The Falklands Oil exploration: Interview With Director Of Mineral Resources
Falkland Islands News Network
A Report for FIBS by Julie Ray (JR) 24 July
Hello and welcome to the programme. Today our guest on “One To One” is Phylis Rendell (PR), Director of Mineral Resources. Thanks for coming in to talk to us.
PR: You’re very welcome
JR: Could you perhaps begin where is the Falklands at this stage with oil?
PR: At the moment we’ve got licence holders. We’ve got licences for areas in the North Falkland Basin to the north of the Falklands and those licence holders are considering their positions at the moment because they are coming to the end of the first 5 year phase that is part of their licences. And, a number of them are looking for new partners and are trying very hard to get new companies to invest and join those licences and fund the next phase of drilling. In addition to that, the Falkland Islands Government’s made other acreage available through a policy called “open door licensing.” We are also trying to encourage companies to look at other areas, other sedimentary basins and to bid for licences.
JR: There’s quite an investment for them because they don’t really know if it’s going to come off commercially. Why will they do that? Is it just part of their business?
PR: Yes, there certainly is a crunch when it comes to drilling wells. They are the very expensive part for the oil companies. We are talking of $30 Million a well, possibly, so they have to think very carefully before they invest that sort of money in a region like ours. And, there are so many other regions in the world that have already found oil – oil’s already proven to be there – so we are at a very early stage. We compare ourselves to the North Sea in the mid 1960s. We are only at the very beginning of exploration.
JR: You have just been to Denver for a conference there. How useful are those conferences? Are they about promoting the Falklands?
PR: It’s about promoting the exploration data that we’ve already got and to help those companies with licences to get partners. So, we, as a Government are there, encouraging the oil companies to look at the data and putting them in touch with existing licence holders and also to encourage those companies to look at new areas and put in new bids. It’s a two-way street as well because we are able to have a look at what other countries are doing – other licensing regimes and compare our regime with those. And, we notice that a lot more countries are now looking for investment like we are and their terms and conditions are quite favourable. So, we have to watch the market constantly.
JR: With regard to the seismic studies. Can you explain what has been discovered so far?
PR: The seismic studies are done first of all to try and target where to drill. We had quite a lot of seismic surveying done. That’s putting a sound-byte, if you like, into the seabed and getting a signal back and having a look at what is under the seabed. A lot of the seismic surveying was done in 1996/97 to pinpoint where to drill. And, it’s really the drilling data that’s really very interesting. The drilling data from 1998 has proven that we’ve got an extremely rich source rock. We didn’t know that until drilling took place. And, this really rich source rock is, perhaps, immature at the higher level but lower down it’s quite mature and has oil bearing rocks. So, we’ve got this really very good source rock. But because it’s really immature at the higher levels it’s creating a really good seal and below it looks like its mature enough to generate hydrocarbons. We now need to know where those hydrocarbons have migrated. They may have migrated away all together. But we are hopeful that they are stored in reservoirs because of the seal across the top. So, we now need more wells to try and find those reservoirs.
JR: And one of the company names I’ve heard is Desire Petroleum. Are they your major company at the moment?
PR: Desire Petroleum is quite well known to Falkland Islanders. Quite a lot of people have shares in Desire Petroleum. They are a UK listed company. They have ended up with quite a lot of acreage in the North Falkland Basin through partnerships and through other companies like Lasmo leaving the area when the oil price crashed in 1998. So, Desire have quite a lot of acreage. In addition to Desire we also have Argos Evergreen. Evergreen is a Denver exploration company. They have a licence and also Shell are with us and IPC which is part of the Lundin Group. But Desire, at the moment, have the largest part of acreage in that basin.
JR: That’s the North Basin. What else is there? What other..?
PR: Well, we have only had wells drilled in that area but we have other sedimentary basins that have potential for hydrocarbons to be present. We have a South Falkland Basin then we have a basin right out to the east which, at the moment, is technically difficult to explore in but in the long-term it might have potential. And, to the south and south-west there is another sedimentary basin. There is a huge potential around the Falklands. It is just a matter of time and exploration companies being prepared to spend a lot of money in a region as remote as ours.
JR: Is it in the same zone as the fishing.
PR: Yes. That’s the only area we can licence that’s within the FICZ and within that zone there is potential for more exploration in those other sedimentary basins.
JR: There is another one called the Special Co-operation Area?
PR: Yes. That’s a region that has been set aside to jointly licence with the Argentines and that lays to the south-west in the Malvinas Basin as it is called. And, we know there are hydrocarbons further west in Argentine waters. Certainly gas has been discovered there. Because it is so far off shore it never has been commercially exploited. So, that area has been set aside to eventually licence with the Argentines.
JR: Now, Mineral Resources isn’t just oil, is it? You mentioned gas but what else does the Mineral Resources Department handle?
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