The Falklands: The first phase of oil exploration
Desire Petroleum: final results, April 9
Chairman's statement (extracts):
The first phase of exploration drilling
in the North Falkland Basin, which
began in April 1998, was completed with
the Shell well 14/10-1, which was the
sixth well drilled. The drilling rig
"Borgny Dolphin" has now left the
Falklands.
This intensive drilling campaign has
produced a considerable amount of data
which are now the subject of analysis
by all of the companies involved.
Although no economic accumulations of
hydrocarbons were discovered, the
campaign demonstrated the existence of
extensive, high- quality, hydrocarbon
source rocks and good oil shows were
encountered in four of the wells.
The studies now underway are focused on
identifying potential structures with
good reservoir development in which the
oil generated might be trapped.
A fuller technical review is given in
the Exploration Report and I will not
repeat it here, however, it is worth
repeating that all of the factors
required for the presence of
hydrocarbon accumulations are present
in the North Falkland Basin and many
prospects remain to be tested.
Unfortunately, overshadowing these
prospects is the current,
historically-low oil price. This has
caused a major reduction in exploration
drilling throughout the World and the
North Falkland Basin is no exception to
this. Additionally, many exploration
companies have had to reduce their
financial exposures and this has led
Desire's partners in the Lasmo
Consortium in Tranches C and D to
decide to withdraw from the Licences.
As a result, Desire will take over 100%
of these Tranches and operate them.
When this process is completed, Desire
will hold 100% of Tranches C, D, I and
L and 12.5% of Tranche F, of which
Sodra is the operator.
The processing of the 2,412 kilometres
of new seismic acquired on Tranches I
and L has been completed and these data
are now being interpreted. The results
of this interpretation should be
available in the next few months.
The company's cash position remains
healthy, although there are several
substantial costs still outstanding
from the drilling programmes.
The structures that were clearly seen
on the pre-lease data have been
confirmed, and the evidence suggests
that the structural failure and
subsidence of the Basin was swift and
relatively passive.
Post-subsidence tectonism has been at a
minimum.
Much of the basin may lie outside the
oil maturity threshold but this does
not preclude the migration of
hydrocarbons to shallower parts of the
Basin if suitable migration paths
existed.
The main concern that Desire had before
drilling, that suitable reservoirs
would be at a premium, has been found
to be the case, although they are not
absent and there is good reason to
believe that, southwards towards
Tranches I and L, their development may
well improve.
Thus the Basin contains structures,
source and reservoir, the necessary
components of a hydrocarbon province
but the successful combination of these
ingredients remains to be found.
Further south from the area of
drilling, Desire completed its
commitment seismic and ancillary
geophysical work in Tranches I and L.
2,412 kilometres of seismic were shot,
together with accompanying gravity and
magnetic data, and these are now being
interpreted.
The data are of high quality and will
form an important basis for launching a
second phase of exploration when the
time comes. The work has confirmed that
structures are more numerous than
further north and it may be that
reservoir rocks are also more common.
There may also be locally-developed
source rocks.
Thus, at the end of the first cycle of
exploration in the North Falkland
Basin, from knowing something of the
structure of the Basin and little of
the hydrocarbon potential, it is now
clear that structures are present, as
are reservoirs and source rocks.
Hydrocarbons have been generated but
commercial accumulations have yet to be
discovered. Considering the size of the
total area, tremendous strides in
knowledge and understanding have been
made and many prospects remain to be
tested.
This applies both to individual
prospects and to whole categories of
prospect, e.g. the entire eastern flank
of the Basin remains undrilled. These
all await future investigation.
Desire has placed itself in a good
position, both in building up an
extensive data base and acquiring a
dominant land holding, to take
advantage of the next cycle of interest
in Falkland exploration. |
