Oil Formations of Iceland’s Dreki Region Confirmed

From our previous January (2012) post, ‘Iceland’s Dreki Region May Show Promise‘, we know that drilling samples from Iceland’s potentially oil-rich northern Dreki region were being analyzed.  Results were to have been released at some time mid-February.  This time has now come, and study results are lending to the existence of oil formations below the Dreki zone.  Iceland’s National Energy Authority says it best;

“The new samples give exciting insight into the petroleum geology of the Jan Mayen Ridge. Diverse sedimentary rocks of Mesozoic age (250 to 65 million years) were recovered. Prior to last summer no rocks older than 50 million years had been drilled or sampled in this area. Advanced geochemical analyses of the recovered sediments suggest active seepage of Jurassic oil and a working hydrocarbon system.”

(Read the full report here)

Potential Issues

Everyone ought to be interested in the search for oil and gas reserves within Iceland’s exclusive economic zones.  This is due to the environmentalist activity that will spur from it.  Iceland is currently under the careful watch of several international environmental firms that wish to erase away the energy intensive aluminium smelting industry.  These protests are mostly related to the construction of hydroelectric dams that need to be built in order to supply aluminium smelters with reliable energy sources.  (Read more – Iceland’s Aluminium Smelting Industry) If clean CO2-free hydroelectric dams are under heavy scrutiny, I would hate to see what kind of attention oil production would yield.

The second issue is that of the likelihood of an oil refinery being built on Icelandic soil if there is to be actual oil production from offshore sources.   According to many sources, there have been plans in the past to build an oil refinery in western Iceland.  It has been argued that due to Iceland’s location relative to oil transit routes, it would be economical to simply refine oil along the way with an Iceland stop-over.  It has also been argued that Icelandic-refined oil would carry far less of a carbon footprint than would the oil refined in other countries.  That being said, Iceland’s total carbon footprint could be reduced if Icelandic ships and cars run on that oil.  (Iceland Review – source below)  The above argument may sound attractive in a vacuum, but Iceland has a history of cartels.  Not only does Iceland have a history of oil cartels among distributing / importing firms, it has a history of, debatably, accepting low energy price contracts on behalf of Icelandic state energy companies, for the aluminium smelting industry.  It would thus be unintuitive to believe that refined oil would be orchestrated to serve solely Icelandic interests.  The main thing to be said here is that pressure to build an oil refinery would be great within a future oil-producing Iceland.

Sources

  • Iceland Review – Oil Refinery to be Built in Iceland’s Westfjords? – http://www.icelandreview.com/icelandreview/search/news/Default.asp?ew_0_a_id=276970
  • Orkustofnun (NEA) – New seabed samples reveal active Jurassic oil seeps and Mesozoic sedimentary sequences on the Jan Mayen Ridge – http://www.nea.is/the-national-energy-authority/news/nr/1209
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One Response to Oil Formations of Iceland’s Dreki Region Confirmed

  1. Pingback: Iceland’s New Era of Offshore Exploration « Arctic Economics

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