As the risks associated with exploration in Faroese territory decrease, the Faroes Oil Industry Group (FOĺB) could take on a more active role in helping promote the Faroe Islands as a place for oil and gas investment.
The last time a well was drilled offshore the Faroe Islands in 2008, there was a palpable sense of disappointment when the William probe operated by BP turned out not to be the find that many had expected and hoped for.
However, with clear and growing evidence of greater success just a few tens of kilometers away on the UK sector of the Atlantic Margin and with the Faroes sector Anne Marie well scheduled for 2010, there is absolutely an air of optimism among the membership of FOĺB, the Faroes Oil Industry Group.
FOĺB chairman Nils Sørensen, Managing Director of Faroe Petroleum Faroes, believes there is much to be positive about, especially in the light of the successful Glenlivet and Tornado wells drilled in UK territory during the 2009 West of Shetland season, both of which have Faroe Petroleum as a strategic stakeholder, and the decision by Total to push ahead with the 2.4 billion gbp (2.6 bn eur) Laggan-Tormore gas/condensate development.
“Generally, I’d say there has been ongoing, moderate progress in the Faroes to the extent that it is no longer completely frontier territory,” says Mr. Sørensen. “With the recent run of successes on the UK side of the Atlantic Margin the risk factor for drilling in Faroese waters has been substantially reduced compared to prior years.
“The Total development of Laggan-Tormore means there could be, for the first time, gas pipeline infrastructure designed with additional capacity to accept production from smaller UK stranded discoveries and smaller prospect that will probably now become sufficiently interesting for companies to consider drilling. And of course last year’s Glenlivet gas discovery success is an obvious potential tie-in.”
Mr. Sørensen points out that this is not the limit of the UK sector successes of late, the most obvious and yet also most tantalizing being Rosebank-Lochnagar — an apparently large oil and gas accumulation that operator Chevron continues to appraise and which is just a few kilometers from the Faroe portion of the Atlantic Margin. He perceives that, gradually, the UK drilling effort is moving westward and closer to the Faroe-UK boundary line.
Legislative change: “This means that Faroe is increasingly a logical extension of what lies on the UK side,” Mr. Sørensen says.
“Look at Anne Marie: which is operated by Eni and in which Faroe Petroleum has a 12.5-percent interest. This is very close to the Cambo well drilled by Hess as operator in 2001 and which encountered oil.”
“I think too that the fact that Statoil has committed to two wells within the next three years is also very encouraging,” he adds, referring to the Norwegian company’s decision to extend its commitment to licenses 006, 009 and 011.
“Remember, every well drilled on either side of the border increases knowledge. Statoil’s commitment especially means a lot.
“An important point is that it is technologically no longer a problem to drill through thick basalt layers … the William and Brugdan well particularly showed that. However, it is still a problem to ‘see’ through thick basalt layers with seismic.”
FOĺB remains the voice of the oil and gas industry in Faroe and has stood the test of time and uncertainty quite robustly. Of course the membership has changed along the way with Anadarko, BP and Chevron no longer involved.
However, the current membership is strong, appropriate and, to an extent, reflects the level of confidence that now exists regarding the potential on both sides of the Faroe-UK boundary.
“We are now looking to promote Faroe as a place for further exploration,” Mr. Sørensen says. This, he argues, is helped by the legislative changes now underway to make exploration easier.
“The introduction of what we call the ‘open door policy’ means licenses can be obtained outside of licensing round procedures. This is similar to the UK where out-of-round licenses have been awarded on a discretionary basis for several years, and to other countries were the same approach has been used to promote the oil and gas sector.
“The changes mean that licenses are to be obtained from Jarðfeingi, the Faroese Earth and Energy Directorate — rather than having to go the political level for acceptance through legislation.”
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