Iceland gathers data on Dreki's oil prospectivity

The National Energy Authority of Iceland (NEAI) has found further evidence that the Dreki area, which is on offer under the nation's first licensing round, could hold oil.

Uchenna Izundu
OGJ International Editor

LONDON, Feb. 21 -- The National Energy Authority of Iceland (NEAI) has found further evidence that the Dreki area, which is on offer under the nation's first licensing round, could hold oil.

Recent seismic studies and reevaluation of available data suggest the presence of thick Mesozoic sediments, similar to those found in the adjacent and geologically-related oil areas of Norway and Greenland.

"Surface pockmarks, which are known to cluster around major hydrocarbon fields in the North Sea, were also recently discovered in the area," NEAI said.

"We are as determined as ever to explore the potential for oil in the Dreki area, despite the current economic crisis. With the ongoing licensing round, we are opening the largest, undrilled, and easily accessible potential oil frontier in the world," said Ossur Skarphedinsson, Iceland's minister of industry.

Iceland's licensing round, which opened last month, covers the Jan Mayen Ridge, which lies between Norway and Iceland (OGJ Online, Sept. 5, 2008). Companies can apply for more than 100 blocks, which measure 390 sq km each, and the licenses may cover more than one block or sections of blocks. Applicants can bid for a total of as many as five licenses, covering an area no larger than 800 sq km.

The closing date for bids is May 15, and the authorities hope to award licenses in October. NEAI said it had received interest from many international oil companies. Acreage in the Arctic was previously difficult to explore because of the weather conditions and challenging environment. Technology advancement has now made it possible to carry out drilling and production, however.

The northern part of the Dreki area, northeast of Iceland, covers 42,700 sq km. Water depth is 800-2,000 m.

Successful companies y will have an initial 12-year exploration permit, with a potential 4-year extension. If any discoveries are made, production licenses are available for 30 years.

Iceland signed a treaty with Norway on the northernmost 30% of the area available, and on those blocks, Norway has the opportunity to acquire up to 25% interest in the license.

Contact Uchenna Izundu at uchennai@pennwell.com.

More in Exploration & Development