STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

THE APPLICATION OF Marathon Oil Company for an order granting an exception to spacing requirements of Title 20 AAC 25.055 to provide for the drilling of the Beaver Creek Unit No. 13 gas development well.

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Conservation Order No. 498

Marathon Oil Company
Beaver Creek Unit No. 13

October 7, 2003

IT APPEARING THAT:

1. Marathon Oil Company submitted an application dated August 20, 2003 requesting exception to the well spacing provisions of Title 20 AAC 25.055(a)(4) to allow drilling the Beaver Creek Unit No. 13, gas development well to a location which is within the same governmental section and within 3000 feet of another well capable of producing from the same pool.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on August 28, 2003 pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1. The Beaver Creek Unit No. 13 (BCU 13) gas development well will be drilled as a deviated hole with a surface location 1479 feet from the west line (FWL) and 1310 feet from the North line (FNL) of Section 34, T7N R10W, Seward Meridian (SM) to a bottomhole location 2680 FWL and 2411 FNL of Section 34, T7N R10W, SM. 2. Offset landowners, owners and operators within 3,000 feet of the anticipated productive interval of the BCU 13 well have been notified.

3. No protests to the spacing exception application were received.

4. The location of the BCU 13 well was selected as a favorable structural position for Tyonek Formation gas reserves on the Beaver Creek Unit structure, if successful the well will access reserves that are not producible from any existing wells.

5. An exception to the well spacing provisions of Title 20 AAC 25.055 (a)(4) is necessary to allow the drilling of the BCU 13.

CONCLUSIONS:

1. The requested spacing exception for the BCU 13 well should be granted, except that the Commission must take such action as will offset any advantage which Marathon Oil Company may have over adjoining owners by reason of the drilling the BCU 13 well as an exception, and so that drainage to the tract with respect to which the exception is granted will be prevented or minimized.

2. Evaluation of the lateral extent of the Tyonek Formation gas reserves in the BCU 13 will be required to insure protection of the correlative rights of adjoining owners.

NOW, THEREFORE, IT IS ORDERED:

1. Marathon Oil Company’s application for exception to the well spacing provision of 20 AAC 25.055(a)(4) is conditionally approved.

2. The BCU 13 well may not be placed on regular production until Marathon Oil Company has evaluated the lateral extent of the Tyonek Formation gas reserves in the BCU 13 and the Commission has been provided that evaluation and has had the opportunity to take additional action to offset any advantage Marathon may have over other owners by reason of drilling BCU 13 to the exception location.

DONE at Anchorage, Alaska and dated October 7, 2003.

Sarah Palin, Chair
Alaska Oil and Gas Conservation Commission

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

Randy Ruedrich, Commissioner
Alaska Oil and Gas Conservation Commission


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