port chosen for CNOOC Iceland oil exploration

Eykon Energy, CNOOC’s local partner for their oil and gas license off Iceland, are being offered access to the Mjóeyri harbour, with a fee exemption during the exploration stages of the project, says the mayor of Fjarðabyggð municipality (Vísir). The announcement came after negotiations between Eykon and the municipality, which haven’t yet resulted in a formal agreement.

Mjóeyri harbour (Mjóeyrarhöfn), on the island’s eastern shore, was built for the Alcoa aluminium plant in nearby Reyðarfjörður.

Here’s more on Iceland oil.

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not just CNOOC to explore for oil off Iceland this year

Ithaca Energy, the operator for one of the two offshore oil and gas licenses in the Icelandic Jan Mayen area (Drekasvæðið), are planning to start 2D measurements this year, reports Vísir. Ithaca are thus joining China’s state-owned CNOOC (中海油), the operator of the other license and by far the biggest company with an interest in Icelandic oil, who have similar plans according to an announcement from last year.

CNOOC’s local partner, Eykon Energy, said in January that they’re optimistic about the project and undeterred by low oil prices. Faroe Petroleum, where Korea’s KNOC has a stake, don’t share such optimism and relinquished their own Jan Mayen license in December after preliminary studies yielded disappointing results.

The problem with any potential hydrocarbon reserves in the area is that they mostly lie under a thick layer of basaltic lava. Surface measurements like the ones planned for this year might not be enough to ascertain if there’s any oil worth extracting down there, making it hard to settle down the question without rather costly deepwater drilling. Those were precisely the reasons why the Faroe-led group gave up on the area, and Ithaca’s reported will to spend money on exploration counts as the first sign of optimism not coming from the CNOOC-Eykon partnership themselves (people with Eykon have a long record of enthusiasm about the area’s prospects).

More about Icelandic oil in my longish CNOOC backgrounder and here and there in shorter posts.

billions and billions of barrels for CNOOC in Iceland

Some rather remarkable estimates about the potential hydrocarbon reserves in the Icelandic Jan Mayen area (Drekasvæði), coming from Eykon Energy, a partner of China’s CNOOC in the largest licensed sector there, have been making the rounds on Norwegian, Icelandic, Danish, Faroese and English-language media.

An area straddling the border between Icelandic and Norwegian waters might contain, according to Eykon chairman Heiðar Már Guðjónsson, reserves of up to 1bn boe. The area, which people with the company have named Bergþóra after a Njáls saga character, doesn’t look particularly close to the sector licensed to Eykon and CNOOC and such numbers would be good news for the neighbouring licensees, among them Ithaca Energy and, through Faroe Petroleum, Korea’s national oil company. Heiðar Már’s numbers for Bergþóra alone are twice as much as what the Norwegian petroleum directorate (NPD) used to estimate for the whole Jan Mayen area.

That’s nothing compared to the 10bn barrels Heyðar Már mentioned to Dagbladet when talking about the whole area, which, converted to money, would be enough to pay off Iceland’s creditors and surely buy a lot of nice things. Some have expressed skepticism about an estimate that’s a healthy 1900% above the NPD’s, but still lags behind the 20bn that Eykon’s own Terje Hagevang projected back in 2008.

I often write about Jan Mayen oil.