-810-989-4098, or Analysts Contact: Thomas Connelly of SEMCO Energy, Inc., +1-248-702-6000, ext. 6240

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

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