6 Billion Barrels of Light Oil Discovered in Alaska

October 5, 2016

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

The oil find is located in Smith Bay, about 300 miles north of the Arctic Circle, less than 2 miles offshore in water less than 6 feet deep.

Based on two wells drilled in early 2016 and 126 square miles of existing 3D seismic, Caelus estimates the oil in place under the current leasehold to be 6 billion barrels.

Production is estimated sometime in 2022, after another appraisal well is done in 2018 and a 3-5 year regulatory process procedures.

With other Caelus holdings in the area, 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 percent. 

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

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.

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.”