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New North Slope Oil Discovery Could Be Biggest Found in Alaska

New find could deliver significant oil production, jobs and state revenue



October 06, 2016
Thursday PM

(SitNews) - Caelus Energy may have discovered an oil field that could be among the biggest ever found in Alaska in shallow waters in Smith Bay, near the northern tip of Alaska.

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Caelus Energy Alaska, LLC announced Tuesday that its subsidiary, Caelus Energy Alaska Smith Bay LLC, has made a significant light oil discovery on its Smith Bay state leases on the North Slope of Alaska.

Caelus CEO Jim Musselman said: “This discovery could be really exciting for the State of Alaska. It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades. Fiscal stability going forward is critical for a project of this magnitude. Without the state tax credit programs, none of this would’ve happened, and I’m not sure Caelus would’ve come to explore in Alaska. We’re proof that the credit programs work.”

Alaska Governor Bill Walker (I) said in a prepared statement, “With an oil pipeline that is three-quarters empty, this is good news for the state of Alaska. I applaud Caelus for this major discovery, and for the company’s commitment to do business in our state. My administration will continue to work with the industry to identify new development opportunities in Alaska’s oil and gas sector, and provide appropriate investment incentives given our current fiscal climate.”

"This is fantastic news," said Sen. Cathy Giessel (R-Anchorage) in response to Caelus' major oil discovery on the North Slope. "Between the Smith Bay and Pika discoveries, Alaska potentially stands to put over 300,000 barrels of new oil through the Trans-Alaska Pipeline System. Coupled with the fact that 2015 saw the first increase in oil production for almost 20 years, the work of independent legacy companies is increasing the lifespan of one of Alaska's main economic drivers."

The Smith Bay fan complex may contain upwards of 10 billion barrels of oil and development could increase Trans-Alaska Pipeline System (TAPS) throughput by an additional 200,000 barrels of oil per day, according to Caelus.

Based on two wells drilled in early 2016, as well as 126 square miles of existing 3D seismic, Caelus estimates the oil in place under the current leasehold to be 6 billion barrels. Furthermore, the Smith Bay fan complex may contain upwards of 10 billion barrels of oil in place when the adjoining acreage is included. Due to the favorable fluids contained in the reservoir, Caelus expects to achieve recovery factors in the range of 30-40%. Additional drilling and seismic should improve estimates of oil in place via delineation of undrilled fan lobes and channel complexes imaged on the original 3D seismic.

The Smith Bay development has the potential to provide 200,000 barrels per day of light, highly mobile oil, which would both increase Trans-Alaska Pipeline System (TAPS) throughput volumes and reduce the average viscosity of oil in the pipeline, extending its long term viability.

The two exploration wells, Caelus-Tulimaniq #1 (“CT-1”) and step-out Caelus-Tulimaniq #2 (“CT-2”), targeted a large Brookian submarine fan complex spanning over 300 square miles. The fan was successfully drilled and logged in both wells, encountering an extension of the accumulation 5.25 miles northwest of the CT-1 discovery at the CT-2 location. Gross hydrocarbon columns in excess of 1,000 feet were encountered in each well; with CT-1 and CT-2 logging 183 and 223 feet of net pay, respectively. Neither well was flow tested due to seasonal time constraints, but extensive sidewall coring and subsequent lab analyses confirm the presence of reservoir-quality sandstones containing light oil ranging from 40-45 degree API gravity.

According to Business Insider, Caelus said if the discovery turns out to be real, the field would be more fertile than the Alpine unit run by ConocoPhillips.

Caelus is currently planning an appraisal, program which will include drilling an additional appraisal well and acquiring a new 3D seismic survey over outboard acreage. The appraisal program will enable Caelus to confirm reservoir continuity, optimize future drilling locations, and ultimately increase reserves. In parallel, Caelus is studying and planning the facilities’ build-out which will process and transport the oil to TAPS.

Caelus Energy Alaska, LLC (“Caelus”), is a privately-held independent exploration and production company headquartered in Dallas with offices and operations in Alaska. Caelus is Operator of the Oooguruk Unit on Alaska’s North Slope, and also holds a large portfolio of exploration acreage across the Alaska North Slope region.



Source of News:

Caelus Energy, LLC

Office of Gov. Bill Walker

Office of Sen. Cathy Giessel (R-Anchorage)



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