Iceland’s first round of licensing for offshore exploration rights began yesterday. Iceland plans to award up to five offshore oil and gas licences, the head of the project told Reuters.
Sveinn Arnarson said that more than 100 blocks covering 42,700 square km in the Dreki (dragon) area in the North Atlantic will be on offer in the round, with applications due by 15 May.
“In this round at most five licenses will be issued, each will have a maximum area of 800 square kilometres,” said Arnarson, the hydrocarbon licensing manager at Iceland’s energy authority Orkustofnun.
The Dreki area is northeast of Iceland and south of Norway’s Jan Mayen. The area has geology considered similar to that found in areas off Greenland where hydrocarbon reserves have already been found. Norwegian authorities will also gain stakes in some blocks near the border of the two countries’ economic zones.
Exploration companies remain positive on the licences despite the fall in oil prices, Orkustofnun chief Gudni Johannesson told Reuters last month.
No sooner has the myth of Iceland becoming a global banking center been popped in brutal fashion – a new myth emerges to take its rightful place.
It’s very, very, unlikely oil exploration companies will discover large areas of oil or natural gas in the Dreki region. They will find a limited amount but it will not be enough to develop Dreki due to the dramatic price level drop for oil and gas.
No one will try and develop the region for at least twenty years given the negative costs of such an operation. The current situation in the Faroe Islands is an excellent case in point.
One hopes Icelanders do not return to manic overconsumption until they actually have the money in the bank this time around.
Maybe someone in the Icelandic government will put in an inflated, fake bid (following the business practices of the Icelandic banks). Then the government can give these licenses to foreigners – how about the British? – in exchange for some debt.
Anyone who buys these licenses has to build huge rigs in rough waters far away from anywhere – and then compete in price with the Saudis who just have to put a hose in the ground.
@ Vilhjalm Antonsen
Very good point made.
I believe at the present oil prices there is no money in offshore oil, were the cost to take the oil is more than the current oil price.
I think to pump the oil out in Kuwait is only about 7 dollars a barrel.
So even in the current LOW market price, still they can make significant profits.
Even if there is a huge amount of oil to be found offshore the market has to strengthen a lot before the developers could make any good returns
BUT i for one still live in hope !
Iceland should first solve the issue @ hand, which is the economic crisis before jumping to any other project, they keep living in a fantasy world hoping to get some fossil oil in the middle of no where,
I guess this is a ”distraction tactics” ??. The clowns running the show in Iceland must have delayed understanding or difficulty to understand that the economy is messed up. They keep looking for ways to ignore the current issue @ hand. Old geezers in the Parliament as if the Parliament is old people’s home.
First things first, they should remain focused in fixing the economic crisis !!
Good to see experts posting again on subjects they know so much about. And with such grace too.
>No sooner has the myth of Iceland becoming a global banking center been popped in brutal fashion
Don’t you think you’re being little bit snidey, kicking when down, etc?
Contribution of Brown Darling not in doubt as is wonderful job being done by them now with City of London now also entering into history as myth of Global Banking Center. (Took Brown 11 years to destrory City of London. Iceland it took him only 1 week to kick right over the waterfall.)
>It’s very, very, unlikely oil exploration companies will discover large areas of oil or natural gas in the Dreki region
Really. Tell to Norweigans extracting right next door, and others to North.
http://eng.vidskiptaraduneyti.is/media/Acrobat/Maps_of_the_Dreki_area_final.pdf
>No one will try and develop the region for at least twenty years given the negative costs of such an operation. The current situation in the Faroe Islands is an excellent case in point.
Once the world turns and comes out of recession, the things that will go up first are assets not injured. That is commodities and particulary oil and gas as capacity worlwide is already “just enough” and the boom will be more because now capacity investment will have been less during recession.
It will happen by the time exploration has begun. Within 2 years most likely. Then cost effectivenss will mean more investment in production. Oil companies know good area when see it. Yes exploration licenses last 12 to 16 year, but thats not surpising. Yes its capital intensive to explore but the profits are so huge once producing and the new technology applied to oil patch — as compared to mining geophysics — is quite amazing.
>compete in price with the Saudis who just have to put a hose in the ground.
Saudis been pumping water in for long time. Capacity is no longer what once was. Common knowledge in oil patch. Keeping at 10mil barrels per day is sretching them even.
http://www.rice.edu/energy/publications/docs/NOCs/Papers/SaudiAramco_Jaffe-Elass.pdf
Reality is oil has to come from elsewhere and new oil fields few in traditional places. And wilth oil comes more likely gas fields. Gas is just as significant particulaly in Europe as many cold Eastern Europeans noticed recently.
http://www.euobserver.com/9/27035
“Oil companies like North Energy and Norwegian energy giant Statoil Hydro believe the Arctic holds as much as 25 percent of the worlds undiscovered oil and gas deposits – as much as the combined reserves of Canada and Saudi Arabia.
Russia’s Gazprom already has approximately 34 trillion cubic metres (113 trillion cubic feet) of gas under development in the Barents Sea and Moscow is claiming territory in the Arctic that contains an estimated 586 billion barrels of oil.”
Fishy, really you need to take a REAL look around you in this world. OIL is a dying animal. Have you ever heard of GREEN? The world is turning to alternate energy sources away from oil. Even long time oil tycoons here in the U.S. are getting out of the oil field and into alternate energy sources now a days. Starlington has it right maybe, a distraction tactic is all it really is. Fishy, you must be someone who has been living under a rock somewhere. Or a mythologist.
U.S. citizen – why do you attack fishy ? He has all the data and you have empty accusations?
oil a dead animal? it never even started off as a dead animal… so you are stating if you found oil on your property you would not drill / sell drilling rights ? (bs)
Of course fishy has heard of green, approx. 90% of Iceland is heating using green technologies.
And btw Lincoln may have been killed because he helped start the destruction of the United States. His heavy handed federalist notions cost the United States more lifes than all other wars put together, unless you count the war against unborn (and born!) babies (40 million and counting)
NO ONE IS PUTTING MONEY IN OIL RIGHT NOW…. WHATEVER ICELAND HAS TO OFFER NO ONE REALLY WANTS TO GET CLOSE TO ICELAND, NO ONE WANTS ANYTHING TO DO WITH ICELAND. ICELAND IS ECONOMICALLY RUINED AND POLITICALLY INSECURE…
NO ONE WOULD LIKE TO MAKE BUSINESS WITH ICELAND UNTIL THE PRESENT SITUATION IS SOLVED. LETS SAY AFTER 2 YEARS.
AT WHAT PRICE DO THEY SELL?? IS IT THE ISK/USD RATE OF THE ICB??
HAHAHAHAHA, WHAT A TROOP OF CLOWNS… HAHAHAHAHAH ;D
michael hannes
I guess you were not here ealier. Today was my first time here posting, with in 5 minutes on another site, he began his name calling and attacking me. Some one that he don’t even know. Please, so you don’t get dragged into it also, lets just keep it between me and him. I would rather he just kept his OPIONIONS to him self. And NO, I would NOT sell the oil rights to any one. Why would I want to invite more problems onto my own land? or onto the rest of the world. They don’t need oil. Oil is what has gotten this world into the problems it has already. As far as who started the destruction of this country, read what the president during 1913 said about the federal researve act of 1913. You know then where it all started. He was sorry he ever made that mistake. That was his OWN words. I didn’t say it.
btw you stated “U.S. citizen – why do you attack fishy ? He has all the data and you have empty accusations?” I do not make accusations. I have facts. He has no data. At lest none that he shares here with me. It would seem that YOU have made an ASSUMPTION of me as well.
ah… touche’ (if thats spelled correctly)
i have to say your tone and response was top-rate…
i did not choose my words quite carefully… perhaps even being a bit argumentative… my bad…
however, i’m also more of a optomystic in regards to oil use, and don’t subscribe to global warming vis-a-vis co2 emissions, and also hopeful that Iceland could benefit by its discovery.
so i had a bit of a bias there….
I’m sure we can both agree about the rest though….. the private bankers at the federal reserve, income tax, dissolution of appointing senators, pillaging of the gold, the consolidation of wealth from the depression, onward through to the Council of Foreign Relations, the Trilateral Commission, Bilderberg group, Rockefeller, Rothchild, etc…
so, what plans are afoot here in Iceland?
@GUS. You may dislike it, but it could even be possible to Iceland to earn a lot of money on Oil/Gas without lifting a finger.
@Fishy – here are some media from StatoilHydro on the Snehvit project west of Hammerfest i Troms/Norway. It did cost money – and even if we like the project or not – it is facinating.
http://www.statoil.com/STATOILCOM/snohvit/svg02699.nsf?OpenDatabase&lang=en
@Øystein. That’s a huge project. Mostly natural gas, it seems. It has taken 5 years just to build the mainland plant. It looks like they haven’t even started the derricks yet offshore.
And the costs are enormous – “58.3 billion (current money) kr. for field development, pipeline and land plant”. And in that case they can run pipes to the coast. What are the costs if you have to build wells in the middle of the ocean with no land to run pipes too, as is the situation with the Icelandic fields?
Norway can afford it and take a long term perspective. The oil companies will only out invest that amount of money if they get very good profits and long-term leases, and even then, it doesn’t make much sense for them. In southern Iraq you just have to put a shovel in the ground and run a hose to the truck. It would be cheaper to pay the Americans to put their army around the oil fields.
Another reason Norway is doing this is to “support” Finnmark. Part of my family came from the Altafjord, south of Hammerfest. Nobody wants to live there anymore unless there is a good incentive — lots of money from the south. It’s far away from anywhere, there’s nothing to do, very cold in the winter (not like the Florida winters in southern Norway and Iceland), mostly dark for three months a year, and huge nasty mosquitos in the summer.
@Vilhjalm – they started gas (LNG) production in 2007 – there is only subsea installation, which make that weather is not a problem. Production is ment to last until 2035.
Yes, the costs is huge, but think of the knowlegde. The benefits from trial and error/knowlegde is is very important.
Yo can read more here:
http://www.statoilhydro.com/en/ouroperations/exploratonprod/ncs/snoehvit/Pages/default.aspx
Finnmark is far north, but there is a big focus on the development of the whole region – includiing north of Finland/Sweden/Russia. Of course Finnmark is ment to get benefits from this, but the perspective is much larger.
As a coriocity Hammerfest – the was the first urban settlement in Northern Europe to get electrical street lights – in 1891.
Sorry about a dead url – those who are interessted can evenually start here:
http://www.statoilhydro.com/en/ouroperations/pipelines/pages/pipelines.aspx Snøhvit is far north.
OYSTEN. WHY SHOULD I DISLIKE ICELAND GETTING MONEY? ONE OF MY THINGS HERE IS ABOUT POSTING IDEAS FOR THIS COUNTRY TO GET MONEY.
I DON´T WANT THIS COUNTRY TO GO WORSE, I WANT IT TO GO BETTER, SOCIAL CHANGES INCLUDED.
THE PROBLEM IS THAT THE SUPPOSEDLY ICELANDIC OIL, MIGHT BE NOT COMERCIABLE AT ALL. THERE IS STILL A LOT TO KNOW ABOUT HOW MUCH THERE IS, AND WHAT KIND OF OIL WE COULD FIND THERE. ( IS IT SAND OIL?)
WE ARE JUST SPECULATING WITH SOMETHING THAT IS A POSSIBILITY. BUT ARE WE GOING TO OPEN THAT BOTTLE OF CAMPAIGNE NOW? NO, OF COURSE NOT, NOT NOW AND NOT IN MANY YEARS.
WHATEVER IT IS THE REASON, THE OIL MARKET IS AT ITS WORST NOW. PRODUCTION HAS BECAME MORE EXPENSIVE AND BENEFITS DRAMATICALLY REDUCED. IT IS JUST THAT OIL ISN´T THAT “GREAT BUSSINESS” ANYMORE. AND NO MATTER HOW MUCH WE NEED OF IT, YOU CAN SEE, PRICES HAVE BEEN ONLY DROPING A LOT… SO
YOU TELL ME…
@Gus – time will show . Here is link from os.is:
http://www.os.is/Apps/WebObjects/Orkustofnun.woa/1/wa/dp?id=2347&wosid=5DFJMjdM7py8rmsOY2K6tw
I don’t really know a hole lot about Iceland, I just love the name. welp, the dress’es the ladies ware there is bautiful too :) and the ladies too. well anyways, I was just wondering, what all resources does Iceland sell/Export? I know it’s got to be more then just fish. Oil/Gas is so bad of an investment that one oil tycoon here in the U.S., his name is Mr. Pickens I think, He’s getting out of oil and into wind turbines now. I was just wondering, perhaps Iceland might have some kind of ability to do that and sell/export it some how like parts or something. Just thinking out loud maybe.
WHY DENMARK AND SWEDEN HAVE JOINED EU?? IF YOU DEFEND THAT IT COULD BE VERY GOOD TO CREATE AN SCANDINAVIAN COMMUNITY, WITH COMMOM CURRENCY AND ALL THOSE CRAZY IDEAS??
BECAUSE YOU DON´T REALLY TRUST EACH OTHER!!
CORRECTION: “WHY SCANDINAVIA DOES “NOT” BACK ICELAND TOTALLY?”