STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage, Alaska 99501

Re: THE APPLICATION OF Evergreen ) Conservation Order No. 480
Resources (Alaska) Corporation )
("Evergreen") for an order granting ) Pioneer Unit Wells
exceptions to the spacing requirements ) D.L. Smith No. 1, Gary & Jo
of 20 AAC 25.055(a)(2) and (a)(4) to ) Ann Stromberg No. 2, Robert
provide for the drilling and testing of the ) L. Smith No. 3, and
D.L. Smith No. 1, Gary & Jo Ann ) Cornhusker No. 4
Stromberg No. 2, Robert L. Smith No. 3, ) Drilling and Testing
and Cornhusker No. 4 wells in an )
undefined coalbed methane gas pool. ) October 29, 2002

IT APPEARING THAT:

1. Evergreen by letters dated September 7, 2002 has requested an order allowing spacing exceptions to drill and test the D.L. Smith No. 1, Gary & Jo Ann Stromberg No. 2, Robert L. Smith No. 3, and Cornhusker No. 4 wells in accordance with 20 AAC 25.055.

2. These proposed vertical wells will be drilled within Sections 1 and 2, T17N, R3W, Seward Meridian ("SM").

3. Cornhusker No. 4 will be less than 1,500' from a property line.

4. Robert L. Smith No. 3, Gary & Jo Ann Stromberg No. 2, and D.L. Smith No. 1 will be less than 1,500' from a property line and closer than 3,000' to wells drilled to the same pool. D.L. Smith No. 1 will be the second gas production well in Section 1, T17N, R3W, SM. Robert L. Smith No. 3 will be the second gas production well in Section 2, T17N, R3W, SM.

5. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on September 11, 2002 and in The Frontiersman on September 13, 2002, pursuant to 20 AAC 25.540.

6. No protests to the applications were received.

FINDINGS:

1. The D.L. Smith No. 1 well will be located 3293 feet FNL and 293 feet FWL, Section 1, T17N, R3W, SM.

2. The Gary & Jo Ann Stromberg No. 2 well will be located 1386 feet FNL and 933 feet FWL, Section 1, T17N, R3W, SM.

3. The Robert L. Smith No. 3 well will be located 3272 feet FSL and 606 feet FEL, Section 2, T17N, R3W, SM.

4. The Cornhusker No. 4 well will be located 2426 feet FNL and 141 feet FEL, Section 2, T17N, R3W, SM.

5. Evergreen proposes to drill these four wells as a pilot project to test producibility of potential coalbed methane resources within the Tertiary-aged Tyonek Formation of the Pioneer Unit.

6. Evergreen sent notice of the application for spacing exception by certified mail to all offset owners, landowners, and operators of all properties within 3000' of the proposed wells.

7. The Division of Governmental Coordination has determined that an ACMP consistency review is not required for this project.

CONCLUSIONS:

1. Closely spaced wells are appropriate for coalbed methane testing and development projects.

2. Exceptions to the well spacing provisions of 20 AAC 25.055 (a)(2) are necessary for the drilling and testing of the D.L. Smith No. 1, Gary & Jo Ann Stromberg No. 2, and Robert L. Smith No. 3, and Cornhusker No. 4 wells.

3. Exceptions to the well spacing provisions of 20 AAC 25.055 (a)(4) are necessary for the drilling and testing of the D.L. Smith No. 1, Gary & Jo Ann Stromberg No. 2, and Robert L. Smith No. 3 wells.

4. Granting spacing exceptions to allow drilling and testing of the D.L. Smith No. 1, Gary & Jo Ann Stromberg No. 2, Robert L. Smith No. 3, and Cornhusker No. 4 wells will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

5. Before regular production is permitted from the D.L. Smith No. 1, Gary & Jo Ann Stromberg No. 2, Robert L. Smith No. 3, and Cornhusker No. 4 wells, the Commission must take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the drilling and testing of the wells as an exception, and so that drainage to the tract with respect to which the exception is granted will be prevented or minimized. AS 31.05.100(b).

NOW, THEREFORE, IT IS ORDERED:

Evergreen's applications for exceptions to the well spacing provisions of 20 AAC 25.055(a)(2) and (a)(4) to drill and test the D.L. Smith No. 1, Gary & Jo Ann Stromberg No. 2, Robert L. Smith No. 3, and Cornhusker No. 4 wells are approved. These wells may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing, to offset any advantage Evergreen may have over other owners by reason of drilling the wells at the exception locations.

DONE at Anchorage, Alaska and dated October 29, 2002.

Cammy Oechsli Taylor, Chair
Alaska Oil and Gas Conservation Commission

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

Michael L. Bill, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index