Known oil reserves in Alaska appear to have experienced a highly significant expansion following a claim by an exploration company that it has made a discovery that would rank among the largest in the history of the state.
Caelus Energy LLC disclosed on Tuesday that it has discovered around six billion barrels in an offshore Arctic location. This estimated figure, if confirmed, means a significant boost to Alaska, a state which has experienced a considerable slump in its oil output over the years.
“This discovery could be really exciting for the state of Alaska,” said Caelus CEO Jim Musselman in a release. “It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades.”
The discovery was reportedly made in the shallow waters of Smith Bay, between Barrow and Prudhoe Bay along the Arctic shore.
Caelus stated that the “light, highly mobile oil” reserves have the capacity to generate 200,000 barrels per day. This is a very impressive figure when compared to the overall state oil output of 483,000 per day. It looks to make the field more productive than the Alpine or Colville River field of ConocoPhillips which started production in 2000, with output peaking at 139,000 barrels per day in 2007.
The statement from the Dallas-based company revealed that up to 2.4 million barrels of the estimated total reserves are recoverable. The figure compares very well with Alaska’s 2.86 billion barrels in proved oil reserves as of 2014.
These estimates are numbers generated by the company, according to a spokesperson. There is no mention of a third-party analysis by another engineering firm.
If fully confirmed, this find looks to lift the Alaskan economy significantly. The state has experienced a significant dip in oil output from peak production level of more than two million barrels per day in 1988 to the current 483,000 barrels, according to Energy Department data.
Caelus revealed that the discovery was made after collection of seismic data and drilling of two wells early this year. Quoting a company spokesman, Bloomberg reports Caelus has plans to drill another well in early 2018.
Light oil, such as discovered by Caelus, flow more like water. This makes their production less cumbersome than that of heavy oil.
The company the new discovery would be the biggest in the state in four decade. Alaska’s biggest oil field Prudhoe Bay was discovered back in 1967.
In spite of the potential the discovery seems to hold, David Houseknecht has cautioned that it might be a little too early to get too optimistic. The project chief for the USGS Energy Resources Program of Alaska said more testing needed to be done.
Houseknecht cited the case of the Kuvlum field discovered by ConocoPhillips predecessor ARCO Alaska in the proximity of the Arctic National Wildlife Refuge. It was believed to be holding one billion barrels in oil reserves, but it ended up not been developed.
It is expected to take between five and 10 years before oil can flow, if the field is developed.