Desire aims to put lustre back into Falklands offshore oil and gas campaign

Following a first exploration drilling programme in 1998, talk of hydrocarbons prospects off the Falkland Islands in the South Atlantic has been notably muted. This could be about to change, as First Break reports. Without much fanfare Desire Petroleum, a small UK-based oil exploration company, has taken what it hopes to be the next big step in reviving interest in oil and gas prospects off the Falkland Islands. Desire announced in January that the Fugro Geoteam vessel Geo Pacific had begun a 40-45 day 3D seismic survey over at least 800 km2 in Tranches C and D, as well as a small portion of Tranche F in the licensed waters north of the Falklands. The company is hoping that the new survey covering three large structures in the North Falkland Basin identified by previous 2D surveys will be the start of something really big. The initiative follows the subdued reaction to the six wells drilled in 1998, after the initial licensing of the Falklands offshore region for exploration by the international oil industry. However, Desire believes that it has found the key to unlocking what could be very substantial hydrocarbon riches. Dr Colin Phipps, the company’s chairman, told shareholders not so long ago that a new geological model had been developed which has identified areas within the North Falklands Basin, and below the source rock, most likely to contain substantial reservoir rocks and traps for oil. The model provided the momentum to plan the new seismic survey, which also took into account discussions with potential farm-in partners who stressed the importance of 3D seismic in refining the major drilling targets. Echoing the findings of the British Geological Society, adviser to the Falkland Islands government on oil and gas exploration, Phipps says the initial drilling campaign in the North Falkland Basin encountered a very thick, lacustrine, source rock which has proved to be the second richest yet discovered worldwide. Calculations indicate that from 60 to 110 billion barrels of oil have been generated and expelled from the mature section of this source rock. At least one other, deeper, source rock was also encountered. All six of the wells drilled to date were targeted at structures which proved to be above the source rock but, because the upper, immature, section of the source rock forms an almost complete seal across the whole of the Basin, only oil shows were encountered. The new geological model has concentrated on identifying potential reservoirs and structures below and adjacent to the source rock. As a result of a worldwide slowdown in offshore drilling activity, the costs of carrying out 3D seismic surveys fell sufficiently at the end of last year for Desire to think about a survey to test the theory on the hydrocarbon bearing structures. The company went to the market and raised some £5 million in total, and is therefore able to pay its own way for the survey. But it is also canvassing potential farm-in candidates, offering significant equity in the equivalent of more than 13 North Sea blocks, and suggesting that breakeven point for any commercial development would be the discovery of 50 million barrels of recoverable oil reserves, assuming the use of floating production, storage and offshore loading (FPSO) technology.