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Image courtesy of Caelus Energy Alaska.

Caelus Energy Alaska said on Tuesday that it made a new offshore Alaska oil discovery that could become one of the largest finds in the state’s history.

The company said that, based on two wells drilled earlier this year along with existing 3D seismic data, it has estimated the oil in place under the current Smith Bay leasehold at 6 billion barrels.

Caelus added that the Smith Bay fan complex may contain upwards of 10 billion barrels of oil in place when the adjoining acreage is included.

“Due to the favorable fluids contained in the reservoir, Caelus expects to achieve recovery factors in the range of 30-40 percent,” Caelus said.

The company said that additional drilling and seismic data should improve estimates of oil in place via delineation of undrilled fan lobes and channel complexes imaged on the original 3D seismic data.

The company is currently estimating recoverable resources at the site of about 1.8 to 2.4 billion barrels.

Two exploration wells, the 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 company said that the fan was successfully drilled and logged in both wells.

The CT-2 location encountered an extension of the accumulation 5.25 miles northwest of the CT-1 discovery.

Each well encountered gross hydrocarbon columns in excess of 1,000 feet.

CT-1 logged 183 feet of net pay while CT-2 logged 223 feet of net pay.

Neither well was flow tested due to seasonal time constraints.

However, the company said extensive sidewall coring and subsequent lab analyses confirm the presence of reservoir-quality sandstones containing light oil ranging from 40 to 45 API gravity.

Caleus said the Smith Bay development has the potential to provide 200,000 barrels per day of light, highly mobile oil that would increase Trans-Alaska Pipeline System (TAPS) throughput volumes and reduce the average viscosity of oil in the pipeline.

Caelus is currently planning an appraisal program that will include drilling an additional appraisal well and acquiring a new 3D seismic survey over outboard acreage.

“In parallel, Caelus is studying and planning the facilities build out which will process and transport the oil to TAPS,” the company said.

Caelus Energy Alaska Smith Bay holds a a 75 percent working interest owner in the State of Alaska oil leases at Smith Bay.

NordAq Energy holds a 17.5 percent working interest and L71 Resources holds a 7.5 percent working interest.