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Falklands eyed as oil region after find
Jane Wardell Associated Press Business Writer
British oil and gas explorer Rockhopper said March 21 its crude discovery in the Falkland Islands is likely to prove commercially viable, boosting expectations that the politically sensitive territory could become a new oil province.
As exploration of the waters around the Falklands remains controversial amid a long-running dispute between Britain and Argentina over ownership of the islands, Rockhopper Exploration PLC reported a “significant reservoir package” at its Sea Lion prospect.
The company, which first reported its oil find at Sea Lion last May, said its appraisal well now showed a thick, high quality reservoir package, a substantial oil column and a recognition of the first oil-water contact in the license to date.
“Following this positive result we believe Sea Lion is highly likely to prove commercially viable,” Chief Executive Sam Moody said in a statement to the London Stock Exchange.
Earlier mixed results The update followed mixed results from earlier Falklands exploration — fellow British company Desire Petroleum PLC abandoned a well last year after failing to find oil — and comes as crude oil prices have soared to just over $103 a barrel amid allied military strikes on Libya, the world’s 12th-largest oil supplier.
Shares in Rockhopper and other companies exploring the Falklands basin jumped after the announcement. Rockhopper soared 31.4 percent to 285.25 pence ($4.64). Desire rose 8.2 percent to 39.75 pence. Falkland Oil and Gas Ltd lifted 3.8 percent to 82.50 pence and Borders & Southern Petroleum PLC picked up 6.7 percent to 64 pence.
However, drilling by British companies off the Falklands has sparked protests from Argentina, which claims sovereignty over the British-governed islands that lie some 300 miles off its coastline.
When the exploration plans were first announced, British Defense Minister Bill Rammell said his government had a “legitimate right” to build an oil industry in its waters.
Argentine President Cristina Fernandez has said Britain’s oil-drilling operation violates international laws and treaties as well as U.N. resolutions asking that neither side take unilateral actions that could aggravate the situation.
Attempts to disrupt Argentina has tried to disrupt the exploration by issuing a decree obliging ships using Argentine ports to seek a permit if they enter or leave British-controlled waters. Britain told its ship captains to ignore the restrictions.
Rockhopper, which wholly owns four offshore production licenses granted by the Falklands government and has a share in another two operated by Desire, said it will now plug and abandon the appraisal well as planned.
It will then send its Ocean Guardian semi-submersible rig to drill an exploratory well at Desire’s Ninky prospect, in which it holds a 7.5 percent working interest, before the rig returns to the Sea Lion prospect to drill a further three appraisal wells. The company is considering extending that program, it said.
“We can now continue to appraise the Sea Lion discovery and to explore additional prospectivity within our acreage with added confidence,” said Moody.
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