Oil exploration around the Falkland Islands has gained considerable momentum over the last three years, providing a welcome, temporary boost to the Islands’ economy and making long-term oil production in the Falklands a real prospect.
The 2010-2012 drilling campaign undertaken by Desire Petroleum and Rockhopper Exploration saw 11 wells drilled, most notable of which was the Sea Lion Oil Discovery and its subsequent appraisal and test wells. Farm-in partners Premier Oil and Rockhopper believe that the Sea Lion discovery holds some 350m barrels of recoverable oil, and both are working towards entering a production phase in 2017.
2012 has also seen the first dedicated deep-water campaign to the South and East of the Falklands, with 2 wells apiece drilled by Borders & Southern Petroleum and Falkland Oil & Gas. To date, this campaign has seen one gas condensate discovery and one gas discovery, although further exploration work will be required over the coming years to determine the nature of the finds.
Parallel to this, exploration around the Falklands has become a truly international affair in recent months following Falkland Oil & Gas’ farm-in agreements with Noble Energy (US) and Edison Spa. (Italy), which will considerably boost the resources and experience available to the burgeoning oil industry.
It is envisaged that production and processing infrastructure will be based offshore. This will not only reduce the onshore environmental impact on the Islands, but will also ensure that the socio-economic impact will not prove overwhelming for the existing infrastructure.
The Falkland Islands Government has began to plan ahead to ensure that the Falklands are prepared should a production phase take off. This includes reviewing not only the current level of infrastructure and service provision, but also the relevant legislation to ensure that it conforms to international best practice. Furthermore, an Oil & Gas Development Group has been set up in order to ensure that the existing private sector benefits from any oil exploration or production.
Maintaining the unique natural heritage and unspoilt environment of the Falklands remains a key Government priority in approving any exploration or production. As such, all such operations require operators to submit an Environmental Impact Assessment (EIA), which in turn is subject to a strict public consultation period. The current exploration campaign has seen a very inclusive environmental auditing process, whereby NGOs and stakeholders are included in environmental impact discussions from as early a stage as possible. Furthermore, the department of Mineral Resources, in conjunction with operators, environmental stakeholders and other government departments, has created the Offshore Hydrocarbons Environmental Forum, whose aim it is to promote cooperation between all relevant bodies and jointly develop a shared vision on how best to protect the unique environment of the Falklands.