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Faroe Islands: Statoil scoops second round

Norway's Statoil was the main winner in the Faroe Islands' second licensing round, awarded in January – but ChevronTexaco won blocks close to its highly promising Rosebank/Lochnagar discovery in UK waters. In total, 50 blocks or part-blocks of the Danish-administered islands' territory were awarded, none of them more than 100 km from the Faroe-UK borderline.

Statoil won the operatorships of three of the seven licences awarded, two of them (010 and 011) on its own and the third (009) through a group comprising Statoil, 50%, Shell, 20%, Dong, 20%, and Føroya Kolvetni, a local private-sector company, 10%. The firm, which also operates two first-round licences, said its application met with "full success".

ChevronTexaco won operatorship of the 008 licence, covering five blocks adjacent to the border, through a group made up of ChevronTexaco, 40%, Statoil, 30%, Dong, 20%, and OMV, 10%. The same group drilled the 213/27-1Z well in the UK part of the Faroe-Shetland basin last year, making the Rosebank/Lochnagar discovery.

The well, drilled by the West Navigator drillship in 1,100 metres of water, found two oil and gas accumulations with a total payzone of 52 metres, oil quality ranging from 27-36°API. ChevronTexaco says appraisal drilling is scheduled for the discovery, which lies 126 km from the nearest coast – Esha Ness on Shetland.

The other successful companies were Føroya Kolvetni, which won the 012 licence on its own, and a venture between Norway's Geysir Petroleum (60%) and Atlantic Petroleum (40%), which took the 013 and 014 licences.

Although the government expressed its satisfaction at the outcome of the round, it seems that officials had to compromise on work requirements because none of the licences calls for a well to be drilled. "Work programmes cover seismic and other surveys as well as processing and interpretation," the Faroese Petroleum Administration (FPA) says. Licences run from three to eight years, divided into phases for which work programmes must be agreed. Two licences make stipulations about exploration wells in subsequent phases.

Four wells have been drilled in Faroese waters as a result of the first round, under which seven licences were awarded in August 2000. The most promising seems to have been 6004/16-1z, drilled by Amerada Hess on behalf of the Faroes Partnership – Amerada Hess, 42.957%, BG, 39.96%, Dong, 16.983%, and Atlantic Petroleum, 0.1%. The well, in 950 metres of water, found a gross hydrocarbons column of 170 metres but was not tested. BP's 6004/12-1 well found non-commercial oil and gas, Eni's 6004/17-1 well was dry and Statoil's 6005/15-1 well found non-commercial traces.

According to the FPA, work programmes for first-round licences called for eight commitment wells to be drilled and seismic and other surveys to be carried out. "The licences expire in August 2006, which means the [four outstanding] wells will have to be drilled by then," an official says – although it is understood that at least one company has asked for an outstanding commitment well to be transferred to its second-round licence.

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