Renewed Exploration Around Brazil Brings Hope For North Falkland Basin Activity
By J. Brock, Falkland Islands News Network
Since hitting a twelve year low in February, prices per barrel for Brendt Crude
have steadily fluctuated upwards. In February prices ranged just under $10.00
per barrel but now the oil has passed the $18.00 per barrel mark and is on its
way to $20.00. With this good news in tow and the prospects that this price
increase was set to remain stable, FINN went along to interview Mrs. Phyl
Rendell, the Director of the Department of Mineral Resources. Was the fact that
OPEC stepped in, and cut production reason to be optimistic about any further
exploration activity in the North Falkland Basin? Mrs Rendell expressed caution.
PR I think the oil companies are still very cautious about stable oil prices. As you
see in the press daily, there are still talks of mergers between major oil
companies. But, they are still looking to produce oil at a lower price per barrel
than they did previously. So, I think it's going to be some time yet before there
are large amounts of money available for exploration in high risk areas. I think the
industry themselves are still very cautious and don't want to be caught out as they
were last year.
FINN Obviously, a lot more is known about the hydrocarbon systems that are
working in the North Falkland Basin. Has the data you can share with us shown
that there is sufficient inducements for the operators to come back for exploratory
drilling?
PR We are just drawing to a conclusion in the analysis of the well data think we
are probably a month or two off a proper and final conclusion that analysis. Then
we will have to look to see if the information that we have is such that it will
attract the industry back in. In the short term we will await the brief by our
consultants British Geological Survey on that matter but meanwhile the Falkland
Islands Government continues to try to attract additional activity in the area. But I
think we will find that in terms of funding for high risk areas for exploration the
money is scarce at the moment.
FINN So, I take it that there isn't much new to report.
PR Not much at the moment. We did not expect any major activity to occur this
year in light of the data acquired last year which we were led to believe by the
industry that they would take a good long look at that data before looking at
further activity offshore. But, I think the area that they are looking at is Brazil.
When the industry take up the licences that recently have been awarded in
Brazilian waters, it is expected that there will be rigs and vessels available for
exploration and I think that will help the South Atlantic generally, all along the
South American Coast there will be vessels generally available and I think will
make it more cost-effective for future drilling for them.
FINN Presumably these vessels, if anything happens down our way, would travel
a shorter distance to reach the North Falklands Basin, or even the Special Area
of Co-operation when they are ready to start exploratory drilling.
PR Yes. It will cut transportation costs. As you know, last year mobilising a rig
from the North Sea and all the supply vessels that went with it and then having to
crew change men and women back to the UK and to Europe was a very costly
exercise. I am led to believe that the industry in the future will be trying to reduce
those costs and look to source facilities closer to home.
The timing for oil prices fluctuating downwards, hitting bottom and then fluctuating
upwards has been well spend by the South Atlantic Hydrocarbons Commission
and, indeed the Oil Operators and the Department of Mineral Resources, in
getting legislation in place for health and safety and the environment as well as
analysing the data from the six exploratory wells that were drilled in the North
Falklands Basin. This has been time well spent. The possibility for cutting the
costs of exploration and a stable oil price means that future exploration in the
North Falkland Basin and the proposed exploration round in the Special Area of
Co-operation will happen when there is money in oil company budgets for high
risk areas. Hang on to those shares, people. Things are definitely looking up.
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