Amerada Hess finds first oil off Faroe Islands in northeast Atlantic

By the OGJ Online Staff

LONDON, Nov. 19 -- Hopes that the Faroe Islands will emerge as a producing area received a boost when Amerada Hess Corp. said Monday it found oil with an offshore wildcat.

The local government has been encouraging oil companies to explore in the area the past 20 years. Only two wells have been drilled, a dry hole by Statoil ASA in September and the Amerada Hess discovery.

The recent decision by BP PLC to develop its Claire discovery between the Faroes and the Shetland Islands has led to rekindled interest in exploration in Faroes waters. A government spokesman said the Amerada Hess discovery could lead to an upsurge in interest in the area.

Faroes Petroleum Minister Eydun Elttoer said, "The success of this well is very important for the Faroe Islands as a future oil province, even if we do not at this moment of time know whether the find is commercial."

He said that it is too early to speculate on the hydorcarbon quantities. Amerada Hess is due to submit a report on the well, along with an appraisal program, within 8 months.

The company, as operator of License 001 in the Faroe Islands, confirmed that well 6004/16-1 found light oil and gas in a gross interval of 170 m. The well was not subjected to a flow test due to weather conditions, and following logging operations, was being abandoned.

Amerada Hess UK Managing Director Nick Fairbrother said, "This is a great result. We're delighted that our first well in the Faroes has been successful, and we look forward to following up on this success with our drilling program next year. However, while the results show the presence of significant volumes of hydrocarbons in the Faroes sector of the northeast Atlantic, a great deal more work is required to evaluate the results of the well and determine the appropriate appraisal program."

Located in 950 m of water close to the boundary with the UK, the well was drilled to 4,275 m TD. It was deepened after reaching the planned depth of 3,830 m.

Amerada Hess is operator with 71.547% of the license. The Danish state exploration and production company DONG AS has 28.286%, and Atlantic Petroleum Inc. has 0.167%.

Amerada Hess contracted the Sovereign Explorer rig to drill the well after it had completed Statoil's unsuccessful well on a nearby block.

In the first licensing round for the Faroe shelf last February, the Ministry of Petroleum received 22 license applications from 17 companies. In August 2000, the ministry awarded seven offshore exploration licenses to 12 companies.

The Faroe Islands, an 18-island archipelago between Scotland and Iceland with a population of 45,000 people, has semiautonomous status under Denmark. The home rule government has full authority over hydrocarbon activity and is campaigning for independence from Denmark by 2012.