Faroes gear up for exploration

The Faroe Islands, a Danish dependency midway between Iceland and Scotland, looks set to open up for exploration licensing this year. In 1993 Faroese authorities set out to lure petroleum companies. Early this month 23 eager firms signed an agreement to begin environmental assessment ahead of licensing. Heralvur Joensen, director of the Faroese Petroleum Administration, told a conference that, following recent enactment of legislation, the government will work to finalize terms and conditions

March 16, 1998

3 min read

David Knott
London
[email protected]

The Faroe Islands, a Danish dependency midway between Iceland and Scotland, looks set to open up for exploration licensing this year.

In 1993 Faroese authorities set out to lure petroleum companies. Early this month 23 eager firms signed an agreement to begin environmental assessment ahead of licensing.

Heralvur Joensen, director of the Faroese Petroleum Administration, told a conference that, following recent enactment of legislation, the government will work to finalize terms and conditions for a first offshore licensing round.

Joensen said interest among oil companies is evident in the number of companies supporting the environmental survey and nominations of acreage by interested companies.

Faroese authorities are guardedly optimistic. Joensen said lack of well data meant assessment of potential was based on analogies with the geologically similar U.K. West of Shetland play and Offshore Central Norway.

"Exploration potential in the Faroes is considered relatively favorable," said Joensen. "Despite the positive elements, the Faroes are considered a frontier, high risk area, where no hydrocarbon accumulations have been proved."

Basalt barrier

There has been no drilling for hydrocarbons in the Faroes, although a group of 19 oil companies extended a geological onshore borehole in 1996 to back up seismic data.

Western Geophysical Ltd., London, acquired seismic data over most of the Faroese offshore territory in 1994 and 1995. This focused particularly on areas east, south, and southwest of the islands.

Since 1994, a number of speculative surveys have been carried out. More than 25 oil companies acquired data, while 23 firms nominated 108 whole blocks and 26 partial blocks for licensing, particularly to the east and south.

"Both seismic and oil companies," said Joensen, "have struggled to solve the problems associated with extensive and thick layers of basalt covering the Faroese shelf.

"A number of innovative steps have been made to improve sub-basalt imaging, and progress appears to have been made. Companies are studying how new drilling techniques can make penetration of basalt easier."

Environmental survey

The environmental survey agreement represents rare cooperation ahead of the usual prelicensing scramble.

Companies involved are: Agip SpA, Amerada Hess Ltd., Amoco Corp., ARCO, BP Exploration Operating Co. Ltd., Conoco Inc., Deminex GmbH, Dansk Olie & Naturgas, Elf Aquitaine SA, Enterprise Oil plc, Exxon Corp., Petrofina SA, Lasmo plc, Maersk Olie & Gas AS, Marathon Oil Co., Mobil Corp., Murphy Eastern Oil Co., Norsk Hydro AS, Phillips Petroleum Co., Saga Petroleum AS, Shell Exploration & Production BV, Statoil, and Texaco Inc.

The surveyors will map out the geotechnical, environmental, and meta-ocean characteristics of the Faroes. An Amerada Hess official said the aim is to have information in place to support drilling anticipated early in 2000.

The official said that, now that framework legislation is in place, companies expect the licensing round to be opened in the autumn, with bidding for license closing by yearend, and license awards in spring of 1999.