STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

THE APPLICATION OFConoco Phillips Alaska, Inc. for an order granting an exception to spacing requirements of Rule 3 of Conservation Order 432B to provide for the drilling and operation of the Kuparuk River Unit 1F-18A and 1F-18AL1 production well bores.

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Conservation Order No. 536

Kuparuk River Field
Kuparuk River Unit
Kuparuk River Oil Pool
Kuparuk River Unit Well Bores
1F-18A and 1F-18AL1

October 12, 2004

IT APPEARING THAT:

1. ConocoPhillips Alaska, Inc. (“CPAI”), by letter dated August 30, 2004 and received by the Alaska Oil and Gas Conservation Commission (“Commission”) that same day, requests exception to the well spacing provisions of Rule 3 of Conservation Order No. 432B (“CO 432B”) to allow drilling and operation of the onshore Kuparuk River Unit (“KRU”) 1F-18A production well and 1F-18AL1 multilateral oil production well to locations within the same governmental quarter sections as, and less than 1,000 feet from, other wells open to the Kuparuk River Oil Pool;

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on September 10, 2004 pursuant to 20 AAC 25.540;

3. Offset landowners, owners and operators within 1,000 feet of the anticipated productive interval have all been notified; and

4. No protests to the application or requests for hearing have been received.

FINDINGS:

1. KRU 1F-18A will be redrilled as a replacement, horizontal wellbore for existing well KRU 1F-18 and KRU 1F-18AL1 will be drilled as a horizontal, multilateral well bore branching from KRU 1F-18A.

2. The surface location of well KRU 1F-18 is 792 feet from the north line and 455 feet from the east line of Section 19, T11N, R10E, UM. The proposed bottom hole location of KRU 1F-18A is 2,793 feet from the south line and 2,223 feet from the west line of Section 17, T11N, R10E, UM. The proposed bottom hole location of KRU 1F-18AL1 is 2,839 feet from the south line and 2,222 feet from the west line of Section 17, T11N, R10E, UM.

3. KRU 1F-18A and 1F-18AL1 will lie entirely within State Lease ADL 25652. ADL 25652 is committed to the Kuparuk River Unit and the Kuparuk Participating Area. The ownership interests in this lease has been consistently cross-assigned, with the owners being CPAI (55.29%), BP Exploration (Alaska) Inc. (39.28%), Union Oil Company of California (4.95%), ExxonMobil Alaska Production Inc. (0.36%), and Chevron USA Inc. (0.11%). The State of Alaska is the landowner for the lease.

4. CPAI is the designated operator of lease ADL 25652.

5. Well spacing in Section 17 of T11N, R10E, UM is regulated by Rule 3 of Conservation Order 432B (“CO 432B”), which supersedes statewide spacing requirements of 20 AAC 25.055. Rule 3 of CO 432B states in part:

“Not more than one well may be drilled on any governmental quarter section or governmental lot corresponding to it ... nor may the pool be opened in a well bore … closer than 1,000 feet to the pool opened to the well bore in another well.”

6. According to the definitions provided in 20 AAC 25.990(73)(B), the term “well:” “includes a well with multiple well branches drilled to different bottom hole locations.”

7. As proposed, KRU 1F-18A will require exception to Rule 3 of CO 432B. This well bore as proposed will be the second well bore open to the pool within the NW Ľ of Section 17, T11N, R10E, UM, and it will lie approximately 800’ from the interval open to the pool in existing injection well KRU 1F-13.

8. As proposed, KRU 1F-18AL1 will require exception to Rule 3 of CO 432B. This multilateral well bore as proposed will be the third well bore open to the pool within the NW Ľ of Section 17, T11N, R10E, UM, and it will lie about 975’ from the interval open to the pool in existing injection well KRU 1F-13.

9. The locations of KRU 1F-18A and 1F-18AL1 were selected as the most favorable structural position to recover oil reserves in the Kuparuk River Oil Pool that are not recoverable with the current well pattern.

10. Offset landowners, owners and operators within 1,000 feet of the anticipated productive interval of KRU 1F-18A and 1F-18AL1 have all been notified.

CONCLUSIONS:

1. An exception to the well spacing provisions of Rule 3, CO 432B is necessary to allow drilling and operation of the KRU 1F-18A well bore.

2. An exception to the well spacing provisions of Rule 3, CO 432B is necessary to allow drilling and operation of the KRU 1F-18AL1 multilateral well bore.

3. Granting the requested spacing exception for the KRU 1F-18A and 1F-18AL1 well bores 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:

CPAI’s application for exception to well spacing provisions to allow the drilling and operation of the KRU 1F-18A and 1F-18AL1 well bores is approved.

DONE at Anchorage, Alaska and dated October 12, 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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