The Falklands: Depressed Oil Prices Are The Dominant Reason Why Exploratory Drilling Has Stopped In the North Falklands Basin
Falkland Islands News Network, February 2
By J. Brock
Exploratory drilling for hydrocarbons stopped for the time being in the North
Falklands Basin at the end of November 1998. With the depressed oil prices, I
asked Phyl Rendell (PR), the Director of the Mineral Resources Department,
about whether there were plans for Desire Petroleum, for example, to begin
exploratory drilling in their tranches at all.
PR At the moment, it's a bit difficult to say. The companies that have already
drilled are spending a considerable amount of time analysing the data that they
have already acquired and they have an enormous amount of data from those first
six wells. The financial climate isn't really conducive for them to be coming back
for the time being.
We await to see whether Desire Petroleum will begin any
exploratory drilling. Desire Petroleum have acquired seismic data over their
tranches and they are in the process of evaluating that right now over the next
three or four months, so we will wait and see what Desire are going to do. It's
going to be difficult for an oil company to acquire a rig and bring it back into the
area right at the moment. But we are optimistic that there will be activity again but
it might be some time away yet.
FINN I understand that some of the data from the wells already drilled is
beginning to come in and that the figures are encouraging. Given recent
speculative stories about there being no oil in the North Falklands Basin, what
kind of encouragement have these figures given the department?
PR There are not so much figures that we have received but data about the types
of rocks that have been penetrated and we had, earlier on when exploratory
drilling had begun, the encouraging news that a source was found, that very small
traces of hydrocarbons were present. Now, the search is on, if you like, to see
where that oil might have migrated from or to. A lot of very technical work is
being done to try and trace those sources of hydrocarbons. We understand that
there were at least two different sources but, it's anyone's guess if they really are
accumulations big enough to look at any commercial development. We won't
know about that until even more wells have been drilled.
FINN Is the only obstacle for any future exploratory drilling in the North
Falklands Basin the low oil prices? Are there other factors that would prevent a
future exploratory drilling effort?
PR I think there is a combination of factors. Obviously at the moment right at the
forefront is the low oil price but, we have to remember that the North Falkland
Basin is a long way offshore, it is an expensive area to explore in and it would
appear that we probably aren't looking at huge structures or huge accumulations
of oil now, having penetrated the basin. We may be looking at more modest
accumulations which might not attract some of the bigger companies. So, there
are a combination of factors and the industry has to make its judgements and
evaluations on the information as they analyse the data.
FINN What is the status of the other mineral prospecting that is going on in the
Falklands. Have any minerals of any market value been identified this year and
what are they?
PR As you know, we've got one company licensed to explore for minerals on
shore, Cambridge Mineral Resources. They are in their second Summer of field
work and they have identified certain minerals such as Zircon, Rutile, and Garnet
that has an industrial use. But, they still have to evaluate to see whether those
minerals are present in quantities that would warrant their extraction and of
course, they would have to come to the Government with development plans
which would have to be looked at very carefully from an environmental point of
view.
They are still prospecting. Just in case, we are looking for more valuable
minerals and metals such as gold and diamonds but, in Government circles, we
are very sceptical about those possibilities. However, we welcome the company
exploring and the work they do and the analysis they do on samples because it
gives us more information about the Islands. We value their work but we are not
overly optimistic that any valuable minerals will be found here.
FINN Anything new in the up and coming programme for this year? Is the work
nearly finished for the licensing round in the Special Area?
PR We are very much in a consolidation phase but we are still working on the
Special Co-operation Area. We have formal meetings scheduled for June-July.
We do work on technical matters in between meetings but, it is a difficult area
and it's going to take time to reach agreement to have a licensing round in the
area. Of course, the urgency has diminished because certainly at the moment it
wouldn't be a good time to have a licensing round with the depressed oil prices.
Perhaps there is not that sense of urgency that we might have had earlier but we
are still endeavouring to finalise a suitable regime that could lead to licensing the
area but I think it's some way off.
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