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)(2) to provide for the drilling and production of the Swanson River Unit KGSF No. 7 gas storage well.

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Conservation Order No. 520.000

Swanson River Unit KGSF No. 7
Drilling and Production

July 20, 2004

IT APPEARING THAT:

1. Union Oil Company of California (UNOCAL) submitted an application dated May 10, 2004 requesting exception to the well spacing provisions of Title 20 AAC 25.055(a)(2) to allow drilling the Swanson River Unit (SRU) KGSF No. 7, gas storage well to a location which is within 1500 feet of a property line between two landowners;

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on May 14, 2004, with a correction published on May 20, 2004 pursuant to 20 AAC 25.540; and

3. No protests to the application or requests for hearing were received.

FINDINGS:

1. The SRU KGSF No. 7 gas storage well is proposed to be deviated with a surface location 425 feet from the east line and 1999 feet from the south line of Section 28, T8N R9W, Seward Meridian (SM) and a bottomhole location 61 feet from the east line and 3192 feet from the south line of Section 28, T8N R9W, SM.

2. The proposed bottom hole location of the SRU KGSF No. 7 well would be located on lease A-028399 with the Bureau of Land Management as landowner and 61 feet from its boundary with lease A-028406 with Cook Inlet Region, Inc. as landowner.

3. Offset landowners, owners and operators within 3,000 feet of the anticipated storage interval of the SRU KGSF No. 7 well have all been notified.

4. The location of the SRU KGSF No. 7 well was selected as a favorable structural position for recovery of stored gas reserves.

5. An exception to the well spacing provisions of Title 20 AAC 25.055 (a)(2) is necessary to allow the drilling of the SRU KGSF No. 7 gas storage well.

CONCLUSIONS:

Granting a spacing exception to allow drilling and production of the SRU KGSF No. 7 gas storage well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners, landowners and operators.

NOW, THEREFORE, IT IS ORDERED:

UNOCAL’s application for exception to the well spacing provision of 20 AAC 25.055(a)(2) for the purpose of drilling and producing the SRU KGSF No. 7 gas storage well is approved.

By Order of the Commission at Anchorage, Alaska, this 20th day July 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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