Opinion ID: 2520305
Heading Depth: 4
Heading Rank: 2

Heading: History of the lease before the discovery well

Text: The corporations' predecessors-in-interest purchased ADL 28299, a DL-1 form lease, in 1965. Like others of its kind, the lease includes a discovery royalty clause that is nearly identical to former AS 38.05.180(a) (1965). [15] Moreover, according to paragraph 43 of the lease, As used in this lease words which are defined in the regulations have the meaning assigned by such definition except where the context clearly requires a different meaning. And paragraph 42 provides that in this lease `regulations' mean the applicable and valid oil and gas leasing regulations of the Commissioner of the Department of Natural Resources in effect on the effective date of this lease unless otherwise specified. The corporations' lease contains approximately four square miles, divided into four sections. The North Prudhoe Bay bounding fault transects the leased land. Three of the lease sections, those south of the fault, overlay the Prudhoe Bay reservoir. The northeast section, section 30, lies north of the fault and outside the Prudhoe Bay reservoir. In 1977 the sections south of the fault were committed to the Prudhoe Bay Unit Agreement. [16] While oil development was concentrated south of the fault in the Prudhoe Bay reservoir  the largest accumulation of oil in North America  discoveries at Niakuk and Pt. McIntyre in 1985 and 1988 proved that the Kuparuk C sandstone north of the fault was also a source of commercial quantities of oil. These discoveries were not within section 30 of the lease. The Kuparuk sands do not form a continuous layer north of the fault, but rather a series of depositions in noncontiguous geographic depressions. In 1997 the corporations drilled the Sambuca No. 1 well, which aimed at land north of the fault in section 30. The target of Sambuca 1 was Ivishak sandstone, but it tapped quantities of oil in an intervening layer, a geographically discrete bed of oil-bearing Kuparuk C, the Midnight Sun Reservoir.