Falklands Developments in 2014

Falklands Developments in 2014

After a busy 2011 and 2012, 2013 was a relatively quiet year for exploration around the Falkland Islands in the South Atlantic Ocean. The various companies involved in the region's nascent oil and gas industry preferred to spend the year focusing on seismic data acquisition campaigns and consolidating some of their assets.

The big news to come out of the Falklands in recent years was Rockhopper Exploration's discovery of up to 1.4 billion barrels of oil in its Sea Lion prospect in the North Falkland Basin during the spring of 2011.

But 2012 proved more disappointing in terms of exploration drilling. None of the wells drilled by Falkland Oil and Gas Ltd. (FOGL) and Borders & Southern Petroleum plc in the South Falkland Basin during 2012 found commercial oil, although Borders' Darwin well did yield an estimated 190 million barrels of condensate.

The major activity in 2013 has been the completion of two 3D seismic campaigns in the South Falkland Basin and the start of a third. Meanwhile, FOGL and Desire Petroleum plc decided to merge, which has resulted in an enlarged company that has a war chest for exploration activities that amounts to $275 million.

The major focus of attention during 2014 will be on the Sea Lion discovery in the North Falkland Basin. Specifically, observers of the Sea Lion project are expecting the imminent arrival of details about how the project's partners plan to develop the field.

Project sanction for Sea Lion is expected by the end of the year, according to operator Premier Oil plc and partner (and field discoverer) Rockhopper Exploration plc. The field is estimated to hold 394 million barrels of oil equivalent that can be recovered. Once developed it is expected to reach a gross production plateau rate of between 80,000 and 85,000 barrels per day, although first oil is unlikely to be achieved until late 2018 at the earliest.

Premier holds a 60-percent interest in the PL032 license, which contains the majority of the Sea Lion discovery, after it farmed into the field in October 2012. Rockhopper retains the remaining 40-percent stake.


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