STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

THE APPLICATION OF Union Oil Company of California (“UNOCAL”) for an order granting an exception to the spacing requirements of 20 AAC 25.055(a)(4) to provide for the drilling of the Happy Valley No. 5 gas development Well.

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Conservation Order No. 512

Falls Creek No. 5
Spacing Exception

February 19, 2004

IT APPEARING THAT:

1. Union Oil Company of California (“UNOCAL”) submitted an application dated December 17, 2003 and received by the Alaska Oil and Gas Conservation Commission on December 29, 2003, requesting exception to the well spacing provisions of Title 20 AAC 25.055(a)(4) to allow the drilling of the Happy Valley No. 5.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on January 8, 2004 pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1. The Happy Valley No. 5 gas development well will be drilled as a deviated hole with a surface location 1299 feet from the east line and 1264 feet from the south line of Section 22, T2S R13W, Seward Meridian (SM) to a proposed bottomhole location 408 feet from the west line and 789 feet from the south line of Section 14, T2S R13W, SM.

2. The anticipated productive interval of the Happy Valley No. 5 well is within 3,000 feet of the productive interval of the Happy Valley No. 3 well.

3. The Happy Valley No. 3 and No. 5 wells are both located within a unit known as the Deep Creek Unit.

4. Offset landowners, owners and operators within 3,000 feet of the anticipated productive interval of the Happy Valley No. 5 well have been notified.

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

6. The location of the Happy Valley No. 5 well was selected as a favorable structural position for recovery of Beluga and Tyonek Formation gas reserves that are not believed to be recoverable from the Happy Valley No. 3 well.

7. An exception to the well spacing provisions of Title 20 AAC 25.055 (a)(4) is necessary to allow the drilling of the Happy Valley No. 5 gas development well.

CONCLUSIONS:

1. Information derived from the drilling of the Happy Valley No. 5 is required to delineate and allow for the efficient management of Deep Creek Unit gas reserves.

2. Drilling and producing the Happy Valley No. 5 well will not cause waste or jeopardize correlative rights.

NOW, THEREFORE, IT IS ORDERED:

UNOCAL’s application is GRANTED.

DONE at Anchorage, Alaska and dated February 19, 2004.

John K. Norman, Chair
Alaska Oil and Gas Conservation Commission

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


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