News
Iceland Drilling Company signs its biggest agreement to date on geothermal drilling in the Azores
Iceland Drilling (UK) Ltd, a subsidiary of the Icelandic firm Jarðboranir hf., has signed a contract with two Azorean energy companies, Sogeo and GeoTerceira, for drilling exploration and production holes at high-temperature fields in the Azores Islands. The purpose of these holes is to generate electricity, and the Iceland Drilling agreement is by far the largest of this sort that has ever been concluded for the region involved. The agreement entails two interrelated projects for Sogeo and Geoterceira, both to be carried out on the Azorean islands of São Miguel and Terceira. In total, the agreement is worth up to ISK 1.8 billion [USD 15 million / EUR 12 million, with due reservations as to fluctuating exchange rates]. Most of the energy is expected to be used for electricity production for the islands.
Expanding operations
Bent S. Einarsson, Iceland Drilling CEO, says that the Azores have proved to be an important market for the company. 'It's no accident that we have managed to build up a strong niche within this market. We started gradually, initially drilling for cold water, and put emphasis above all on increasing our expertise and strengthening our connections with island residents. When opportunities began to open up for projects in Azorean high-temperature areas, we were in an advantageous position from which to compete as contractors - not only due to our knowledge of local conditions but also because of our experience of high-temperature geothermal drilling in challenging Icelandic settings. In particular, we are pleased with how much our projects in the Azores have grown in recent years.'
Located in the Atlantic some 1,500 km west of Portugal, the Azores have a population somewhat smaller than Iceland's 312,000 residents. Over half of the Azoreans live on the largest island, São Miguel. In fact, it is not long since geothermal exploitation began on São Miguel, in which Iceland Drilling was also involved. Since results were good, a decision was made to exploit the area further, by drilling additional wells. According to Bent Einarsson, the intention is to obtain over 40% of island power requirements from geothermal sources, as soon as the new boreholes have been connected to a power plant. No geothermal power has yet been developed on the island of Terceira, buton completion of drilling,constructionof an electric power plant is envisaged there too. As CEO Bent Einarsson sums up the situation, 'The Terceira power plant is expected to start generating in 2011, with estimates calling for it to fulfil 40% of island energy needs from the very beginning.' He also mentions that the European Union has supported Azorean geothermal projects, because they are seen as a realistic way of contributing to Azorean possibilities for increased self-sufficiency in the provision of environmentally friendly energy.
Highly productive fields
Vilhjalmur Gudmundsson , CDO of Iceland Drilling, states that a total of around thirty people will be involved in the drilling operations: from Iceland, Hungary and the Azores themselves. 'A drilling rig with the name Jötunn will be moved to the islands in December, operations will begin early in 2009, and we assume that the job will be finished by about the middle of 2010.' According to Vilhjalmur , 3-6 wells in the Pico Alto area are proposed for Geoterceira, while 4-7 wells in several different areas are included in Sogeo's intentions for serving the generating station at Ribeira Grande. Vilhjalmur continues: 'These high-temperature areas are extremely productive, since the islands lie on the Mid-Atlantic Ridge, like Iceland. We intend to drill down to depths of 1,000 to 1,500 m, where temperatures should be around 300° C.'
He also points out that although the principal regional industries are fishing and agriculture, tourism is a significant growth area for the economy. 'It is above all with regard for the tourist industry that the islands place strict environmental demands on contractors, no less than those placed in Iceland. It is safe to say that our emphasis on keeping everything tidy and orderly fits in well with local desires.'