A lot bigger area than that is already in production on the Alaskan North Slope. This isn't a theory. It is existing production sites in the Alpine Area on the Western North Slope.
http://www.conocophillipsalaska.com/ArcticEnergy.pdf
BP is going to be able to reach 8 miles horizontally with the new drill rig they are having built for the North Slope.
30 STRONG: UERD for offshore development
http://www.petroleumnews.com/pnads/48009602.shtml
...But Liberty drilling will likely achieve world records for extended reach drilling, with horizontal departures from the wellheads of up to 44,000 feet or more.
Drilling studies support departures of 34,000 to 44,000 feet, BP has said...
I think I remember reading some time ago that the oil companies were planning to drill in the Beaufort Sea and tap the oil in ANWAR this way until they were shut down with new requirements to prove they will never spill a drop of oil. Does that ring a bell?
Nice diagram, but 502 acres is 0.8 square miles, not .08 (640 acres to the secion)