MercoPress. South Atlantic News Agency

Deepwater oil rig needed to drill in Falklands’ southern waters, confirms FOGL

FOGL confirmed it will press ahead with its Falklands’ drilling program

Falkland Oil and Gas (FOGL) will press ahead with its drilling program offshore the Falkland Islands despite reporting that its Toroa F61/5-1 exploration well was dry. However FOGL, which is associated with Anglo-Australian mining giant BHP Billiton, said it will work first towards contracting a deepwater rig.

FOGL holds Falkland Islands government licences to the south and east of the Islands, a vast area that had never been drilled until the disappointing Toroa F61/5-1 which reached almost 2.500 metres in waters over 600 metres deep.

The two previous wells drilled in Falklands’ waters (Desire Petroleum and Rockhopper Exploration) as well as those of the 1998 round were concentrated in the North Falkland basin where the water depth ranges 200/300 meters.

FOGL Chief Executive Tim Bushell indicated that “whilst the results of the Toroa well are disappointing, it has to be remembered that this is the first well in a previously un-drilled frontier basin”.

He added that FOGL “continues to work towards getting a deepwater rig so that we can drill our other prospects which are bigger and probably better prospects. In the meantime, we'll evaluate the data we have from this well to see how it can help us drill other wells“.

The Toroa prospect is located in Licence PL15, in which FOGL has a 49% interest alongside BHP Billiton’s 51%. Originally the company was planning a two-phase drilling program starting at Toroa and then moving on to a deepwater campaign, which was expected to start in late 2010. Under the terms of its farm-in agreement, BHP Billiton is funding more than two thirds of the total cost of the committed two wells program.

”There are very few rigs that can drill under harsh conditions,“ said a FOGL spokesperson. ”So it's impossible to say when that might happen. We had the current rig for only one slot.”

The current rig “Ocean Guardian” was contracted by Desire Petroleum, which drilled the first well and the leased to Rockhopper Exploration that announced the discovery of oil at the Sea Lion prospect, and to FOGL. Although ideal for the North Falkland basin, apparently operating at 600 metres deep waters the rig is close to its potential.

Meanwhile oil company Argos Resources said it will join the Falklands drilling campaign after it completes an IPO to raise funds for the initiative, according to media reports.