STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

THE APPLICATION OFConoco Phillips Alaska, Inc. for an order granting an exception to spacing requirements of Rule 3 of Conservation Order432B to provide for the drilling and operation of the Kuparuk River Unit 1Y-24A and 1Y-24AL1 production well bores.

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Conservation Order No. 530

Kuparuk River Field
Kuparuk River Unit
Kuparuk River Oil Pool
Kuparuk River Unit Well Bore
1Y-24A and 1Y-24AL1

August 19, 2004

IT APPEARING THAT:

1. ConocoPhillips Alaska, Inc. (“CPAI”), by letter dated June 25, 2004 and received by the Alaska Oil and Gas Conservation Commission (“Commission”) on June 29, 2004, 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”) 1Y-24A and 1Y-24AL1 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 July 16, 2004 pursuant to 20 AAC 25.540;

3. All owners, landowners and operators within 1000 feet of the anticipated productive interval and all operators of wells within 200 feet of the proposed wellbores have been notified; and

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

FINDINGS:

1. KRU 1Y-24A will be redrilled as a replacement wellbore for existing well KRU 1Y-24 and KRU 1Y-24AL1 will be drilled as a deviated, multilateral well bore branching from the new oil production well KRU 1Y-24A.

2. The surface location of KRU 1Y-24 is 570 feet from the north line and 1762 feet from the west line of Section 1, T11N, R9E, UM. The proposed bottom hole location of KRU 1Y-24A is 4,900 feet from the north line and 3,970 feet from the east line of Section 1, T11N, R9E, UM. The proposed bottom hole location of KRU 1Y-24AL1 is 1,697 feet from the north line and 2,025 feet from the east line of Section 12, T11N, R9E, UM.

3. KRU 1Y-24A and 1Y-24AL1 will lie entirely within State Lease ADL 25646. ADL 25646 is committed to the Kuparuk River Unit and the Kuparuk Participating Area. The ownership interests in this lease has 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 the lease.

4. CPAI is the designated operator of lease ADL 25646.

5. Well spacing in Sections 1 and 12 of T11N, R9E, UM is 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 ... nor may the pool be opened in a well bore … closer than 1,000 feet to the pool opened to the well bore in another well.”

6. 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.”

7. As proposed, KRU 1Y-24A be the second well bore open to the pool within the NE ¼ of Section 12, T11N, R09E, Umiat Meridian (“UM”), the second well bore open to the pool within the SE ¼ of Section 1, T11N, R09E, UM, and the third well bore open to the pool in the SW ¼ of Section 1, T11N, R09E, UM. KRU 1Y-24A will also open the Kuparuk River Oil Pool less than 1,000’ distant from KRU 1Y-07.

8. As proposed, KRU 1Y-24AL1 will require an exception to Rule 3 of CO 432B. This multilateral well bore will be the third well bore open to the pool in the NE ¼ of Section 12, T11N, R9E, UM. KRU 1Y-24AL1 will also open the Kuparuk River Oil Pool less than 1,000’ distant from KRU 2Z-05.

9. The locations of KRU 1Y-24A and KRU 1Y-24AL1 were 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.

10. All owners, landowners and operators within 1,000 feet of the anticipated productive interval of KRU 1Y-24A and KRU 1Y-24AL1 and all operators of wells within 200 feet of the proposed wellbores have been notified.

CONCLUSIONS:

1. An exception to the well spacing provisions of Rule 3, CO 432B is necessary to allow drilling and operation of the KRU 1Y-24A production well bore;

2. An exception to the well spacing provisions of Rule 3, CO 432B is necessary to allow drilling and operation of the KRU 1Y-24AL1 multilateral production well bore; and

3. Granting the requested spacing exception for the KRU 1Y-24A and KRU 1Y-24AL1 well bores 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 1Y-24A and 1Y-24AL1 production well bores is approved.

DONE at Anchorage, Alaska and dated August 19, 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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