Caelus drilled two wells at Smith Bay in 2016. Photo: Caelus.Caelus Energy said it’s made a major oil discovery on the North Slope, at Smith Bay. The company estimates the oil under its current state leases at 6 billion barrels and says as much as 10 billion may lie under the shallow bay.Listen Now “It’s going to be a massive development,” Caelus CEO Jim Musselman said. “Very important for the state of the Alaska, and it’s going to create, you know, thousands of jobs.”Musselman said two wells drilled this year, sidewall cores and 3D seismic work suggest a large reservoir of light oil in good rock.“And we have the same fan complexes under each well, so that gives us courage that the fan extends over this big area,” Musselman said.Production is years away. The company says the development could eventually boost the amount of oil going down the Trans-Alaska Pipeline by about 200,000 barrels per day, an increase of nearly 40 percent over current daily averages. And Musselman said, the light oilCaelus Energy CEO Jim Musselman. Photo: Caelus.will help cut sludge, improving the pipeline’s flow.The CEO estimates the cost of the project at $8 billion to $10 billion. He says he’s confident he can get financing if the price of oil goes up to at least $65 a barrel. He said state tax credits are also crucial.“We can in fact help with their fiscal crisis going forward if they’ll help us, and I think that’s all we’re looking for,” Musselman said.This summer, Governor Bill Walker vetoed oil tax credits worth $430 million, saying the state couldn’t afford to pay so much to oil companies. However, the state is still obligated to pay them at some point in the future.Smith Bay is 150 miles west of Prudhoe Bay. The Caelus leases are in state waters, off theSmith Bay is about 150 miles west of Prudhoe Bay. (Image: Google)National Petroleum Reserve-Alaska.Lois Epstein, Arctic director for The Wilderness Society, says there’s a lot to worry about with this project. Smith Bay is next to the Teshekpuk Lake area, a large freshwater wetland that Epstein says is important to waterfowl, caribou and polar bear, and for subsistence.“Essentially, what we’re talking about is a massive industrialization in an area that’s very, very important to a large number of species,” Epstein said.The company plans to begin environmental studies now and drill an appraisal well during the winter that begins in 2017.