STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage Alaska 99501-3192
Re:THE APPLICATION OF BP                    )  Conservation Order No. 349A
EXPLORATION (Alaska) INC.                   )
to amend the affected areas of the          )  BP Exploration (Alaska), Inc.
Prudhoe Bay Field, Kuparuk River            )  Kuparuk River Field
Oil Pool as specified in Conservation       )  Prudhoe Bay Field
Order No. 98-A and the Kuparuk              )  Kuparuk River Oil Pool
River Field, Kuparuk River Oil Pool         )
as specified in Conservation Order          )
Nos. 173and 349.                            )
                                               December 23, 1996
IT APPEARING THAT:

1. BP Exploration (Alaska), Inc. (BPXA) submitted an application dated November 19, 1996 requesting expansion of the Kuparuk River Field, Kuparuk River Oil Pool affected area to include a portion of the Prudhoe Bay Field, Kuparuk River Oil Pool.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on November 27, 1996 pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1 . The current boundary between the Prudhoe Bay Field, Kuparuk River Oil Pool (PBKROP) and the Kuparuk River Field, Kuparuk River Oil Pool (KRKROP) is described in Conservation Order (C.O.) No. 173 dated May 6, 1981.

2. Findings 3 through 6 of C.O. 173 document that the north western boundary of the PBKROP was delineated on the basis of structural trends projected into an area of relatively restricted subsurface control.

3. Finding 10 of C.O. 173 indicates that, at the time of the writing, the KRKROP was anticipated to consist of a single pool with a common oil-water contact.

4. C.O. No. 349, issued December 16, 1994 modified the affected area and description of the KRKROP as put forward in C.O. 173.

5. Findings 4,6,7, and 12, and conclusion 1 of C.O. 349 document the KRKROP is composed of multiple separate oil accumulations caused by numerous pressure discontinuities related to extensive faulting and stratigraphic discontinuities.

6. Development drilling by BPXA in the vicinity of the Cascade 1 and 1A exploration wells, within the PBKROP affected area, has established the presence of oil bearing Kuparuk River Formation which is structurally and stratigraphically equivalent to the KRKROP in Milne Point Unit.

7. The local eastern extent of this accumulation is established in the Arco Eileen #1 well located in section 7 T12N R12E U.M., which contained water saturated KRKROP equivalents.

8. BPXA intends to conduct Kuparuk River Formation development activities using Milne Point unit infrastructure with integrated KRKROP management procedures on State of Alaska oil and gas leases ADL nos. 28232, 375132 and 375133.

CONCLUSIONS:

1. The boundary between the KRKROP and the PBKROP in the vicinity of the BPXA Cascade 1, 1A and ARCO Eileen 1 wells was originally defined using limited subsurface control.

2. An oil accumulation common to the KRKROP has been demonstrated to extend into the PBKROP affected area in the vicinity of the BPXA Cascade 1, 1 A and Arco Eileen 1 wells.

3. Expansion of the KRKROP affected area in the vicinity of the BPXA Cascade 1, 1A and Arco Eileen 1 wells is conducive to maximizing ultimate recovery of proved reserves and will not violate correlative rights.

NOW, THEREFORE, IT IS ORDERED that Conservation Order No. 98-A is hereby amended by removing the following described area from the Prudhoe Bay Field Kuparuk River Oil Pool rules area:

TI3N, R11E, U.M. T12N, R11E, U.M.
SECS. 27,34 SECS. 1,2,9,10,11,12

NOW, THEREFORE, IT IS ORDERED THAT the Kuparuk River oil pool rules area described in Conservation Order No.349 is repealed and hereinafter pertains to the following described area:

T9N, R6E, U.M. T11N, R10E, U.M.
SECS. 1,2,11,12,13, and 14. ALL
T9N, R7E, U.M. T11N, R11E U.M.
SECS. 1,2,3,4,5,6,7,8,9,10,11,12,13, SECS. 3,4,5,6,7,8,9,10,11,14,15,16,17,18,
14,15,16,17 and 18. 19,20,21,22,23,24,25,26,27,28,29,30,31,
32,33,34,35 and 36.
T9N, R8E U.M.
SECS. 1,2,3,4,5,6,7,8,9,10,11,12,13, T12N, R7E, U.M.
14,15,16,17, and 18. SECS. 25,26,35 and 36.
T9N, R9E, U.M. T12N, R8E, U.M.
SECS. 1,2,3,4,5,6,7,8,9,10,11,12,15,16,17 ALL.
and 18.
T9N, R10E U.M. T12N R9E U.M.
SECS. 1,2,3,4,5,6,7,8,9,10,11 and 12. ALL.
T10N, R6E, U.M. T12N, R10E, U.M.
SECS. 1,2,3,4,9,10,11,12,13,14,15,16,21, ALL.
22,23,24,25,26,35 and 36.
T12N, R11E, U.M.
T10N, R7E, U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11,12,18,
ALL. 19,20,29,30,31,32
and 33.
T10N, R8E, U.M.
ALL. T13N, R8E, U.M.
SECS. 13,14,23,24,25,26,27,28,33,34,35 and 36.
T10N, R9E, U.M.
ALL. T13N, R9E, U.M.
ALL.
T10N, R10E, U.M.
ALL. T13N, R10E, U.M.
ALL.
T10N, R11E, U.M.
SECS. 5,6,7,8,17,18,19 and 20. T13N, R11E, U.M.
SECS. 7,8,16,17,18,19,20,21,27,28,29,30,
T11N, R6E, U.M. 31,32,33 and 34
SECS. 25,26,35 and 36.
T14N R9E U.M.
T11N, R7E, U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11,12,13,14,
SECS. 1,2,3,4,9,10,11,12,13,14,15,16, 15,16,17,18,20,21,22,23,24,25,26,27,
17,18,19,20,21,22,23,24,25,26,27,28,29, 28,29,32,33,34,35 and 36.
30,31,32,33,34,35 and 36.
T14N, R10E U.M.
T11N, R8E, U.M. SECS. 15,16,17,18,19,20,21,22,27,28,29,
ALL. 30,31,32,33,34 and 35
T11N, R9E, U.M. T15N, R9E U.M.
ALL State lands within SECS. 25,26,27,31,
32,33,34,35 and 36.

DONE at Anchorage, Alaska and dated December 23, 1996.

David W. Johnston, Commissioner
Alaska Oil and Gas Conservation Commission

Tuckerman Babcock, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index