The Falkland Islands, remotely situated in the South Atlantic off Argentina, is the epitome of a frontier area for oil and natural gas exploration. In 1998, six offshore wells were drilled in the North Falkland basin, testing the same play, and found very rich organic source rock. Five wells had shows, of which one flowed oil and one flowed natural gas.

Now a semisubmersible drilling rig is back in the area to drill four wells for Desire Petroleum PLC and two wells for Rockhopper Exploration PLC. BHP Billiton, Borders & Southern Petroleum PLC, and Falkland Oil and Gas Ltd. (FOGL) also hold licenses in the Falkland basin.

Investments

Now scientists estimate there may be as much as 60 billion bbl of oil in the offshore areas surrounding the Falklands, and the Telegraph reported in December 2009 that Britain’s financial sector had invested US $530 million in projects off the Falklands.

Desire Petroleum, Rockhopper Exploration, Arcadia Petroleum, and Argos Resources hold acreage in the North Falkland basin. (Image courtesy of Desire Petroleum)

David Hudd, chairman of Falkland Islands Holdings and vice-chairman of Falkland Oil and Gas, said, the benefits are potentially huge for the companies involved, the Falkland Islands and for Britain.

In July 2009, the Falkland Islands Government’s Department of Mineral Resources estimated that operators had spent about $200 million on data acquisition in the Falklands over the preceding five years. Water depths range to about 1,800 ft (550 m) in the North Falkland basin and to about 9,840 ft (3,000 m) in the southern basins.

Sovereignty issues?

The Falkland Islands are a British Overseas Territory, the British having declared sovereignty in 1833. Argentina continues to disputes ownership and tried to seize the territory in April 1982, resulting in a 74-day war with Britain. In June 1982, the Argentine forces surrendered and Britain declared a 150-mile (241-km) “Protection Zone” around the Falklands.

In April 2009, Argentina submitted a claim to the United Nations, claiming 660,000 sq miles (1.71 million sq km) surrounding the Falklands (Las Malvinas), South Georgia, and South Sandwich Islands. Argentinean President Cristina Kirchner pledged to regain the islands and Argentina continues to protest the current drilling program.

Desire

Desire Petroleum was founded in 1996 and participated in the first round of drilling in the North Falkland Basin in 1998. Desire now operates 6 licenses in the area: Tranches C, D, F, I, L, and the recently awarded PL034.

Desire contracted with Diamond Offshore Drilling to use the Ocean Guardian semisubmersible to drill four initial wells and has options to drill four additional wells.

AGR Petroleum Services is contracted to provide logistical support for six wells. Drilling was to begin in mid- February and Desire announced the first well would be the Liz prospect, in the company’s Tranche C acreage. After drilling the Liz well, the rig will drill the Sea Lion and Ernest prospects for Rockhopper.

Desire also wants to test the Toroa prospect, about 90 miles (140 km) south of Stanley in water 1,805-2,395 ft (550-730 m) deep, testing the Cretaceous Springhill play.

FOGL

Stanley-based Falkland Oil and Gas was awarded licenses in 2002 and 2004 covering 18,819 sq miles (48,740 sq km), equivalent to 223 North Sea blocks.

BHP Billiton has partnered with FOGL and under the terms of the farm-out agreement will drill at least two exploration wells before the end of 2010.

FOGL commissioned a comprehensive site survey program to the south and east of the Falkland Islands, from December 2008 to February 2009, investigating four prospects. Three prospects which have been site surveyed - Loligo, Nimrod, and Endeavour - all lie in water deeper than 3,280 ft (1,000 m) and may require a dynamically-positioned rig for deepwater drilling.

Fugro Surveys supplied the MV Fugro Meridian for shallow hazard surveys, and the British Antarctic Survey vessel James Clark Ross was deployed to measure waves and currents in 2008-09. The data acquired in the surveys was used in regulatory submissions including the environmental impact assessment submitted to the FIG.