MercoPress. South Atlantic News Agency

Oil drilling begins in unexplored Falkland Islands’ south east waters

Falkland Oil & Gas (FOGL) in association with BHP Billiton became the third oil company this year to begin exploratory drilling operations in Falkland Islands’ waters according to a Tuesday release from the company.

“FOGL is pleased to announce that the Toroa F61/5-1 exploration well spudded on Monday 31st May 2010. The Toroa (albatross in Maori) prospect is located in Licence PL15, in which FOGL has a 49% interest”, said the release.

The well is being drilled to an estimated target depth of circa 2,700 metres. Drilling operations are expected to take approximately 35 days and “a further announcement will be made once drilling is completed”, added the release.

Besides the fact that FOGL is associated to one of the world’s largest mining companies BH Billiton, the well is being drilled to the south and east of the Falkland Islands, an area yet unexplored because when the 1998 exploration round and the two 2010 wells so far, have concentrated in the North Falkland Basin.

Moving to the south of the Falklands where it is deeper means the oil rig “Ocean Guardian” will be operating at a depth of 600 metres while to the north water is shallower, in the range of 200 to 300 metres.

Apparently bad weather has delayed the Toroa drilling because the rig was only making two knots when tugged from Rockhopper’s Sea Lion prospect.

The current drilling round which begun last February started with Desire Petroleum’s Liz prospect which proved negative and Rockhopper’s Sea Lion prospect that effectively discovered oil. However, further testing of samples and drilling will be needed to pinpoint with greater certainty the deposit and its commercial volume.

According to company sources the cost of the Toroa well is expected to be in the range of 21 million US dollars.

In an earlier statement FOGL said it was continuing to review with BHP Billiton a number of rig options with a view to drilling further wells on its licenses. Securing a suitable rig will determine the ultimate timing of the second phase of the program.

Other FOGL prospects which have been surveyed, Loligo, Nimrod, and Endeavour all lie in water depths greater than 1,000 meters and are best suited to being drilled by a dynamically positioned drill-ship or semi-submersible.

Falkland Island Oil and Gas is looking to contract such a rig later in 2010 to complete its minimum work commitment of two wells and possibly drill other discretionary wells.

As happened with the previous spudding announcements a strong condemnation can be expected from Argentina that claims sovereignty over the Falklands and other South Atlantic islands and the adjacent coastal and maritime areas.