Exploitation of oil off the Falklands Islands, is imminent

Falklands' oil quest takes off

Stanley, Falkland Islands (UPI) Nov 30, 2009
The Falkland Islands' quest for potentially vast quantities of hydrocarbons offshore has taken off with an exploratory drilling season after operators raised enough cash to lease a rig from Scotland.

The semisubmersible Ocean Guardian rig, in operation in the North Sea for well over 20 years, was leased by Desire Petroleum as part of an ambitious plan to explore reserves in the North Falkland Basin. Experts have said the basin could have very large reserves that could transform the Falkland Islands, a British overseas territory that was the scene of a 1982 war between Britain and Argentina, into an oil-rich nation.

Industry sources said a tug boat, Maersk Traveler, is hauling the rig from its Scottish Highlands deepwater home to the Falklands. Current estimates said the rig could be in place within two months, or slightly longer if it faced rough weather on its trans-Atlantic journey.

U.K.-based Desire Petroleum said it had launched the exploratory operation on the basis of expert estimates the basin floor may be holding more than 3.5 billion barrels of oil and more than 9 trillion cubic feet of gas.

Although no commercial discoveries have been made in the Falklands, exploration ventures go back to 1998, when six wells were drilled to the north of the islands. The drilling revealed the presence of a rich organic source rock that, estimates then said, could hold up to 60 billion barrels of oil. Although that estimate has not been scaled down, recovery of those quantities of oil may require huge investments over a long period, analysts said.

The Falklands government has put in place new environmental legislation in response to protests from campaigners who believe the arrival of oil could ruin the islands. The Falklands have a thriving tourism industry

, mainly because of their main attraction -- penguins -- but officials point out the earnings from foreign travelers do not compare with a potential oil bonanza.