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 (“MOC”) for an order granting an exception to the spacing requirements of 20 AAC 25.055(a)(2) and (4) to provide for the drilling and producing of the Susan Dionne No. 2 gas development well.

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Conservation Order No. 531

Susan Dionne No. 2
Drilling and Producing

August 24, 2004

IT APPEARING THAT:

1. MOC by letter dated June 11, 2004 has requested an order allowing a spacing exception to drill and test the Susan Dionne No. 2 well in accordance with 20 AAC 25.055;

2. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on June 28, 2004, pursuant to 20 AAC 25.540;

3. All owners, landowners and operators of all properties within 3000 feet of the anticipated productive interval have been notified; and all operators of wells within 200 feet of the proposed wellbores have been notified; and

4. No protests to the application were received.

FINDINGS:

1. The surface location of this well is 219 feet from the south line (“FSL”) and 1418 feet from the east line (“FEL”) of Section 6, T1S, R13W, Seward Meridian (“S.M.”). The projected bottom hole location for this well is 330 feet FSL, 1210 feet FEL, Section 31, T1S, R13W, S.M.

2. An exception to the well spacing provisions of 20 AAC 25.055 (a)(2) is necessary for the drilling and testing of this well. The anticipated productive intervals in the Tyonek Formation of the Susan Dionne No. 2 gas development well, if successful, will be within 1500 feet of a property line between two owners.

3. An exception to the well spacing provisions of 20 AAC 25.055 (a)(4) is necessary for the drilling and testing of this well. The anticipated productive interval in the Tyonek Formation of the Susan Dionne No. 2 gas development well, if successful, will be within 3,000 feet and in the same pool as the productive interval in the Susan Dionne No. 3 gas development well.

4. MOC sent notice of the application for spacing exception by certified mail to the owners, landowners, and operators of all properties within 3,000 feet of the proposed Susan Dionne No. 2 well.

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

6. The location of the Susan Dionne No. 2 well was selected on the basis of a favorable structural position for recovery of gas reserves from the Tyonek Formation that are not believed to recoverable from the Susan Dionne No. 3 well.

7. Susan Dionne Wells No.’s 2 and 3 are located within the Dionne Participating Area of the Nilnichik Unit.

CONCLUSIONS:

1. An exception to 20 AAC 25.055(a)(2) & (4) is necessary to allow drilling and production of the Susan Dionne No. 2 gas development well.

2. Granting this spacing exception to allow drilling and testing of the Susan Dionne No. 2 well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

NOW, THEREFORE, IT IS ORDERED:

Marathon’s application for an exception to the well spacing provisions of 20 AAC 25.055(a)(2) and (4) for the purpose of drilling and producing the Susan Dionne No. 2 gas development well is hereby approved.

DONE at Anchorage, Alaska and dated August 24, 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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