Amerada Hess receives green light to drill in Faroese waters

Sep 14, 2001 02:00 AM

Amerada Hess has been given the green light by the Faroese government to drill for Atlantic Ocean oil and gas close to the boundary between UK and Faroese waters. The energy major is expected to start work in a few days and this will be the third and last chance this year for any oil company to find either oil or gas offshore the Faroe Islands.
The news so far is said to be grim for the Faroese. Norwegian oil company Statoil failed to hit the jackpot with the first ever well drilled off this archipelago of North Atlantic islands and it seems that BP, which is currently completing the second well, may also fail to produce good news. Both companies set off to drill their respective wells full of confidence and armed with extensive seismic survey data pointing to promising targets.

Only tiny traces of hydrocarbons were found by Statoil. BP said that drilling would continue for another week or so. A spokesman said the company had encountered some very tough conditions. Rumours are circulating the North Sea that BP's well will not be as successful as hoped.
The goal remains to prove that UK west of Shetland oil reserves extend into Faroese waters. Commercial finds would generate valuable business for Faroese companies and for the Scottish energy service sector concentrated in Aberdeen and Shetland.
Amerada Hess will use the rig Sovereign Explorer, once Statoil has completed plugging and abandoning its failed well. Like BP and Statoil, it will also drill very close to the UK-Faroes boundary. The US company is working in consortium with British Gas, DONG of Denmark and Faroese company Atlantic Petroleum.

The Faroese Ministry of Petroleum said that the Hess well would take 2-3 months and that the rig would be working in 950 metres of water -- very deep. If Amerada Hess also fails to find oil or gas, it will be a huge setback for the Faroese. Drilling in the open Atlantic is very expensive and, although further exploration is scheduled for next year, there is a risk that some companies mightpull out.
The Faroese are already worried that they are watching a re-run of the swiftly aborted, marginally successful Falkland Islands first oil and gas drilling campaign of winter 1997/98, since when the oil majors have not been back.

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