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 for an order granting an exception from the spacing requirements of 20 AAC 25.055(a)(4) to provide for the drilling and production of the Beaver Creek Unit No. 15 gas development well.

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Conservation Order No. 538

Beaver Creek Unit No. 15

November 1, 2004

IT APPEARING THAT:

1. Marathon Oil Company (“MOC”) submitted an application dated August 31, 2004 requesting exception from the well spacing provisions of e 20 AAC 25.055(a)(4) to allow drilling the Beaver Creek Unit (BCU) No. 15, gas development well to a producing location, which is within 3000 feet of a well producing from the same pool;

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on September 13, 2004, pursuant to 20 AAC 25.540; and

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

FINDINGS:

1. The BCU No. 15 gas development well is proposed to be drilled as a deviated hole with a surface location 1443 feet from the east line and 91 feet from the south line of Section 33, T7N R10W, Seward Meridian (SM) to a bottomhole location 250 feet from the east line and 200 feet from the south line of Section 33, T7N R10W, SM.

2. The proposed productive interval of the BCU No. 15 well will be located approximately 1900 feet from the Lower Beluga Formation producing zones in wells BCU No. 14 and BCU No. 1A.

3. Offset landowners, owners and operators within 3,000 feet of the proposed productive interval of the BCU No. 15 well have been notified of the application.

4. The location of the BCU No. 15 well was selected due to reservoir pressure data from the Beaver Creek Field that indicates that the laterally discontinuous reservoirs of the Beluga Formation cannot be efficiently depleted with 3,000 feet inter-well spacing.

5. An exception to the well spacing provisions of 20 AAC 25.055 (a)(4) is necessary to allow the drilling of the BCU No. 15 gas production well.

CONCLUSIONS:

Drilling and producing the BCU No. 15 gas production well in the proposed exception location will not cause waste or jeopardize correlative rights.

NOW, THEREFORE, IT IS ORDERED:

MOC’s application is granted.

DONE at Anchorage, Alaska and dated November 1, 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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