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 exception to the spacing requirements of 20 AAC 25.055(a)(4) to provide for the drilling and production of the Beaver Creek Unit No. 14 gas development well.

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Conservation Order No. 521.000

Beaver Creek Unit No. 14
Drilling and Production

July 20, 2004

IT APPEARING THAT:

1. Marathon Oil Company (MOC) submitted an application dated May 12, 2004 requesting exception to the well spacing provisions of Title 20 AAC 25.055(a)(4) to allow drilling the Beaver Creek Unit (BCU) No. 14, gas development well to a producing location that is within 3000 feet of a well producing from the same pool;

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on May 20, 2004, pursuant to 20 AAC 25.540; and

3. No protests to the application or requests for hearing were received.

FINDINGS:

1. The BCU No. 14 gas development well is proposed to be drilled as a deviated hole with a surface location 1325 feet from the east line and 111 feet from the south line of Section 33, T7N R10W, Seward Meridian (SM) to a bottomhole location 243 feet from the east line and 2051 feet from the south line of Section 33, T7N R10W, SM.

2. The proposed productive interval of the BCU No. 14 well will be located approximately 1650 feet from the Lower Beluga Formation producing zones in BCU No. 9.

3. Offset landowners, owners and operators within 3,000 feet of the anticipated productive interval of the BCU No. 14 well haveall been notified.

4. The location of the BCU No. 14 well was selected due to reservoir pressure data from the Beaver Creek Field that indicates the laterally discontinuous reservoirs of the Beluga Formation cannot be efficiently depleted with 3,000 feet inter-well spacing.

5. An exception to the well spacing provisions of Title 20 AAC 25.055 (a)(4) is necessary to allow the drilling of the BCU No. 14 gas storage well.

CONCLUSIONS:

Granting a spacing exception to allow drilling and production of the BCU No. 14 gas storage well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners, landowners and operators.

NOW, THEREFORE, IT IS ORDERED:

Marathonsís application for exception to the well spacing provision of 20 AAC 25.055(a)(4) for the purpose of drilling and producing the BCU No. 14 gas storage well is approved.

By Order of the Commission at Anchorage, Alaska, this 20th day July 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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