March 11, 2004

News Release: Commences Pipeline Construction at McLeod and Gordondale

San Telmo Energy Ltd. is pleased to announce that construction is underway on gas pipelines and facilities to tie-in wells at McLeod and Gordondale. This is the final stage required before the commencement of production.
All of the necessary permits have now been approved and received from the Alberta government, including the Energy Utilities Board (EUB).

San Telmo will construct a 5.1 kilometer pipeline from McLeod to deliver gas to nearby processing facilities. Construction is underway on a 4'sweet gas pipeline capable of handling up to eight million cubic feet of gas per day, a 36'separator, a line heater and one 750-barrel condensate storage tank. Facilities and pipeline construction is underway at Gordondale, where a 3.5 kilometer 4'sour gas pipeline, three phase oil separator package and two 700-barrel oil storage tanks are currently being constructed.

San Telmo is pleased to be in the final preproduction stages at both McLeod and Gordondale. 'We recognize that it has taken longer than originally anticipated to get to this stage,'said Brian Bass, President & CEO for San Telmo. 'This was due to a number of factors, including complex engineering associated with producing both sour oil and gas from Gordondale and gas and condensate from McLeod as well as amendments requested by the Alberta government. San Telmo is looking forward to the start of production and to the subsequent increase in cash flow to the company.'

San Telmo will report on flow rates at McLeod and Gordondale following a period of stabilized production.

ABOUT SAN TELMO ENERGY LTD.

San Telmo Energy Ltd. is an emerging oil and gas company with an experienced management team. Operated through its wholly owned subsidiary San Telmo Energy Inc. of Calgary, Alberta, San Telmo Energy Ltd. is focused on acquiring, developing and producing proven developed and underdeveloped reserves which offer long term value for the company.

FORWARD-LOOKING STATEMENT

This release may contain forward-looking statements, within the meaning of the 'safe-harbour'provision of the Private Securities Litigation Reform Act of 1995, regarding San Telmo Energy's business or financial condition. Actual results could differ materially from those described in this news release as a result of numerous factors, some of which are outside of the control of the company.



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