Crunch time for Falklands oil as Shell drills it's last well
(A Report For Calling The Falklands by David Wood 06/11/98)
Falkland Island News Network, 08 Nov 1998
Friday's edition of the Oil and Gas Weekly, "Upstream," features the headline "Shell Seen As Last Big Hope For Falklands Oil." According to the author of the piece, Chris Hobson, the results of the well being drilled by Shell are certainly going to make a difference to the large company active in the South Atlantic. However, he feels that some of the smaller companies are still optimistic about their chances and told me why the different size companies seem to have different attitudes.
CH I think it is fair to say that maybe the bigger players have started to make their decisions but the smaller players and I include Desire, the local Falkland Islands company and also SODRA, part of London Oil and I know that they are still
optimistic and hope that they might be able to return and put together a consortia to do dome more drilling and I think there are strong possibilities that will happen in the future. So, I don't think that all hope is lost by any means.
DW Presumably, though, the idea that there will be some new Brent Field down there, that idea has kind of subsided and now we might be looking at a few smaller finds, perhaps a bit more scattered.
CH Yes. That seems to be the general tone at the moment. A number of the oil company executives who I've spoken to have said that they never expected it to be a new North Sea in the first place, they now have had to completely reassess it. There hasn't been the big reservoirs they'd hoped for down there but however, there have been some shows and some of the smaller players think that there might still be reservoirs down there that could be productive. There could be a number of smaller fields in time but the oil industry is a high risk game and with low oil prices, we are talking about quite a few years.
DW There does seem to be quite a split, certainly in terms of the opinions on the smaller players in the oil industry and the larger companies. Why, exactly, is that? Have the larger companies got more to loose or is something else going on?
CH When you hit dry wells, everyone's got a lot to lose in the oil industry and drilling in the Falklands has proved to be quite an expensive business for some of them, even though the sharing of the rig has helped. I think the short answer to that is that a lot of the big players now have been hit pretty hard. We have low oil prices you only have to look at shell's results, down 56% on Friday morning. All of these what would be classed as non-core assets have to be looked at and a lot of the bigger companies are looking at those. Quite often what you find in the oil game is that the sharper perhaps smarter companies perhaps pick up where the big boys think that there's no immediate signs of success so, I do have a feeling that maybe we haven't heard the last of Falklands drilling and maybe we could see some interesting changes of assets in the next six to nine months.
DW And what's the next big date to look for now that Shell is drilling its final well?
CH I think the thing to watch out for is how we now kind of shape up with further optional wells that other operators might have. I think Desire obviously have started some seismic work and I know that Certainly London and Sodra haven't completely written off the basin so it's a bit difficult to tell at the moment and some people have suggested to me you might see a rig back next year but they have all got quite a long time and it may be further on than that.
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