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. 476
Company ("Marathon") for an order granting )
an exception to the spacing requirements of ) Susan Dionne #1
20 AAC 25.055(a)(2) to provide for the ) Drilling and Testing
testing of the Susan Dionne #1 well in an )
undefined gas pool. ) July 24, 2002

IT APPEARING THAT:

1) Marathon, by letter dated March 20, 2002 and received by the Commission on March 26, 2002, has requested an order allowing a spacing exception in accordance with 20 AAC 25.055 to test the Susan Dionne #1 well within 1500 feet of a property line.

2) Marathon, by letter dated April 18, 2002 and received by the Commission on April 19, 2002, submitted a revised request for spacing exception.

3) The Commission published notice of opportunity for public hearing in the Anchorage Daily News on April 26, 2002 and the Peninsula Clarion on April 26, 2002, pursuant to 20 AAC 25.540.

4) No protests to the application were received.

FINDINGS:

1) The surface location of this well is 144 feet from the South line ("FSL") and 1488 feet from the East line ("FEL") of Section 6, T1S, R13W, Seward Meridian ("S.M."). The proposed test interval is located 107 feet FSL and 1687 feet FEL, Section 6, T1S, R13W, S.M. The plugged back bottom hole location for this well is 286 feet FSL, 2555 feet FEL, Section 6, T1S, R13W, S.M.

2) An exception to the well spacing provisions of 20 AAC 25.055 (a)(2) is necessary in order to test the well for gas within 1500 feet of a property line.

3) The Division of Governmental Coordination has determined that the proposed Susan Dionne #1 project does not require a state review for consistency with the Alaska Coastal Management Program.

4) Marathon sent notice of the application for spacing exception by certified mail to all offset owners, landowners, and operators of all properties within 3000 feet of the proposed test interval in the Susan Dionne #1 well.

CONCLUSIONS:

1) An exception to 20 AAC 25.055(a)(2) is necessary to allow testing of the Susan Dionne #1 well.

2) Granting a spacing exception to allow testing of the Susan Dionne #1 well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

3) Before regular production is permitted from the Susan Dionne #1 well, the Commission must take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the drilling and testing of the well as an exception, and so that drainage 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 provision of 20 AAC 25.055(a)(2) for the purpose of drilling and testing the Susan Dionne #1 well is approved. The Susan Dionne #1 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 Susan Dionne #1 to the exception location and to allow affected owners to produce their just and equitable share of hydrocarbons.

DONE at Anchorage, Alaska and dated July 24, 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