Earlier this month, Caelus Energy announced one of the largest oil finds in Alaska’s history—estimated at a whopping six billion barrels. What does the discovery mean for the domestic oil market? Read our breakdown below.
Who are the key players?
- Caelus Energy, LLC, a Dallas-based company that specializes in the exploration and production of oil and gas in Alaska. It was Caelus that discovered the oil on its leased acreage in Smith Bay.
- Alyeska Pipeline Service Company, owner of the 800-mile-long Trans-Alaska Pipeline System (TAPS), which will transport the oil across the state.
- Alyeska Consortium, the oil companies that operate the Alyeska Pipeline Service Company, including:
- Unocal Pipeline Company
Where was the discovery made?
Smith Bay on Alaska’s North Slope
How much oil did they find?
Based on the two wells it’s drilled thus far, Caelus estimates the discovery consists of six billion barrels, with the potential to provide 200,000 barrels of light oil a day. The company also suggested as many as four billion additional barrels may exist in neighboring acreage.
Fortunately, the waters of Smith Bay are relatively shallow, making the oil less difficult to access than with other recent drilling endeavors. However, accessing the Smith Bay reserves won’t be without its challenges. Potential delays and roadblocks include:
- Building a new 150-mile pipeline connecting Smith Bay with the Trans-Alaskan Pipeline System—a massive project requiring significant time and resources.
- Navigating and ensuring compliance with the state’s pipeline regulations.
- Overcoming potential opposition to the pipeline build and various drilling/production tactics.
Based on these considerations, Forbes reports that it could be five to ten years before production begins.
If the estimates are correct, Caelus’ recent discovery would boost Alaska’s oil reserves by by 80 percent. This dramatic increase couldn’t have come at a better time. The state’s oil production has steadily dropped since its peak during the late 80s, with the once oil-rich Prudhoe Bay “drying up” in recent years.
Caelus CEO Jim Musselman described the significance of the discovery, saying:
"It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades.”
We provide world-class metal fabrication services to the oil and gas industry. Find out more about our work in this sector.
Banner image by Frank K. via Wikimedia Commons