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Ghexis newsletter No.11 - April 1997

 
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Newsletter No. 11 - April 1997
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Headlines:

1:  Offshore West Greenland: The Fylla area
2:  Onshore exploration in West Greenland
3:  A new information package: The Disko–Nuussuaq–Svartenhuk region
4:  Melville Bay


Offshore West Greenland: The Fylla area

On December 5, 1996, an exploration and exploitation licence for hydrocarbons was granted for parts of the Fylla area off West Greenland. The licensee is a group composed of Statoil (operator, 38.25%), Phillips (38.25%), DOPAS (8.5%) and Nunaoil (15%).

Background

In 1992, seismic data were acquired by the Geological Survey of Greenland (GGU) over the Fylla area. In the later processing of the seismic, flat-spots in large, rotated fault-blocks were observed on one of the seismic lines. This area had not previously been regarded as of commercial interest because water depths are between 500 and 1200 m. Later reprocessing of part of this line determined that the flat-spots indicate real geological features, possibly gas-liquid  contacts.

In 1994, Nunaoil A/S (jointly owned by the Danish and Greenland Governments) acquired 1,706 km of additional speculative seismic data in the Fylla area. These data confirmed the existence of the flat-spots on several lines, both parallel to and at right-angles to GGU's original line.

Application procedure

The offshore areas in West Greenland south of 70°30'N were covered by an open-door  policy adopted by the Danish/Greenland Authorities in April 1994. However, when it became obvious that the new seismic data from the Fylla area were so encouraging that considerable industry interest in the area could be expected, it was decided in May 1995 to use a special application procedure for the Fylla area. Thus, all applications for licences in the Fylla area received as of February 29, 1996, would be handled by the Mineral Resources Administration for Greenland (MRA) in one process.

At the expiry of the deadline, applications had been received from two groups with participation of the following companies:

  • Dansk Olie- og Gasproduktion A/S (DOPAS)
    Den norske stats oljeselskap a.s. (Statoil)
    Elf Acquitaine
    Phillips Petroleum International Corporation Denmark
    Total

Negotiations were carried out with both application groups during the spring of 1996. As of the summer of 1996 the negotiations for a licence text were concentrated on the Statoil group composed of Statoil, Phillips and DOPAS. The Statoil licence was granted on December 5, 1996.

Licence area and terms

The Statoil licence is based on the model exploration and exploitation licence used during the 1992-93 licensing round for offshore areas in West Greenland south of 66°N. However, significant adjustments have been made, in particular with respect to the provisions regarding licence area and period, relinquishment, exploration commitments and royalties. The licence terms may be summarized as follows:

  • Initially, the licence covers an area of 9,487 km² divided into a western subarea of 6,842  km² and an eastern subarea of 2,645 km².
  • The exploration period is from December 5, 1996 to December 31, 2004 and is divided into two subperiods of four years each. The exploration period may be extended at the discretion of the Minister for Environment and Energy for periods of up to three years at a time.
  • At the end of the first subperiod, 25% of the licence area is to be relinquished.
  • The exploration commitments during the first subperiod consist of seismic data acquisition and exploratory wells.
  • During the second subperiod the exploration commitments consist of additional exploratory wells.
  • Nunaoil A/S participates in the licence with 15% which is carried in the exploration phase, but not in the development and production phases.
  • In the event of a discovery, the licensee is entitled to be granted a 30 year exploitation licence over the area in which commercially viable hydrocarbons have been demonstrated and delineated.

The licensee will pay Greenland taxation in force at any time, including corporation tax (currently 35%) and dividend tax.

They will also pay royalties as follows:

  • For oil/condensate the royalty is 2% of the first 500 million barrels of oil/condensate produced and 5% for the production exceeding 500 million barrels.
  • For natural gas the royalty is 2% on the value of the natural gas, irrespective of the size of the production.

Public revenues from the exploitation licence will be divided between the Danish State and the Greenland Government with 50% to each party as regards revenues up to 500 million DKK per year. The division of revenues in excess of 500 million DKK per year will be stipulated in the  Mineral Resources Act following negotiations between the two governments.

A copy of the Statoil licence text may be requested from MRA.

The licensee plans to carry out seismic acquisition and environmental studies during 1997. The first exploratory well could be drilled as early as the summer of 1998.


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Onshore exploration in West Greenland

1996 saw a major development within exploration activities onshore West Greenland. In 1996,  the first conventional oil exploratory well onshore in Greenland was drilled to a depth of 2,997 m on the south-western coast of the Nuussuaq Peninsula. Oil exploration was also initiated on the Disko Island. In both cases the exploration was carried out by a group led by the Canadian company grønArctic Energy Inc. The group also includes the mineral companies Platinova A/S and Platinova Resources Ltd.

Nuussuaq GRO#3 - the first onshore oil exploratory well in Greenland

Following the drilling of four slim hole wells in 1994-95, grøn-Arctic in 1996 drilled a full-scale exploratory well - the first onshore oil exploratory well in
Greenland.

The drilling rig, Terroco Drilling Rig #3, drilling accessories and supplies were mobilised from Montreal, Canada on July 1st on the vessel "Anna Desgagnes" arriving at Nuussuaq on July 9th.

The original program was for the drilling of two, possibly three, wells at sites located inland on Nuussuaq. Due to a late spring, the conditions for transporting the rig and equipment overland on the tundra were not deemed feasible and it was then decided by grønArctic to drill an exploration well at an alternative site near the mobilising staging area. According to grønArctic's press release of August 1, 1996, the GRO#3 well was drilled "to evaluate the stratigraphic section along this structural trend which is associated with oil seeps at Marraat to the north-west and the oil seeps to the south-east of this drilling location".

grønArctic's Nuussuaq Kugssuaq GRO#3 well was spudded on August 3rd and terminated on October 6th at a depth of 2,996.6 m (2983.32 TVD). The GRO#3 well was drilled in  accordance with requirements set out by MRA that included the development of Oil Spill  Response and Emergency Response Plans and a Safe Work Practices and Environmental Guidelines Manual.

Drilling the Nuussuaq GRO#3 well fulfilled grønArctic's exploration commitment for 1996 and 1997 for the Nuussuaq licence.

Depending on financing, grønArctic plans to drill 2-3 wells in the 1997-98 winter season. The winter season will allow for trucking of the rig and equipment on the frozen terrain to the drill  sites.

Airborne gravity and magnetic survey

From February to April 1996, grønArctic carried out an airborne gravity and reconnaissance survey in its licence area on Nuussuaq and over parts of Disko. A total of 6,040 line kilometers of gravity data and 6,222 line kilometers of magnetic data were acquired with a 2 x 12 kilometer flight grid.

Adjustments of the Nuussuaq licence

The Nuussuaq licence was granted in May 1995. Prior to this grønArctic had drilled a slim core hole in 1994. In 1995, a geophysical survey was carried out and three slim core holes were drilled on the south-western and northern coast of Nuussuaq.

Based on the results of the 1995 exploration, the Nuussuaq licence was adjusted in the spring of 1996, primarily with respect to the exploration commitments and the size of the licence area. Thus, the licence area was increased from 1,692 km² to 2,355 km², however without amendments of the relinquishment provisions.

At the end of 1996, a large part of the licence area was relinquished in accordance with the licence terms. The licence area now covers slightly under 1,000 km².

Granting of a Disko licence

A new exploration and exploitation licence for hydrocarbons was granted in the spring of 1996 for onshore areas of 1,011 km² on Disko Island in West Greenland. The Disko licence is granted to the same licensee as the Nuussuaq licence and the licence terms are based on the same principles as the Nuussuaq licence.


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New information package: The Disko–Nuussuaq–Svartenhuk region

A new data and report package including many results from recent GEUS studies on Disko, Nuussuaq and Svartenhuk Halvø has been released in April, 1997. The results are of great importance for a first assessment of the exploration possibilities on- and offshore West Greenland. The package is being distributed to the industry at a price of DKK 10,000 that mainly covers the costs of reproduction and shipment. The package includes results from systematic field work from the period 1990-1996. It includes descriptions of the sedimentology, stratigraphy and organic geochemistry of the onshore basins, selected studies made by GEUS for grønArctic Energy Inc. as part of their exploration drilling in 1994 (GANW #1) and 1995 (GANE #1, GANT #1 and GANK #1), and results from the Umiivik-1 well on Svartenhuk Halvø drilled by GEUS for the Danish/Greenland Authorities in 1995.

Contents include

  • well completion reports for GANE #1, GANT #1, GANK #1 and Umiivik-1,
  • sedimentological reports for GANE #1, GANT #1, GANK #1, Umiivik-1,
  • geological and geochemical report for GANW#1,
  • geochemical reports for GANE #1, GANT #1, GANK #1, Umiivik-1,
  • palynological report for Umiivik-1,
  • organic geochemical data and report from seep studies on Disko and Nuussuaq,
  • reprints, preprints and abstracts of selected papers.

A complete list of contents and an order form can be obtained from the Geological Survey of Denmark and Greenland (GEUS).

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Melville Bay

As part of the KANUMAS-project, 4,070 km of seismic data were acquired off Northwest Greenland in the Melville Bay area. The results of this data revealed a very large thickness of sediments in a complex of grabens and half-grabens and also the existence of very large structures that could provide traps for hydrocarbons. However, planning of any future exploration requires in addition to a detailed evaluation of the KANUMAS data, an understanding of the physical and environmental data in the area. Due to the lack of accessible information concerning the physical environment, the Danish/Greenland authorities commissioned the Danish Meteorological Institute (DMI) to prepare a report compiling and interpreting all available information on physical conditions (climate, winds, currents and ice conditions) in the area. This completed report titled Physical Environment in eastern Baffin Bay north of 71°N consists of three volumes of which Volume 1 comprises the main text and several examples, Volume 2 is a collection of appendices, and Volume 3 deals with Satellite Imagery. These reports can be purchased from MRA. Additional information is provided in a recently issued leaflet.

In regards to the biological environment, surveys have been carried since 1994 by the National Environmental Research Institute directed primarily at the large populations of sea birds in the area. Basic information on sea bird colonies has been gathered and compiled in a database and published in a report in 1996. Aerial surveys were conducted in 1994 and 1995 with the aim of locating moulting areas for ducks in the coastal zone. A study identifying birdconcentrations during the spring migration was initiated in 1995 and will continue in 1997. In addition, as part of an investigation of use of habitat in 1993 and 1994, narwhals in the Melville Bay were tagged with satellite transmitters.

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BUREAU OF MINERALS AND PETROLEUM (BMP)
Government of Greenland, P.O. Box 930, DK-3900 Nuuk, Greenland
Tel.: +299 34 68 00, Fax.: +299 32 43 02, E-mail: bmp@gh.gl
Homepage: www.bmp.gl

GEOLOGICAL SURVEY OF DENMARK AND GREENLAND (GEUS)
Øster Voldgade 10, DK-1350 Copenhagen K, Denmark
Tel.: +45 38 14 20 00, Fax.: +45 38 14 20 50, E-mail: geus@geus.dk
Homepage: www.geus.dk

ISSN 0909-0630 



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Last modified: 10 March 2002 © GEUS
GHEXIS is published by GEUS in co-orporation with the Bureau of Minerals and Petroleum, Government of Greenland
GHEXIS publiceres af GEUS i samarbejde med Råstofdirektoratet, Grønlands Hjemmestyre

GHEXIS Newsletter No. 11