Texas Oil Company Announces Big Offshore Alaska Discovery

Smith Bay Alaska

In a press release Tuesday, the company announced its discovery could yield between 6 billion and 10 billion barrels of light oil - which is recovered from the ground more easily than other types of oil.

ANCHORAGE, Alaska (AP) - A Texas company says it has made a large-scale oil discovery in state waters off Alaska's North Slope. The Smith Bay project has the potential to solve a lot of problems: Alaska needs the revenue such a huge field would provide; Alaskans need the hundreds of jobs required to develop a large-scale project; the economy needs the hundreds of millions of dollars that will be spent to pursue this development; and the Trans Alaska pipeline needs the increased throughput. Caelus Energy is now developing two smaller fields in Alaska, Nuna and Oooguruk, whose joint recovery is estimated at 215 million barrels.

"This discovery could be really exciting for the state of Alaska", Caelus CEO Jim Musselman said in a statement. 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. As North Slope production has diminished, the trans-Alaska pipeline is operating at only about one-quarter capacity. Some 183 feet of net pay was measured in CT-1, while in CT-2 there was 223 feet.

Dallas-based Caelus Energy Alaska LLC says a subsidiary made a significant discovery on its state leases at Smith Bay.

The company did not have time to flow test either well. Caelus' partners in Smith Bay include NordAq Energy, Inc.

The company now plans an appraisal programme to include a new well and new seismic. 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", he said in the announcement. "We're proof that the credit programs work". (17.5% working interest) and L71 Resources, LLC (7.5% working interest).

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