The state on Jan. 2 approved a request from the Marathon Oil Co. to significantly shrink the size of the Kasilof Unit, located along the Kenai Peninsula in the Cook Inlet.
Marathon requested the contraction in mid-December 2007, after deciding not to further explore or delineate the unit as required by its Second Plan of Exploration from Aug. 29, 2005.
The plan required Marathon to collect 3-D seismic data in the area by the end of 2007. According to its filings with the state, Marathon chose to cancel that seismic survey “due to the unfavorable economics associated with any further development of the Kasilof Unit.”
Created in 2002, the Kasilof Unit originally covered 13,289 acres over three state leases — ADL 384529, ADL 384534 and ADL 389502 — in state waters nearly five miles south of Cape Kasilof.
After the contraction, the unit will shrink to just less than 380 acres over two leases — ADL 384529 and ADL 384534.
Marathon is both the unit operator and the sole working interesting owner of the Kasilof Unit, which allowed it to request the contraction unilaterally.
As part of the contraction, Marathon waived its rights to extend the severed leases and agreed to pay the state Department of Natural Resources $323,510 by Jan. 15 for the discontinued acreage.
The state will accept appeals on the decision through Jan. 22, 2008.
Editor’s note: See full stories in Jan. 20 issue of Petroleum News, which will be available online Friday, Jan. 18.