STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage, Alaska 99501

Re: THE APPLICATION OF Evergreen ) Conservation Order No. 479
Resources (Alaska) Corporation )
("Evergreen") for an order granting ) Pioneer Unit Wells
exceptions to the spacing requirements ) Cook No. 1, Lowell No. 2,
of 20 AAC 25.055(a)(2) and (a)(4) to ) Bering No. 3, & Baronoff No. 4
provide for the drilling and testing of the ) Drilling and Testing
Cook No. 1, Lowell No. 2, Bering No.3, )
and Baronoff No. 4 wells in an undefined )
coalbed methane gas pool. ) October 29, 2002

IT APPEARING THAT:

1. Evergreen by letters dated September 7, 2002 has requested an order allowing spacing exceptions to drill and test the Cook No. 1, Lowell No. 2, Bering No.3, and Baronoff No. 4 wells in accordance with 20 AAC 25.055.

2. These proposed vertical wells will be drilled within Section 30, T18N, R1W, Seward Meridian ("SM").

3. Bering No. 3 will be less than 1,500' from a property line.

4. Baronoff No. 4, Lowell No. 2, and Cook No. 1 will be less than 1,500' from a property line and closer than 3,000' to wells drilled to the same pool. These wells will be the second, third and fourth gas production wells, respectively, in Section 30, T18N, R1W, SM.

5. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on September 11, 2002 and in The Frontiersman on September 13, 2002, pursuant to 20 AAC 25.540.

6. No protests to the applications were received.

FINDINGS:

1. The Cook No. 1 well will be located 991 feet FSL and 888 feet FEL, Section 30, T18N, R1W, SM.

2. The Lowell No. 2 well will be located 967 feet FSL and 1329 feet FEL, Section 30, T18N, R1W, SM.

3. The Bering No. 3 well will be located 1523 feet FSL and 471 feet FEL, Section 30, T18N, R1W, SM.

4. The Baronoff No. 4 well will be located 504 feet FSL and 423 feet FEL, Section 30, T18N, R1W, SM.

5. Evergreen proposes to drill these four wells as a pilot project to test producibility of potential coalbed methane resources within the Tertiary-aged Tyonek Formation of the Pioneer Unit.

6. Evergreen sent notice of the application for spacing exception by certified mail to all offset owners, landowners, and operators of all properties within 3000' of the proposed wells.

7. The Division of Governmental Coordination has determined that an ACMP consistency review is not required for this project.

CONCLUSIONS:

1. Closely spaced wells are appropriate for coalbed methane testing and development projects.

2. Exceptions to the well spacing provisions of 20 AAC 25.055 (a)(2) are necessary for the drilling and testing of the Cook No. 1, Lowell No. 2, Bering No. 3, and Baronoff No. 4 wells.

3. Exceptions to the well spacing provisions of 20 AAC 25.055 (a)(4) are necessary for the drilling and testing of the Cook No. 1, Lowell No. 2, and Baronoff No. 4 wells.

4. Granting spacing exceptions to allow drilling and testing of the Cook No. 1, Lowell No. 2, Bering No.3, and Baronoff No. 4 wells will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

5. Before regular production is permitted from the Cook No. 1, Lowell No. 2, Bering No.3, and Baronoff No. 4 wells, 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 wells 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:

Evergreen's applications for exceptions to the well spacing provisions of 20 AAC 25.055(a)(2) and (a)(4) to drill and test the Cook No. 1, Lowell No. 2, Bering No.3, and Baronoff No. 4 wells are approved. These wells may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing, to offset any advantage Evergreen may have over other owners by reason of drilling the wells at the exception locations.

DONE at Anchorage, Alaska and dated October 29, 2002.

Cammy Oechsli Taylor, Chair
Alaska Oil and Gas Conservation Commission

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

Michael L. Bill, Commissioner
Alaska Oil and Gas Conservation Commission

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