MercoPress. South Atlantic News Agency

Encouraging oil exploration survey in Falklands waters

Falkland Oil and Gas Ltd said the results from its controlled source electromagnetic (CSEM) survey on its Falkland Islands exploration programme are encouraging, with “positive” CSEM anomalies indicating the possible presence of trapped hydrocarbons with the potential of significant resources.

The FOGL report indicates that most encouraging CSEM anomalies have been identified over the Loligo, Garrodia, Nimrod, Caird, Toroa, Lutra and Undine prospects. All of these features could contain large amounts of oil and gas, with individual prospects containing potential recoverable volumes ranging up to 3,500 million barrels. "The results of the CSEM and 2D seismic infill surveys have reduced exploration risk and have considerably improved the chances of finding commercial quantities of oil and gas within our licences", chief executive Tim Bushell said in a statement. The CSEM survey was carried out on behalf of FOGL by Offshore Hydrocarbon Mapping plc and was completed in August 2007 with over 750 kilometers of CSEM data acquired along 7 lines, over a total of 12 prospects. Basic processing is now complete on all lines, and enhanced processing and interpretation, will continue over the next few months. The FOGL proprietary 2D seismic survey was acquired by Wavefield Inseis AS between 19 November 2006 and 31 May 2007 and a total of 9,950km were acquired: 5215 km in the 2002 licences and 4735 km in the 2004 licences. Meanwhile the Falkland Islands Government (FIG) has consented to the assignment of a 51% license interest to BHP Billiton and the approval of BHP Billiton as license operator. All parties envisage the execution of formal documents to finalize this will occur shortly. Under the revised License terms agreed by FIG, Phase 1 of the licences will be extended by 3 years until December 2010 and Phase 2 extended by 2 years, until December 2015. In return FOGL and BHP Billiton have agreed to make a 50% relinquishment of Area B (PPL30 and PPL31) of the 2004 licences and a 25% relinquishment of Area A of the 2004 licences (PPL 25 – PPL 29 inclusive). All significant leads and prospects have, in the opinion of the FOGL, been retained within the 2004 license area. The retained area of the 2004 licences will be combined into a single administrative unit, with a total area of 34,336 square kilometers. No further relinquishment of the 2002 licences will be required as part of these changes. The total retained area of the 2002 and 2004 licences comprises 48,853 square kilometers, equivalent to over 220 UK North Sea blocks. This work will now be carried out in conjunction with farm-in partner, BHP Billiton, who will take over operatorship of the licences from 1 January 2008. Seabed coring and site surveys are expected to be carried out in 2008. BHP Billiton is currently reviewing a number of potential rig options.