Evidence is growing that oil may be found in the Dreki area, northeast of Iceland. Recent seismic studies and re-evaluation of available data indicate the presence of thick Mesozoic sediments, similar to those found in the adjacent and geologically-related oil areas of Norway and Greenland. Surface pockmarks, which are known to cluster around major hydrocarbon fields in the North Sea, were also recently discovered in the area.
"We are as determined as ever to explore the potential for oil in the Dreki area, despite the current economic crisis. With the ongoing licensing round we are opening the largest, undrilled, and easily accessible potential oil frontier in the world. Many international oil companies have already expressed keen interest in further research in the area, and the attention of oil industry pioneers is being drawn to Iceland," said Ossur Skarphedinsson, Iceland's Minister of Industry.
First-Ever Licensing Round
The blocks on offer in the first Licensing Round are located in the Dreki area, northeast of Iceland, from 67 degrees 00'N to 68 degrees 30'N and 11 degrees 30'W to 6 degrees 20'W. The area covers 42,700 square kilometers. Water depths range mostly from 800 to 2000 meters, which is well within the reach of currently available and tested technology for undersea oil drilling.
Each block will measure approximately 96,000 acres (390 square kilometers) each, and the licenses may cover more than one block or sections of blocks. Applications for licenses can cover one or more blocks, up to five in total, covering an area no larger than 200,000 acres (800 square kilometers). The exploration and production licenses included in the round are:
The terms of the licensing include an initial 12-year exploration permit, with a potential 4-year extension; and once a field has been discovered and appraised, production licenses are available for 30 years.
Iceland signed a treaty with Norway on the northernmost 30% of the area available, and on those blocks, Norway has the opportunity to acquire up to 25% interest in the license.
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