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Desire’s 3D Results Highlight Oil And Gas Potential Of The Falklands
Desire Petroleum’s 3D seismic shoot over Tranches C and D in the North Falkland Basin off the Falkland Isles has exceeded expectations and the exploration outfit is now hoping to sign up joint venture partners ahead of starting drilling work next year.

“We’re very pleased with the results,” Dr Ian Duncan of Desire told oilbarrel.com. “It’s confirmed what we expected to see and exceeded some of our expectations.”

AIM-quoted Desire - named after HMS Desire, which discovered the Falkland Islands in 1592 - was formed in 1996 to participate in the first round of licensing offshore the Falkland Islands. The company holds 100 per cent of Tranches C, D, I and L, which cover a total of 3,650 sq km or the equivalent of 13.5 UK North Sea blocks. Desire also holds 12.5 per cent in the Talisman Energy-operated Tranche F.

While the 1996-1998 exploration campaign failed to live up to the high hopes of the international oil prospectors, which included major oil companies, five of the six wells sunk during the initial drilling season recorded oil or oil and gas shows and established the presence of one of the richest source rocks in the world, the lacustrine.

Desire’s latest technical work has strengthened its belief in the prospectivity of the North Falkland Basin and its geological model for the area. Existing 2D data has been incorporated in the interpretation of the new 3D data, enabling the geologists to see deeper horizons not tested by the 1998 Falklands exploration campaign. The new data has largely confirmed Desire’s geological model as well as identifying new prospects, of which at least six could hold between 100 and 1,000 million barrels.

The 3D seismic also highlights Direct Hydrocarbon Indicators that appear to point to the presence of gas. Considerable volumes of gas were, of course, found by Shell’s first well in Tranche B in the 1990s but left untested because it was considered uneconomic at the time. Desire believes those economics have now been turned around given the surge in the price of gas and the reduced costs of gas-to-liquids technology. The company reckons that even at gas prices well below current levels, a gas accumulation equivalent in size to a 300 million barrel oilfield would be commercially viable. Several of the prospects identified on the seismic match this requirement.

Potential farm-in partners are now assessing Desire’s data. “A number of companies have expressed an interest and they are reviewing the data, which obviously takes some time,” said Duncan. “However, we would hope to put together a group so that we can get drilling as soon as possible, ideally towards the back end of next year.”

Desire aims to retain at least a 50 per cent stake in the acreage. “We want to keep our exposure because we really believe in it,” said Duncan.

Desire, of course, is not the only company that believes in the prospectivity of the waters off the Falkland Isles. Falkland Oil & Gas with joint venture partners Global Petroleum and Hardman Resources are preparing to shoot a survey over their acreage in the South Falkland Basin later this quarter. Geologically the two areas are very different and results in one area cannot be used to understand the other. Even so, Desire sees the renewed interest in the southern Atlantic as positive.

“It’s good that other companies are there now,” said Duncan. “It means we may be able to share some rig mobilization costs and keep costs down.”

He added: “There’s a lot more interest in the Falklands because it’s a very under-explored area with a lot of potential.”