DEPRESSED OIL PRICES ARE THE DOMINANT REASON WHY EXPLORATORY DRILLING FOR HYDROCARBONS STOPPED IN THE
NORTH FALKLANDS BASIN
By J. Brock (FINN)
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. |
