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Iceland Drilling Signs a Drilling Contract for 50 wells in Hengill area, Iceland
Orkuveita Reykjavíkur and Jarðboranir (Iceland Drilling) sign the largest ever drilling contract in Iceland - electricity production from geothermal sources increased by more than 40%
A geothermal drilling contract in the Hengill area has been signed between Orkuveita Reykjavíkur and Jarðboranir hf. This is the largest contract of its kind in Iceland as well as being the most extensive drilling project ever undertaken in this country and Orkuveita’s largest competitive tender for a geothermal project so far.
A huge increase in demand has caused the production of electricity in domestic geothermal plants to rise by more than 100% since the year 2005; with production reaching almost 3,600 GWh last year. The new drilling initiated by OR is expected to increase production by a further 40%.
Cost within schedule
The project, put up for tender in the European Economic Area, includes the drilling of 50 holes in the Hengill area, of which 35 are high-temperature holes and 15 are downflow holes. Jarðboranir submitted an offer of ISK 13.4 billion for the project, amounting to around 90% of the budget prepared by OR's advisers; ISK 14.6 billion. 20 high-temperature holes and 12 downflow holes will be drilled between 2009 and 2010. Orkuveita Reykjavíkur will decide on the schedule for the remainder of the contract at a later stage.
Preparation for the project will begin in September, while the drilling is expected to start in March 2009. Drilling activities between 2009 and 2010 will involve the expansion of Hellisheiðarvirkjun and the building of Hverahlíðarvirkjun.
For the project, Jarðboranir will use its newest drills; the largest land drills in the Nordic countries. Directional drilling will be used, allowing diagonal holes to be drilled in several directions from the same drilling location. This method significantly increases the chance of success, whilst being much more environmentally-friendly since it decreases surface damage. Up to a hundred people are expected to work on the drilling project.
The foundation of a stronger economy
The contract was signed by Hjörleifur B. Kvaran; CEO of Orkuveita Reykjavíkur and Bent S. Einarsson; CEO of Jarðboranir. Kvaran points out that environmentally sound energy is the driving force of progress in modern society and that this landmark contract is an important step towards using the country’s geothermal resources for this purpose. “The increase in value that we are aiming for with the contract will be the foundation of a stronger economy and diverse innovation. In addition, it is our objective to utilise the resources in a manner we can be proud of. We work in a competitive market, but while we strive to meet the needs of customers to the best of our ability, we must also take care to safeguard the opportunities of future generations in order to fulfil their own needs."
Bent S. Einarsson says that this important contract confirms Jarðboranir’s capacity to take on more ambitious projects, as shown by the company’s rapid growth in terms of activities, manpower and equipment in the past few years. “We have good experience of working with Orkuveita and it is an exciting challenge to prove our ability to contract a project of such magnitude. We are also proud of being a link in the value chain in which environmentally sound energy is converted into a valuable export commodity. Our increased domestic activities during the past few years have helped us to take on demanding drilling projects abroad, demonstrating a growth in this part of our activities and in marketing exports. People sometimes seem to forget that economic growth in Iceland depends on strong export activities.”
For more information contact:
Vilhjálmur Guðmundsson
Chief Executive of Corporate Development
Iceland Drilling ltd
E-mail: vilhjalmur(at)iceland-drilling.com
Tel: +354 585 5410
Mob: +354 8585410