Alaska’s beleaguered oil industry has finally found a lifeline. A small but very successful energy exploration company, Caelus Energy LLC, announced its discovery of a new oil field on Alaska’s North Slope.
What does the company say about its latest discovery?
The field is located in Smith Bay, an area 30 miles north of the Arctic Circle near Alaska’s northernmost city, Barrow. Caelus claims the field holds 6 billion barrels of oil and when combined with an adjacent field could contain more than 10 billion barrels. It expects to be able to recover about 30-40% of that oil.
What does this discovery mean?
If it is true, and only preliminary testing has been completed, the discovery would increase Alaska’s current oil reserves by 80%. At its height, in 1988, Alaska produced 2 million barrels per day. Most of that oil came from Prudhoe Bay which has since fallen to a quarter of that by 2015.
How difficult will it be to start production?
This oil will be significantly more challenging to access than the oil in recently discovered fields in Texas but less challenging to access than the oil in Shell’s recently abandoned project in Alaska’s Chukchi Sea in the Arctic. The oil in Smith Bay is located in shallow waters near land which makes it easier to reach than that in the Chukchi Sea. Caelus says the company plans to bring in barges and sink them in the water near Smith Bay to build platforms. The project would also include a newan 800 mile pipeline to connect Smith Bay with the Trans-Alaskan Pipeline System in Prudhoe Bay. Even though Alaska’s pipeline regulations are considerably more friendly to energy companies than elsewhere in the U.S., it could still take between five and ten years before any oil is produced. And when it comes to opposition to pipelines and Arctic drilling, all possible delays are on the table.
Ships bringing oil drilling equipment to Alaska pass through Seattle’s Elliott Bay on Wednesday, June 27, 2012. These rigs later moved to the Beaufort and Chukchi seas for offshore drilling. (AP Photo/Donna Gordon Blankinship)
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