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)(2) and (4) to provide for the drilling and producing of the Susan Dionne 4 gas development well.

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Conservation Order No. 545

Susan Dionne 4
Ninilchik Unit

January 26, 2005

IT APPEARING THAT:

1. Marathon Oil Company (“MOC”) by letter dated November 17, 2004, requested an order allowing a spacing exception under 20 AAC 25.055 to allow the drill and operation of the Susan Dionne 4 well.

2. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on December 1, 2004, pursuant to 20 AAC 25.540.

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

FINDINGS:

1. The surface location of this well is 104 feet from the south line (“FSL”) and 1331 feet from the east line (“FEL”) of Section 6, T1S, R13W, Seward Meridian (“S.M.”). The projected bottom hole location for this well is 4870 feet FSL, 3095 feet FEL, Section 12, T1S, R14W, S.M.

2. An exception to the well spacing provisions of 20 AAC 25.055 (a)(2) is necessary for the production of this well. The anticipated productive interval in the Beluga and Tyonek Formations of the Susan Dionne No. 4 gas development well, if successful, will be within 1,500 feet of a property line between two landowners.

3. An exception to the well spacing provisions of 20 AAC 25.055 (a)(4) is necessary for the drilling and production of this well. The anticipated productive interval in the Beluga and Tyonek Formations of the Susan Dionne No. 4 gas development well, if successful, will be within 3,000 feet and in the same pool as the productive interval in the Susan Dionne No. 3 gas development well.

4. MOC sent notice of the application for spacing exception by certified mail to all offset owners, landowners, and operators of all properties within 3,000 feet of the proposed Susan Dionne No. 4 well.

5. The location of the Susan Dionne No. 4 well was selected on the basis of a favorable structural position for recovery of gas reserves from the Beluga and Tyonek Formations that are not believed to recoverable from the Susan Dionne No. 3 well or from a location greater than 1500 feet from a property line between two landowners.

6. Wells Susan Dionne No. 3 and 4 are located within the Susan Dionne Participating Area in the Ninilchik Unit.

7. The anticipated productive interval of the Susan Dionne No. 4 well is more than 1500 feet from the external boundary of the Ninilchik Unit.

CONCLUSIONS:

1. An exception to 20 AAC 25.055(a)(2) and (4) is necessary to allow drilling and production of the Susan Dionne No. 4 gas development well.

2. Granting a spacing exception to allow drilling and production of the Susan Dionne No. 4 well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.

NOW, THEREFORE, IT IS ORDERED:

MOC’s application for exception to the well spacing provisions of 20 AAC 25.055(a)(2) and (4) for the purpose of drilling and producing the Susan Dionne No. 4 gas development well is granted.

DONE at Anchorage, Alaska and dated January 26, 2005.

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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