Caelus gave a lunch talk to my office last week. It was interesting to hear some details of the discovery, and the challenges they have. They'll be drilling a third and more extensive well next winter, but it looks like a large promising find. One of the major challenges is they are ~175 miles from TAPS and the are on state leases surrounded by Federal land. Running the pipeline could be a major political hurdle. Also all of their leases are offshore (in all of 2-10' of water) and ideally they'd have at least an onshore laydown area during construction if not some onshore facilities and that gets back to the federal land issue.
One other interesting point during the discussion was the mention of Teshekpuk lake oil leases. The Federal government had scheduled lease sales in 2008. They put the lease sales on hold for 10 years. With the new administration there is a chance that lease sale would go ahead. Those leases are between the Caelus Smith Bay discovery and TAPS, so the potential for much more oil for dedcades to come and more of a justification of a significant pipeline to tie Smith Bay into TAPS.
If Smith Bay is developed, the forecast is it would yield the state ~$30 billion in taxes over 30 years, and extend the life of TAPS by ~20 years. Without the additional 200k bbls/day from Smith or other new developments TAPS is looking to be in trouble from insufficient throughput in 10-15 years.
