STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage, Alaska 99501

Re: THE APPLICATION OF Phillips Alaska, ) Conservation Order No. 466
Inc. ("Phillips") for an order granting )
an exception to the spacing requirements of ) Nanuq #5
Regulation 20 AAC 25.055 (a)(1) to provide ) Exploratory Well
for the drilling and testing of the Nanuq #5 )
exploratory well to a bottom hole ) March 13, 2002
location that is closer than 500 feet to a )
property line. )

IT APPEARING THAT:

1. Phillips Alaska, Inc. ("Phillips") by letter dated January 29, 2002, and received by the Commission on January 30, 2002, has requested an order allowing a spacing exception in accordance with 20 AAC 25.055 for the proposed Nanuq #5 exploratory oil well. The locations of prospective test intervals within this well may fall within 500 feet of a property line, which is also the exterior boundary of the Colville River Unit.

2. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on February 4, 2002, pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1) The surface location of the well is 2895' FNL, 102' FEL, Section 24, T11N, R4E, U.M. The projected Nanuq target location is 4518' FNL, 3043' FEL, Section 30, T11N, R5E, U.M. (inside the Colville River Unit). The projected Kuparuk target location is 460' FNL, 2650' FEL, Section 31, T11N, R5E, U.M. (outside the Colville River Unit). The projected bottom hole location for this well is 607' FNL, 2603' FEL, Section 31, T11N, R5E, U.M. (outside the Colville River Unit).

2) Rule 3 of Conservation Order 443, which governs well spacing within the Colville River Unit applies only to development wells, and not to the proposed Nanuq #5 exploratory well.

3) An exception to the well spacing provisions of 20 AAC 25.055 (a)(1) is necessary for the drilling of this well.

CONCLUSION:

Granting a spacing exception to allow drilling of the Nanuq #5 exploratory well promotes efficient exploration and development, and will not result in waste nor jeopardize correlative rights.

NOW, THEREFORE, IT IS ORDERED:

Phillips's application for exception to the well spacing provisions of 20 AAC 25.055 (a)(1) for the purpose of drilling and testing the Nanuq #5 well is approved.

The Nanuq #5 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing, to offset any advantage Phillips may have over other owners by reason of drilling Nanuq #5 to the exception location and to allow affected owners to produce their just and equitable share of hydrocarbons. Such Commission action may include establishing a new drilling unit and providing for the pooling of separately owned properties within the drilling unit.

DONE at Anchorage, Alaska and dated March 14, 2002.

Cammy Oechsli Taylor, Chair
Alaska Oil and Gas Conservation Commission

Daniel T. Seamount, Jr., Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index