SODRA, DESIRE PETROLEUM AND THE FALKLANDS :
THERE IS LIGHT AT THE END OF THE TUNNEL FOR FURTHER EXPLORATORY WELLS IN THE NORTH
FALKLANDS BASIN
By J. Brock (FINN)
Speculation in the media about SODRA and Desire drilling an exploratory well has met with caution, even though the price per
barrel of oil has risen 12c to approximately $12.56. News of the possible joint exploratory well prompted FINN to have a chat
with director of Mineral Resources, Mrs. Phyl Rendell about the possible well and some of its implications.
PR The companies have been doing a lot of talking. There are all sorts of proposals in the air, which is only to be expected
when the rig is coming to the end of its last committed well. I think that some of the other companies have been looking at ways
in which to keep the rig here and drill more wells.
FINN given the risks involved and the relatively low price of oil per barrel, is this wise?
PR I think it's only natural and I think the Falkland Islands Government is very willing to co-operate in any way it can if good
strong proposals are presented to us but it is rather risky in these rather difficult times with exploration. It's difficult to find the
cash to continue. There certainly are a number of proposals in the pipeline, so to speak, but what will actually come about at the
end of it is certainly unclear. What is clear is that the proposals that are put to government are entirely up to the companies
involved.
FINN Then, the speculation that we might be retaining the rig for further exploration is true.
PR We certainly have been party to some of the discussions and we would like to assist wherever we can if the proposals are
well put together and within the rules and guidelines of our operational legislation.
FINN The reality is the price per barrel. It is still considerably low. Are there any indicators that this might turn around and
decrease the risk to companies wanting to do exploratory drilling in the North Falklands Basin?
PR I think the price of oil last week went to $12.56 for Brent Crude. That was thought to be quite an improvement. It was
about .12c up on the previous price. But, when the oil is under $13.00 a barrel it's very very difficult for the companies to find
oil exploration money. Their money is needed to keep their production fields operational and therefore area for new areas or
areas where there haven't yet been proven resources found are the areas that will get neglected and I think it's a very good thing
that the Falkland Islands had its licensing round two years ago and wasn't trying to licence the offshore now. We certainly, I
think, would find a very different situation. I have just been to Rio at an Oil Convention and those countries trying to get started
with Licensing rounds at the moment are really finding it very, very tough, indeed. Frankly, I think we are in a pretty good
position. We've licensed our acreage. We've had companies drilling. We have a tremendous amount of data now from six
wells. There will be time taken over analysing that. But, with the down-turn in oil prices, it will take some time for there to be
more activity offshore Falklands.
FINN the Geology itself, I understand, is one of the drawing cards in actually having more exploratory wells drilled. Is the
Geology addictive?
PR It's addictive for Petroleum Geologists and these six wells have revealed very interesting things. They certainly have found
oil there but not in commercial quantities so now the hunt is on to see where that oil might be coming from or might have
migrated to, to try and find reservoirs that hopefully will be big enough to exploit. So, it is a bit like having put a needle in a
haystack and analysing what was down those wells and trying to find and understand what's going on. From a geologist's point
of view, it's quite fascinating but, of course, they've got to get the funding and the commitment from their oil companies to keep
searching.
FINN I was wondering also about the Special Area. Would you be able to tell FINN's readers how that's progressing?
PR We've got meetings. The Attorney General and I are going to London in early December for a set of meetings. The Special
Area matters are still in discussion and we are still trying to find ways forward. There are still quite a number of technical issues
that need to be addressed, things like marking schemes, health and safety legislation, tax issues. These are all nitty gritty things
that we are still working on and our experts are working on and they are on course. We always knew it would take time. It
took us more than four or five years to prepare for the Falklands and that only involved one country but now we are trying to
put together two regimes and with people not working full time on it, it is going to take a little while yet.
FINN So, perhaps by the time the special Area of Co-operation is ready to begin its licensing round, the price of oil per barrel
might have risen above $13.00 per barrel.
PR Perhaps it's a good thing that we're not ready now. As you say, by the time we are ready, perhaps the prices will be a bit
more buoyant and we will be able to attract good companies into that area.
Last changed: November 18, 1998 |
