Oil and energy company Caelus Energy said it’s made a major oil discovery on the North Slope, at Smith Bay.
The company estimates the oil under its current state leases at 6 billion barrels and said as much as 10 billion may lie under the shallow bay.
“It’s going to be a massive development,” Caelus CEO Jim Musselman said. “Very important for the state of the Alaska, and it’s going to create, you know, thousands of jobs.”
Musselman said two wells drilled this year, sidewall core samples and 3-D seismic work suggest a large reservoir of light oil in good rock.
“And we have the same fan complexes under each well, so that gives us courage that the fan extends over this big area,” Musselman said.
Production is years away.
The company says the development could eventually boost the amount of oil going down the Trans-Alaska Pipeline by about 200,000 barrels per day, an increase of nearly 40 percent over current daily averages.
Musselman said, the light oil will help cut sludge, improving the pipeline’s flow.
The CEO estimates the cost of the project at $8 billion to $10 billion. He’s confident he can get financing if the price of oil goes up to at least $65 a barrel. State tax credits are also important, he said.
“We can in fact help with their fiscal crisis going forward if they’ll help us, and I think that’s all we’re looking for,” Musselman said.
This summer, Gov. Bill Walker vetoed oil tax credits worth $430 million, saying the state couldn’t afford to pay so much to oil companies.
Smith Bay is between Barrow and Prudhoe Bay.
The Caelus leases are in state waters, offshore of the National Petroleum Reserve-Alaska.
