STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage, Alaska 99501

Re: THE APPLICATION OF Marathon Oil ) Conservation Order No. 468
Company for an order granting an )
exception to the spacing requirements of ) Falls Creek #1RD
Regulation 20 AAC 25.055 (a)(2) to provide ) Exploratory Well
for the drilling and testing of the Falls Creek #1RD )
exploratory well to a bottom hole location ) April 4, 2002
that is closer than 1500 feet to a property line. )

IT APPEARING THAT:

1) Marathon Oil Company by letter dated February 8, 2002, and received by the Commission on February 20, 2002, has requested an order allowing a spacing exception in accordance with 20 AAC 25.055(a)(2) for the proposed Falls Creek #1RD exploratory well. The locations of prospective test intervals within this well may fall within 1500 feet of a property line.

2) The Commission published notice of opportunity for public hearing in the Anchorage Daily News on February 27, 2002, pursuant to 20 AAC 25.540.

3) No protests to the application were received.

FINDINGS:

1) The surface location of the Falls Creek #1RD well is 1898' FSL & 2885' FEL, Section 6, T1N, 12W, SM. The anticipated target interval is 1821' FSL & 5025' FEL, Sec. 6, T1N, 12W, SM. The projected bottom hole location for this deviated well is 1830' FSL & 5025' FEL, Sec. 6, T1N, 12W, SM.

2) Marathon notified all offset owners, landowners, and operators of all wells within 3,000 feet of the Falls Creek #1RD well.

3) There are no other completed wells or wells capable of producing gas within the same governmental section as the Falls Creek #1RD Well.

4) An exception to the well spacing provisions of 20 AAC 25.055 (a)(2) is necessary for the drilling of this well.

CONCLUSION:

1) Granting a spacing exception to allow drilling of the Falls Creek #1RD exploratory well promotes efficient exploration and development, and will not result in waste nor jeopardize correlative rights.

2) Before regular production is permitted from the Falls Creek #1RD well, the Commission must take such action as will offset any advantage which the person securing the exception may have over the other producers by reason of the drilling of the well as an exception, and so that drainage from development units to the tract with respect to which the exception is granted will be prevented or minimized. AS 31.05.100(b).

NOW, THEREFORE, IT IS ORDERED:

Marathon's application for exception to the well spacing provisions of 20 AAC 25.055 (a)(2) for the purpose of drilling and testing the Falls Creek #1RD well is approved.

The Falls Creek #1RD well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing, to offset any advantage Marathon may have over other owners by reason of drilling Falls Creek #1RD to the exception location and to allow affected owners to produce their just and equitable share of hydrocarbons.

DONE at Anchorage, Alaska and dated April 4, 2002.

Cammy Oechsli Taylor, Chair
Alaska Oil and Gas Conservation Commission

Daniel T. Seamount, Jr., Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index