STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

THE APPLICATION OFConocoPhillips Alaska, Inc. for an order granting an exception to spacing requirements of Rule 3 of Conservation Order 432B to provide for the drilling and operation of the Kuparuk River Unit 1C-08L1-01 multilateral production well bore.

)
)
)
)
)
)
)
)
)
)
Conservation Order No. 529

Kuparuk River Field
Kuparuk River Unit
Kuparuk River Oil Pool
Kuparuk River Unit Well Bore
1C-08L1-01

August 6, 2004

IT APPEARING THAT:

1. ConocoPhillips Alaska, Inc. (“CPAI”), by letter dated June 16, 2004 and received by the Alaska Oil and Gas Conservation Commission (“Commission”) that same day, requests exception to the well spacing provisions of Rule 3 of Conservation Order No. 432B (“CO 432B”) to allow drilling and operation of the Kuparuk River Unit (“KRU”) 1C-08L1 and KRU 1C-08L2 multilateral oil production well bores to locations within the same governmental quarter sections as other wells open to the Kuparuk River Oil Pool;

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on June 21, 2004 pursuant to 20 AAC 25.540;

3. Offset landowners, owners and operators within 1000 feet of the anticipated productive interval have all been notified; and

4. No protests to the application or requests for hearing have been received.

FINDINGS:

1. The KRU 1C-08L2 multilateral well bore was subsequently renamed “KRU 1C-08L1-01” by the Commission, as this multilateral well bore originates from the KRU 1C-08L1 multilateral well bore rather than within the original KRU 1C-08 well bore, as the “L2” suffix implies.

2. KRU 1C-08L1 and KRU 1C-08L1-01 will be drilled as deviated, multilateral well bores branching from existing oil production well KRU 1C-08.

3. The surface location of KRU 1C-08 is 1,246 feet from the north line and 668 feet from the west line of Section 12, T11N, R10E, UM. The proposed bottom hole location of KRU 1C-08L1 is 2,422 feet from the south line and 5,234 feet from the east line of Section 2, T11N, R10E, UM. The proposed bottom hole location of KRU 1C-08L1-01 is 3,210 feet from the south line and 35 feet from the east line of Section 3, T11N, R10E, UM.

4. KRU 1C-08L1 will lie within State Lease ADL 25649. The proposed bottom hole location will be within 50 feet of the western boundary of this lease. However, ADL 25649 and the adjacent leases ADL 25648 (to the west), ADL 25639 (to the northwest) and ADL 25638 (to the north) are committed to the Kuparuk River Unit and the Kuparuk Participating Area. The ownership interests in these leases have been consistently cross-assigned, with the owners being CPAI (55.29%), BP Exploration (Alaska) Inc. (39.28%), Union Oil Company of California (4.95%), ExxonMobil Alaska Production Inc. (0.36%), and Chevron USA Inc. (0.11%). The State of Alaska is the landowner for these leases.

5. The top of the productive interval in KRU 1C-08L1-01 will lie within State Lease ADL 25649. The proposed bottom hole location will lie within State Lease and ADL 25648. Leases ADL 25648, ADL 25649, and adjacent leases ADL 25639 (to the north) and ADL 25638 (to the northeast) are committed to the Kuparuk River Unit and the Kuparuk Participating Area. The ownership interests in these leases have been consistently cross-assigned, with the owners being CPAI (55.29%), BP Exploration (Alaska) Inc. (39.28%), Union Oil Company of California (4.95%), ExxonMobil Alaska Production Inc. (0.36%), and Chevron USA Inc. (0.11%). The State of Alaska is the landowner for these leases.

6. CPAI is the designated operator of leases ADL 25648 and ADL 25649.

7. Well spacing in Sections 2 and 3 of T11N, R10E, UM are regulated by Rule 3 of Conservation Order 432B (“CO 432B”), which supersedes statewide spacing requirements of 20 AAC 25.055. Rule 3 of CO 432B states in part:

“Not more than one well may be drilled on any governmental quarter section or governmental lot corresponding to it...”

8. According to the definitions provided in 20 AAC 25.990(73)(B), the term “well:” “includes a well with multiple well branches drilled to different bottom hole locations.”

9. As proposed, KRU 1C-08L1 does not require a spacing exception. KRU 1C-08 and KRU 1C-08L1 will both be open to the Kuparuk River Oil Pool within the SW ¼ of Section 2, T11N, R10E, UM. However, KRU 1C-08 and KRU 1C-08L1, by the definition above, are part of the same well. As such, no spacing exception will be required for KRU 1C-08L1.

10. As proposed, KRU 1C-08L1-01 will require exception to Rule 3 of CO 432B. This multilateral well bore will be the second well bore open to the pool in the SE ¼ and in the NE ¼ of Section 3, T11N, R10E, UM.

11. The location of KRU 1C-08L1-01 was selected as the most favorable structural position to recover oil reserves in the Kuparuk River Oil Pool that are not recoverable with the current well pattern.

12. Offset landowners, owners and operators within 1,000 feet of the anticipated productive interval of KRU 1C-08L1-01 have all been notified.

CONCLUSIONS:

1. An exception to the well spacing provisions of Rule 3, CO 432B is not necessary to allow the drilling and operation of the KRU 1C-08L1 multilateral production well bore.

2. An exception to the well spacing provisions of Rule 3, CO 432B is necessary to allow the drilling and operation of the KRU 1C-08L1-01 multilateral production well bore.

3. Granting the requested spacing exception for the KRU 1C-08L1-01 well bore will promote more efficient recovery of oil reserves and will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

NOW, THEREFORE, IT IS ORDERED

CPAI’s application for exception to well spacing provisions to allow the drilling and operation of the KRU 1C-08L1-01 production well bore is approved.

DONE at Anchorage, Alaska and dated August 18, 2004.

John K. Norman, Chair
Alaska Oil and Gas Conservation Commission

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


Conservation Order Index      Home      Webmaster