STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

ADMINISTRATIVE APPROVAL NO. 406A.01

Mr. Randy Thomas
GKA Drilling Team Leader
ConocoPhillips Alaska, Inc.
P.O. Box 100360
Anchorage, AK 99510-0360

Re: Spacing Exception for Kuparuk River Unit 1E-123L1 Well

Dear Mr. Thomas:

On May 17, 2004, the Alaska Oil and Gas Conservation Commission (“Commission”) received your correspondence dated May 15, 2004 requesting a waiver of spacing requirements for drilling and operation of the Kuparuk River Unit (“KRU”) 1E-123L1 oil production well. This well will lie entirely within state leases ADL 025651 and ADL 025648, and more than 300 feet from any property lines where ownership changes. The productive interval of KRU 1E-123L1 will lie within the West Sak “D” sand, and will approach within 310 feet of existing well KRU 1B-101L1, which is also open to the West Sak D sand.

Conservation Order 406A (“CO 406A”) governs the West Sak Oil Pool within the Kuparuk River Unit. Rule 3 of CO 406A states: “Nominal spacing units within the pool will be 10 acres. The pool shall not be opened in any well closer than 300 feet to an external boundary where ownership changes.” An exception to the spacing requirements of Rule 3 is required as KRU 1E-123L1 will open the pool in the same 10-acre spacing unit as existing well KRU 1B-101L1.

Rule 13 of CO 406A states: “Upon proper application, the Commission may administratively waive the requirements of any rule stated above or administratively amend this order as long as the change does not promote waste, jeopardize correlative rights, and is based on sound engineering and geoscience principles.” Administrative approval is appropriate for a waiver of well spacing requirements specified in CO 406A. Notice and public hearing are not required for this spacing exception application as KRU 1E-123L1 will lie entirely within unitized State leases ADL 025651 and ADL 025648, which are committed to the West Sak Participating Area, and will be located more than 300 feet from any property lines. Correlative rights will not be jeopardized.

The Commission has determined drilling and operation of the KRU 1E-123L1 well is based on sound engineering and geoscience principles, will enhance recovery, will not promote waste or jeopardize correlative rights, and will not result in an increased risk of fluid movement into freshwater. The Commission hereby approves the drilling and operation of the Kuparuk River Unit 1E-123L1 well as proposed.

DONE at Anchorage, Alaska and dated May 20, 2004.

The Alaska Oil and Gas Conservation Commission

John K. Norman, Chair
Commissioner

Daniel T. Seamount, Jr.
Commissioner


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