Falkland Islands News Network: The Time For Assessment Begins
Borgny Dolphin Moves Off To Tierra Del Fuego
By J. Brock, December 8
Now that Shell have completed their exploratory drilling in the North Falklands
Basin and Borgny Dolphin has moved to Tierra Del Fuego to drill a shallow well
for the French Oil Company, Total, it is time for the data from all six of the
Basin's exploratory to be analysed. The information came fast and furious and
there was time only to do a rough analysis which gave investors a basic idea of
what could be in the Basin, however, it will take several years to work with the
data that has been gathered and the true results won't be known until after the
turn of the century.
But, why give up after only six exploratory wells? On Monday, 07 December the
reason became all too clear when the price of Brent Crude went below $10.00
per barrel. During the decline of the price per barrel for crude Shell closed its
London Offices and now Lasmo has laid off 600 workers. Both oil companies
have done exploratory drilling in the North Falklands Basin. Smaller oil
companies have stopped exploratory drilling as there is not enough in the budget
to use in a high risk area. If they do any exploratory drilling at all, the expense of
logistics will have to fall and the price per barrel must rise. Add to this, decreasing
the risk of finding anything.
In the North Falklands Basin the price per barrel needs to be at least $15.00 to
attract the larger oil companies back again. For the smaller companies that price
needs to be from $18.00 to $20.00 to offset the risks. Given the thus-far warmer
conditions in the Northern Hemisphere this Winter, it looks as if the demand for
oil is not going to exhaust supplies. This is one factor that keeps the price of oil at
historic lows.
On the brighter side, Borgny Dolphin is still in the South-West Atlantic and should
Desire wish to do any exploratory drilling, they will not have the expense of
bringing a rig from the Northern Hemisphere. Hopefully the rig can be kept busy
here so that the data collected can be taken advantage of. Who knows, Desire
might, should they decide to do an exploratory well, strike something in
commercial quantities.
There have only been six exploratory wells drilled in the North Falklands Basin
and the fact that hydrocarbons are indicated in those exploratory drills is a very
encouraging sign for the future. After all, there were more wells drilled in the
North Sea before any hydrocarbons at all were found and it was dozens of
further drills to find anything in commercial quantities. We should not throw in the
towel after only six exploratory wells.
Smaller companies are urged to have patience and not to get any money together
until economic conditions, including the price of oil per barrel improve. What is
the sense of extracting the oil if you lose money on each barrel. If there is data
showing oil in commercial quantities that at the time is not profitable to extract
then the larger operators will come back to it when financial indications are right.
Those smaller companies, if they have spent their exploratory money, run the risk
of great losses. Again, it is not the consortia of smaller companies that will make it
big given those circumstances.
It is paramount about the correct analysis of the data from the exploratory wells
already drilled. If anything, during this downwardly fluctuating financial climate,
invest in more seismic work and/or improvements on technology that already
exists. This will benefit the industry as a whole and in future make exploration a
more financially viable prospect. It takes a while to work on the data anyway, so
there is time to do necessary thinking about the way forward. Pounce, yes, but at
the proper time and with the implements that you need.
The North Falklands Basin has the potential for oil in commercial quantities. It is
the investors that are needed to keep the faith alive and, naturally the money,
flowing in the right directions. Now is the time for waiting and analysing and
planning for the next exploratory session.
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