Don't give up the day job

Nov. 26, 2001
A friendly feature of the annual North Sea exploration and production exhibitions, held in alternate years in Aberdeen and Stavanger, has been the presence over the past 10 years of the stand from the Faroes Islands.

A friendly feature of the annual North Sea exploration and production exhibitions, held in alternate years in Aberdeen and Stavanger, has been the presence over the past 10 years of the stand from the Faroes Islands.

Their staff have been extolling the virtues of their small country and suggesting to anyone who would listen that it could be the next major world oil province.

Their enthusiasm was infectious enough for 17 oil companies to apply for 22 exploration licenses in the first licensing round on the Faroe Shelf in February last year. The following Aug. 7, licenses were awarded to 12 companies.

It was the mid-1970s discovery by BP PLC of a large oil reservoir in the North Atlantic region near the Faroes boundary that kept hopes alive.

The field has now been named Clair and will soon come into production from an extremely complex reservoir, which had to wait technological advances to make it viable.

Eureka!

Now oil has been found in Faroes waters by Amerada Hess Corp. (see related item, Newsletter, p. 8), and although it will be eight months before the company has to decide if its find is worth developing, the people of the Faroes are already celebrating (although at local prices, the amount of celebratory champagne is strictly limited).

However, the coming harsh winter months will give them time to reflect.

The sad fact is that the discovery has come at a time when oil prices are at best unstable and at worst heading downwards. The economic climate makes it unlikely that Faroes oil will be quickly brought into production.

The area is far from any existing export infrastructure, and environmental pressure groups are already marshalling their arguments against oil developments in the area.

They argue that the fishing industry already provides the islanders with a good standard of living and account for 90% of island income and that the ecology in the area is a fragile one.

Meeting challenges

However, the oil industry has risen to challenges in the past, and if there is oil in the area in economically recoverable quantities, they will develop the techniques required to bring it to market.

The 45,000 people who live on the 18-island archipelago, located between Scotland and Iceland, deserve having a more diverse economy and access to the opportunities that an oil industry would bring.

They have semi-autonomous status under Denmark's government. The home-rule government has full authority over hydrocarbon activity in its territory and is campaigning for independence from Denmark by 2012.

One thing is certain: Their stand will be at the Northern Seas Conference in Stavanger next November, and their smiles will be wider than usual.