Falklands get ready for oil rig crews

Oct 27, 2009 01:00 AM

British oil exploration company Rockhopper has raised the cash it needs to start drilling for underwater oil and gas deposits north of the Falkland Islands, an area believed to hold large quantities of hydrocarbons and already dubbed low-risk because of the certainty of the find.
Rockhopper said it raised about $ 80 mm to finance the drilling offshore in the North Falkland Basin. Most of the cash in the equity placing is believed to have come from institutional investors that are openly excited about scientific reports the Falklands may yield more oil than the British side of the North Sea.

News of the impending boom has sent Falklands environmentalists wrapping their arms around the penguins -- a lucrative tourism attraction but not quite on the scale financially of an oil bonanza. Warnings that oil may ruin the Falklands forever have prompted the government to reassure Falklanders they will watch the oil crews every step of the way in and out of the sea.
Bitter critics of the development have cited Britain's apparent failure to make good use of its North Sea oil boom and welcomed the news with a mixture of dismay and anxiety -- especially about Argentina's next move.

The islands were invaded by Argentina in 1982 in an ill-fated campaign to reassert their Argentine identity as Islas Malvinas. The war ended with an Argentine defeat. Emotional scars in Buenos Aires run far deeper than those felt in Britain. The conflict did, however, trigger the collapse of military supremacy in Argentina and restored democratic order.
No one knows how Argentina will react next as the Falklands' rise as a major oil producer comes closer to reality. In some Falklands circles, discussion of another possible encounter with Argentina is taboo, while Argentine President Cristina Fernandez de Kirchner keeps alive the flame of her nation's "inalienable" rights over the islands with frequent pronouncements.

The change in the islands' fortune is a certainty, reinforced by Rockhopper's statement thatit chose the North Falkland Basin first because it considered it "relatively low risk in exploration terms, with both proven oil and gas."
Industry analysts said the area is also cheaper to work in, as it involves modest water depths, compared to the great depths Brazil needs to drill for its new oil. More oil and gas is believed by experts to be trapped within the rocky seabed around the Falkland Islands.

Rockhopper's partner Desire Petroleum announced earlier in October it secured a summer lease on a UK-based rig, Ocean Guardian, to start the drilling the first two of six wells. Rockhopper has already done extensive seismic surveys and technical evaluation in the area.
An independent survey identified 1 bn barrels of prospective or unrisked oil resources in the Falklands waters. The Ocean Guardian is scheduled to depart from the North Sea by early December and begin drilling in February 2010.

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