Desire Petroleum has committed to a letter of intent with Diamond Offshore Drilling that should see the semi-submersible drilling rig, Ocean Guardian, leave the North Sea shortly and head for the South Atlantic to drill a minimum of four wells in the North Falkland Basin.
The company has options to drill a further four wells for itself and or its partners. AGR Petroleum Services of Aberdeen will be managing the overall drilling programme.
Rockhopper Exploration, which is a partner in a significant slice of North Falkland Basin acreage, has almost simultaneously signed a letter of intent with a so far undisclosed third party keen to farm into one of the licences.
In both cases, the respective arrangements have to be confirmed, with discussions to conclude ongoing.
In Desire’s case, the plan is that the Ocean Guardian will mobilise to Falkland Islands waters next month following a period of maintenance at Invergordon. Projected arrival is early-February 2010.
The company is keen to maximise use of the rig while in Falklands waters and, to this end, is investigating with its advisers the best course of action to raise additional funds – speculated to be around £30million – prior to mobilisation to ensure that the sector is explored as widely as possible.
Chairman Stephen Phipps said: “Subject to the anticipated timing, we will be commencing activity in early-2010, when we intend to explore as many play types as possible, thus maximising our chances of success.”
At Rockhopper, not only has the company signed a letter of intent designed to bring extra financial firepower to bear in the upcoming Falklands campaign, its environmental impact statements, submitted in relation to the planned drilling, have been approved by the Falkland Islands government.
However, this approval is subject to the further approval, by the mineral resources committee, of an operational addendum which will be submitted once the rig details and timing of drilling campaign are formally finalised.
The farm-out, if completed, would entail the drilling of one well.
Rockhopper currently has the only acreage in the Falklands with a recognised discovery, Johnson, which is a very large gas-bearing structure, possibly 250sq km in area.
Sea Lion and Ernest are the company’s primary oil targets. Both have direct hydrocarbon indicators, Sea Lion in the form of AVO anomaly, Ernest in the form of a positive CSEM anomaly, and are clearly defined on seismic.
A study commissioned by Rockhopper Exploration and published earlier this year shows just how tantalisingly close the late-1990s exploration drilling campaign to the north of the Falkland Islands came to success, especially one of the two operated by Shell.
The results of the six wells drilled were:
14/10-1 – Shell, 3,005m, live oil of 27 Deg API.
14/9-1 – Amerada Hess, 2,590m, oil stains.
14/5-1A – Shell, 4,525m depth, oil shows, plus gas.
14/9-2 – Amerada, 2,345m, oil stains.
14/13-1 – Lasmo, 1,475m, dry hole.
14/24-1 – Lundin, 2,914m, oil stains.
All this acreage was eventually let go by the various consortia and later picked up by Desire Petroleum and Rockhopper. According to RPS, which carried out the analysis, well 14/5-1 encountered significant gas shows and kicks within the deeper drilled sections (3,500-4,525m). Energy’s parent, the Press and Journal, reported gas kicks at the time based on information leaked from the rig drilling the well. Shell was not at all forthcoming.
Log analysis from the eventual Shell well report indicates that, within the deeper sand units, more than 165m of gas pay was present.
Independent log analysis performed by Rockhopper indicates that 5-130m of gas pay was intersected by the well.
For now, these volumes of gas – perhaps several trillion cu ft – have been classified as “contingent resources”. According to RPS, at least 5-8TCF would be needed to justify an on-site LNG plant.
The decision on targets most likely to be chosen for drilling has not yet been made public, although RPS said in its report that it seemed certain that the Ann prospect would be drilled and would be followed up by the drilling of another called Liz. There will almost certainly be a strong opportunistic element to the campaign, which will be guided by the success/failure of the first couple of wells drilled.