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 exceptionto spacing requirements of Title20 AAC 25.055 to provide for thedrilling and regular productionof the Falls Creek No. 4 gas development well.

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Conservation Order No. 511

Marathon Oil Company
Falls Creek No. 4

February 6, 2004

IT APPEARING THAT:

1. Marathon Oil Company (“Marathon”) submitted an application dated December 15, 2003 requesting exception to the well spacing provisions of Title 20 AAC 25.055(a)(4) to allow drilling the Falls Creek No. 4, gas development well to a location which is within 3000 feet of the Falls Creek No. 3 gas well.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on December 22, 2003 pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1. The Falls Creek No. 4 gas development well will be drilled as a deviated hole with a surface location 2842 feet from the east line and 1842 feet from the south line of Section 6, T1N, R12W, Seward Meridian (“SM”) to a bottomhole location 1910 feet from the east line and 794 feet from the south line of Section 1, T1N R13W, SM.

2. The productive interval of the Falls Creek No. 4 well will lie less than 1500 feet from the nearest property line, which is also the boundary of the Participating Area, but it will lie more than 1500 feet from the boundary of the Unit.

3. Offset landowners, owners and operators within 3,000 feet of the anticipated productive interval of the Falls Creek No. 4 well have been notified.

4. No protests to the spacing exception application were received.

5. The location of the Falls Creek No. 4 well was selected as a favorable structural postion for recovery of Beluga and Tyonek Formation gas reserves not accessed by, and not in communication with, those reserves opened by the Falls Creek No. 3 gas development well.

6. An exception to the well spacing provisions of Title 20 AAC 25.055 (a)(4) is necessary to allow the drilling and production of the Falls Creek No. 4 gas development well within 900 feet of the Falls Creek No. 3 gas development well and less than 1500 feet of the nearest property line.

CONCLUSIONS:

1. This exception will not cause waste or jeopardize correlative rights.

2. The requested spacing exception for the Falls Creek No. 4 well should be granted.

NOW, THEREFORE, IT IS ORDERED:

1. Marathon’s application for exception to the well spacing provision of 20 AAC 25.055(a)(4) is approved.

DONE at Anchorage, Alaska and dated February 6, 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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