STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

THE APPLICATION OF BP Exploration (Alaska) Inc. for an order granting an exception to spacing requirements of Regulation 20 AAC 25.055 to provide for the drilling and operation of the Milne Point Unit K-21A Injection Service well.

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Conservation Order No. 499

Milne Point Field
Milne Point Unit
Kuparuk River Oil Pool

Milne Point Unit Well K-21A

October 8, 2003

IT APPEARING THAT:

1. BP Exploration (Alaska) Inc. (“BPXA”), by letter dated August 6, 2003 and received by the Alaska Oil and Gas Conservation Commission (“Commission”) that same day, requests exception to the well spacing provisions of 20 AAC 25.055 to allow drilling and operation of the Milne Point Unit (“MPU”) K-21A injection service well to a location which is within 500 feet of a property line where ownership or landownership changes.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on August 15, 2003 pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1. The MPU K-21A injection service well will be drilled as a deviated hole with a surface location 2080 feet from the east line (“FEL”) and 3606 feet from the south line (“FSL”) of Section 3, T12N, R11E, Umiat Meridian (“UM”) to a bottomhole location 1140 feet FEL and 60 feet from the FSL of Section 4, T12N, R11E, UM, a portion of which is a unit boundary. This bottomhole location lies near the center of State Lease ADL 375133, and more than 500’ away from the nearest lease boundary.

2. Well spacing in Sections 3 and 4 of T12N, R11E, UM is regulated by Conservation Order 432B (“CO 432B”), which supersedes statewide spacing requirements of 20 AAC 25.055. Rule 3 of CO 432B states: “…nor may the pool be opened in a well bore that is closer than 500 feet to any property line.” As proposed, MPU K-21A requires an exception to Rule 3 of CO 432B, if a unit boundary is considered a property line within the meaning of Rule 3.

3. The location of the MPU K-21A well was selected as the most favorable structural position to recover oil reserves in the Kuparuk River Formation that are not recoverable with the current well pattern.

4. Offset landowners, owners and operators within 1,000 feet of the anticipated injection interval of the MPU K-21A well have been notified.

CONCLUSIONS:

1. An exception to the well spacing provisions of CO 432B is necessary to allow the drilling and operation of the MPU K-21A injection service well.

2. Granting the requested spacing exception for the MPU K-21A well will promote more efficient recovery of oil reserves and will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

NOW, THEREFORE, IT IS ORDERED:

1. BPXA’ application for exception to well spacing provisions to allow the drilling and operation of the MPU K-21A injection service well is approved.

DONE at Anchorage, Alaska and dated October 8, 2003.

Sarah Palin, Chair
Alaska Oil and Gas Conservation Commission

Randy Ruedrich, Commissioner
Alaska Oil and Gas Conservation Commission

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


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