The discovery is located at the Smith Bay which is about 150 miles west of Prudhoe Bay, about 90 miles east of Barrow. It was made by the company’s subsidiary, Caelus Energy Alaska Smith Bay LLC.

Caelus owns a 75 percent working interest ownership in 26 leases covering 117,000 acres in Smith Bay. Caelus’ partners in Smith Bay include NordAq Energy, Inc., 17.5% working interest, and L71 Resources, LLC, 7.5% working interest.The acreage is on state land offshore from the federal National Petroleum Reserve-Alaska.

In a press release on Tuesday, Caelus said that, based on two wells drilled in early 2016 as well as 126 square miles of existing 3D seismic, the company estimated 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, the company added.

Due to the favorable fluids contained in the reservoir, Caelus noted it 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.

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.”

According to the oil company, 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.

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.

The news of a discovery was welcomed by the U.S. senator for Alaska, Lisa Murkowski, who said the discovery is exactly what the state and nation need to keep TAPS viable. Murkowski added: “I look forward to keeping all of the federal permitting agencies aligned & on time so Caelus can move from exploration to development.”

Source: Offshore Energy Today