STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
3001 Porcupine Drive
Anchorage Alaska 99501-3192

Re: THE APPLICATION OF MARATHON     )         Conservation Order No. 426
OIL COMPANY for an order granting               )
an exception to spacing requirements of          )
20 AAC 25.055(a)(4) to provide for the            )         Marathon Oil Company
drilling of the Sterling Unit 41-15 and                )         Sterling Unit Wells 41-15 and 32-9
Sterling Unit 32-9 gas development wells        )
within the Sterling Unit, east of the city of         )
Kenai.                                                                   )
                                                                                        May 20, 1998

IT APPEARING THAT:

Marathon Oil Company submitted applications dated April 23, 1998 and April 24, 1998 requesting exception to the well spacing provisions of 20 AAC 25.055(a)(4). The first exception would allow drilling the Sterling Unit 41-15 gas development well to a producing location closer than 1500 feet to a section line in an undefined gas pool. The second would allow drilling the Sterling Unit 32-9 gas development well to a producing location that is closer than 3000 feet from another well capable of producing from the same pool.

The Commission published notice of opportunity for public hearing in the Anchorage Daily News on May 2, 1998 pursuant to 20 AAC 25.540.

No protests to the application were received.

FINDINGS:

The Sterling Unit 41-15 gas development well will be drilled as a deviated hole from a surface location of 2327' from the south line (FSL) and 437' from the east line (FEL) of Section 9, T5N, R10W, Seward Meridian (SM) to a bottomhole location 4208' FSL and 1049' FEL of Section 15, T5N, R10W, SM. The Sterling Unit 32-9 gas development well will be drilled as a deviated hole from a surface location of 2312' FSL and 449' FEL of Section 9, T5N, R10W, SM to a producing location of 2706' FSL and 2197' FEL of Section 9, T5N, R10W, SM.

Offset owners Bureau of Land Mangement, U.S. Minerals Management Service, Cook Inlet Region, Inc and the State of Alaska have been duly notified.

An exception to the well spacing provisions of 20 AAC 25.055 (a)(4) is necessary to allow the drilling of these wells.

CONCLUSION:

Granting a spacing exception to allow drilling of the Sterling Unit 41-15 and the Sterling Unit 32-9 gas wells will not result in waste nor jeopardize correlative rights.

NOW, THEREFORE, IT IS ORDERED:

Marathon Oil Company's applications for exception to the well spacing provisions of 20 AAC 25.055 (a)(4) for the purpose of drilling the Sterling Unit 41-15 and the Sterling Unit 32-9 gas wells are approved.

DONE at Anchorage, Alaska and dated May 20, 1998.

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

Robert N. Christenson, Commissioner
Alaska Oil and Gas Conservation Commission

Cammy Oechsli, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order No. 426
May 20, 1998

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