STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION CONMISSION

3001 Porcupine Drive

Anchorage, Alaska 99501-3192

Re: THE APPLICATION OF FAR NORTH ) Conservation Order No. 210
OIL AND GAS, INC. for an )
to 20 AAC 25.055(a)(1) to )
to 20 AAC 25.055(a)(1) to )
re-enter the Cannery Loop )
Unit No. 2 well. ) May 31, 1985

IT APPEARING THAT:

1. Far North Oil and Gas, Inc., by letter dated May 3, 1985, requested the Alaska Oil and Gas Conservation Commission to issue and order granting an exception to 20 AAC 25.055(a)(1) in order to re-enter the Cannery Loop Unit No. 2 well which is only 160 feet from the property line on which it is located.

2. Notice of public hearing was published in the Peninsula Clarion and the Anchorage Times on May 17, 1985.

3. There were no protests to the request set forth in the notice of public hearing.

FINDINGS:

1. The Cannery Loop Unit No. 2 well was drilled and abandoned by Union Oil Company of California in 1981.

2. At the time it was drilled, the Cannery Loop Unit No. 2 well was in the Cannery Loop Unit and was drilled as an exploratory well.

3. The Cannery Loop Unit No. 2 well is located 1481 feet from the north line and 863 feet from the east line of Section 2, T5N, R11W, SM.

4. Far North Oil and Gas, Inc. claims the right to enter Cannery Loop Unit No. 2 well to explore, produce and remove hydrocarbons by virtue of an oil and gas lease from Michael Pelch, the owner in fee of the mineral rights beneath a nominal 160 acre tract comprising the SE 1/4; NE 1/4; NE 1/4, SE 1/4; SW 1/4, SE 1/4 and NW 1/4, SE 1/4 of Section 2, T5N, R11W, SM.

5. The Cannery Loop Unit No. 2 well is located 160 feet from the north line and 457 feet from the west line of the Michael Pelch Lease.

6. Far North Oil and Gas, Inc. states the Cannery Loop Unit No. 2 well has potential as a crude oil producer.

7. Exceptions to spacing requirements can be obtained as provided for in 20 AAC 25.055(b).

CONCLUSIONS:

1. An exception to 20 AAC 25.055(a)(1) is necessary to re-enter the subject well in order to explore for hydrocarbon production.

2. Should a hydrocarbon pool be discovered by re-entry of Cannery Loop Unit No. 2 well, the Commission must establish a drilling unit for the pool in accord with AS 31.05.100(a) and enforce the protection of correlative rights for the owners in the pool in accord with AS 31.05.100(c).

NOW, THEREFORE, IT IS ORDERED:

With an approved Drilling Permit, Far North Oil and Gas, Inc. is permitted to re-enter the abandoned Cannery Loop Unit No. 2 well to explore for hydrocarbons. If the well proves to be capable of hydrocarbon production, regular production will not be permitted until the Commission has established a drilling unit for the pool and issues an order integrating the interests of owners within the drilling unit, absent voluntary integration by the owners.

DONE at Anchorage, Alaska and dated May 31, 1985.

C. V. Chatterton, Chairman
Alaska Oil an Gas Conservation Commission

Harry W. Kugler, Commissioner
Alaska Oil and Gas Conservation Commission

Lonnie C. Smith, Commissioner
Alaska Oil and Gas Conservation Commission

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