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July 2007

Vol. 12, No. 28 Week of July 15, 2007

Action quickens in Greenland

Acquisition season begins; EnCana exec puts offshore well costs at about $60M

Gary Park

For Petroleum News

Interest in Greenland is perking up among Canadian companies, with EnCana on the hunt for a farm-in partner for two offshore licenses and Husky Energy eager to apply its offshore Newfoundland experience in a new region.

Meanwhile, Norwegian-based TGS-NOPEC Geophysical has launched Greenland’s latest acquisition season, hoping to add more than 100,000 miles of aeromagnetic data and 5,500 miles of two-dimensional seismic data.

EnCana acquired two offshore blocks — Atammik and Lady Franklin — in 2002 and 2005, with an 87.5 percent working interest. The balance is held by Greenland’s state-owned Nunaoil. The licenses were issued for 10-year terms.

The licenses are 90 to 150 miles west of the Greenland capital of Nuuk in water depths ranging from 3,000-5,000 feet, with a target well depth of about 12,500 feet.

EnCana Vice President Mark Cooper told the Canadian Society of Petroleum Geologists there is confidence west Greenland could become a major new hydrocarbon region, although recoverable oil of at least 150 million barrels would be needed for an economically viable development.

Wells could cost up to $60 million

He estimated well costs at up to $60 million, but doubts a well will be spudded before 2011 because of the time required to contract a rig and complete a drilling program.

Cooper said a partner would be involved in the second phase of exploration, including $6 million of geological and geophysical work on each of the two blocks.

A drilling decision would be separate from the current decision-making process, he said.

Cooper said past exploration offshore Greenland has pointed to large-scale resource potential, backed by a stable political system and sound fiscal regime.

He said there is an environmental concern relating to sea ice, but the overall conditions pose less of a threat at Newfoundland’s Grand Banks, where the Hibernia, Terra Nova and White Rose fields are already producing oil.

The physical environment can be managed using existing technology, Cooper said, adding that the area is similar to the North Sea of more than 40 years ago when the region was known to have many very large structures.

Husky also has licenses

Giving a lift to Greenland’s prospects, Husky said in June it had landed two exploration licenses in an area covering about 5,450 square miles, about three times the size of EnCana’s licenses.

The Husky blocks are about 70 miles off the west coast of Disko Island in water depths of less than 1,600 feet.

As with EnCana, Husky has an 87.5 percent interest and Nunaoil holds the balance.

Husky Chief Executive Officer John Lau said his company will start an aero-gravity and magnetic survey over the blocks this summer.

TGS-NOPEC, the leading holder of multi-client Greenland exploration data, has started a 40,000 mile aeromagnetic survey covering the complete Greenland side of Baffin Bay. Delivery is in the final quarter of 2007.

Later this summer, TGS will start the first phase of a new aeromagnetic acquisition project offshore northeast Greenland.

The sedimentary basins off the island’s west coast cover more than 100,000 square miles, matching the entire North Sea, but Greenland government officials have been cautious about projecting the scope of the potential resources beyond suggesting one area is comparable to Norway’s Ekofisk field, which is projected to have 3.5 billion barrels of recoverable oil.






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