Hydrocarbons Daily Record Tuesday, 25 March 2008

DESIRE PETROLEUM TO CONDUCT ENVIRONMENTAL IMPACT ASSESSMENT IN NORTH FALKLAND BASIN

Desire Petroleum’s Chief Executive Officer, Mr. Ian Duncan (ID) is visiting the Falklands this week to make arrangements to conduct an Environmental Impact Assessment (EIA) in the Company’s Tranches in the North Falkland Basin. In an exclusive interview with FINN, Mr. Duncan explained that he wasn’t here for a shareholders’ meeting but

ID: It’s on-going planning for the resumption of drilling in the North Falkland Basin. As we have announced, we are planning to drill three wells there and, as part of the process, we are preparing an Environmental Impact Assessment. This is an update of the 1998 EIA, which the companies prepared at that time.

We have appointed a company called RPS Energy, which is the leading environmental consultancy company in Europe to produce it. In the first part of the process of this visit, John Parry, who is the Environmental Manager, who will be carrying out the EIA, was here last week. And, with myself, we visited all the major stake holders, which are, Mineral Resources, Falklands Conservation, Fisheries, the Chief Executive, the Deputy Governor, Environmental Planning and the Public Works Department. We really just wanted to find out what the major stake holders’ concerns were so we could address them in the EIA.

We have had some very successful meetings. The intention was for John to go back to the

and draw up the EIA and we will submit it in late November to the Director of Mineral Resources. There is an internal time table for Mineral Resources and Phyl Rendell is to take it to Executive Council and it will be published in the Gazette for 42 days.

It was very important for Mr Duncan to stress that Desire Plc is a transparent company. And no wonder. Speculation was high about the low-key visit thus far.

ID: We encourage people to ask questions about what we are doing. We want people to be aware of our operations so the EIA will be published for 42 days and we will invite comments. And, at the end of that period we will come back with RPS and our drilling people. We will then have a public meeting and explain what it is we are about and address any issues that have arisen during the presentation and the EIA.

ID: A very important part. For us, environmental protection is a priority with regard to our operations. That’s why we are conducting this study and also why we are having these presentations, so if people have concerns, we point out this is a very straight forward operation. Drilling has taken place in this area before. There have been extensive base-line studies as a result of the 1998 drilling. We are very keen to involve all parties in our activities.

FINN: I understand that all of the seismic is done and that the next stage after the EIA will be drilling. Is this true or do you have more seismic work to do?

ID: In 2004, we shot the 3D seismic 840 sq km and interpreted the data. We have identified these prospects we would like to drill. Earlier this year we had a fundraising exercise when we raised £24Million and we are currently putting in place all the permits and approvals to commence drilling and we are looking for a rig.

As we have announced recently in our interim statement, the rig market has changed dramatically in the last 6 months. Last December we had a rig enquiry to the market on the availability of rigs and seven of the major drilling companies phoned and said they had suitable rigs. In the meantime, we went through the fund raising exercise. We then went again to look at the market, once we had the funds – we couldn’t secure the rig until we had the money.

We discovered the rig market had tightened dramatically and of course the oil price has gone up – doubled. Rig rates have doubled as well and the availability of rigs has really reduced dramatically. There are several reasons for this as oil prices are encouraging companies to go drilling for exploration wells, drilling production wells, they are drilling appraisal wells. So now we are looking at a very tight market but we have been here before on these markets, when oil prices go up they also come down.

Seeing that the price of getting a rig to the North Falkland Basin had doubled, would Desire have to go back to the market place to raise more money? The short answer is no. They simply will wait until prices stabilise before identifying a rig and putting it over an exploratory prospect.

What happens in the rig market is that – and we are already seeing it – new rigs start to get built. We know there are 30 new rigs under construction. What really brings it to our attention is that people drill dry holes, so they may have a continuing programme drilling wells but they decided not to drill any more wells so those rigs then come on the market.

The company we are using for drilling is called Peak Well Management. They are an international company that are involved in drilling over 30 wells world-wide this year – West Africa, the North Sea – and they are actively looking for a rig for us at the moment. It’s been very disappointing and frustrating for us that we have not been able to get a rig but we are doing everything possible to get one. We don’t know when that will be.

FINN: I have heard that one of the problems in finding a suitable rig is that the technology is scarce that will drill through the rather thick source rock that is predominant in the North Falkland Basin. Is this a major factor in why you cannot get a rig down here?

ID: Six wells were drilled in the area where we are going to drill. These wells were drilled in 1998 and they were really rather straight forward wells. There were no complications. For example, they drilled a 3,000 metre well in just over 20 days. As I say, no hazards were identified and drilling is very straight forward. We don’t see any problems.

The conditions where we are drilling in the North Falkland Basin are very similar to the central North Sea weather-wise, so you can drill all the year around. The water depths are very reasonable and similar to the North Sea. These are shallow wells – 3,000 metres. We are not looking at deep wells and we are planning to drill three wells and we are looking at 80 to 100 days for the total programme, so this is not a long duration programme. Because the environment is very similar in terms of water depth and weather in the North sea, we can use what is called 3^rd Generation semi submersibles. And there are a lot of those available in the north.

This is not a deep water hostile environment like the west of Shetland where there are many fewer rigs than there are available that can drill areas like the North Falkland Basin.

FINN: Many people writing about this area tout horrible weather and, FINN has replied to one such article recently.

ID: I always say the weather is like that in Aberdeen and I am from Aberdeen so I might be a little bit biased. You do get a bit more sunshine that London. I just wish I had taken my shorts and tee shirts with me.

FINN: We know about the source rock in the North Falkland Basin but FOGL are showing their results in the South Falkland Basin that shows gas chimneys and flat spots. FOGL say that from satellite they see crude oil slicks. Are there any such indicators in the North Falkland Basin?

ID: Yes. We see those as well. We shot 3D seismic so we got very good control on our prospects. As I say, we have identified seven prospects, which we are ready to drill. Some of those do have flat spots and some of them do have vent gas chimneys as well. We have drilled before and we have got a very good idea what the geology is.

The reason we like the North Falkland Basin so much is the source rock which you mentioned. It is a world class source rock. It’s 1,000 metres thick and everybody who looks at it have come up with estimates of large quantities. We have developed a model where we think the oil has accumulated on the margins of the Basin in these deltas, which we have identified. And, those are the features we are hoping to drill in the next drilling campaign.

FINN: The price of oil dropped to $61.32 yesterday. If the price drops significantly, at which point would a drilling programme here become unviable? That price has risen since 1998, when it hovered around $14.00 per barrel.

ID: The economics we did last year suggested that at $30.00 oil and 35Million barrels recoverable would be economic. The fiscal regime is very similar to the North Sea. We would apply very similar drilling techniques in those sort of developments – offshore developments would be the sort of thing we’d have in mind so we based all our economics on $25.00 - $30.00 oil. At $60.00 obviously it looks a lot more attractive.

FINN: Compared with the North Sea, how large is the area you are planning to drill?

ID: The fields we are looking at are similar potentially. They are very large fields. The first prospect we will drill, Liz, has got something like 700 to 900Million barrels of oil recoverable, which would be a very large field. So, we have a range of prospects. Liz is the largest but we have other prospects as well.

We see the 3D seismic but until we drill, we don’t know whether there is oil there. We have done all we can and now we are ready to drill and we are frustrated that we can’t get a rig. We are doing everything we can and will resume drilling as soon as possible.

We are here to do the planning, getting everything in place – all our ducks in a row so that when we do get a rig, we are ready to drill as quickly as possible. Preparing the Environmental Impact Assessment is just part of that process.

FINN: Finally, how are you going to let people know about the EIA and your proposed drilling programme?

ID: We intend to have a public meeting at the end of January, early February and we will detail the operational plans, all the mitigation efforts we will be putting in place and having an absolute minimum environmental footprint in the area.

Standard Chartered Bank in Stanley as well as branches in 56 other countries sponsors a world-wide charity called “Seeing is Believing” and, indeed the March Marathon was a big fundraiser for it. Another chance to help the charity comes up on Thursday, 13 October 2005. The bank in Stanley will have a special counter set up to take money for the charity as well as showing a documentary and a specially made video.

According to the BBC World Website, the documentary being shown at the Bank on their new plasma screen in the banking hall will be hosted by former Prime Minister, Sir John Major, who is now an Ambassador for Vision 2020.

It is a Standard Chartered Bank goal to help restore sight to 1 million people, so did deep everyone.

As first reported on the South Georgia Website, a team of four kayakers hope to make the 400 mile circumnavigation of South Georgia during this austral summer. After arrival at South Georgia via the Falkland Islands – an 800 mile journey in itself, the intrepid four, Pete Bray, Nigel Dennis, Jeff Allen and Hadas Feldman will slide into their sea kayaks and begin the risky journey on November 12^th.

Awaiting the men at times will be mountainous seas, ice, fierce winds and lots of Fur Seal pups. There are great stretches of coastline where the men will not be able to land and it is hoped (for their sakes) that the changeable weather will be in their favour when they are in the most dangerous parts of the Southern coastline of the Island.

What is not known from the reports in the UK Press is whether the team has a back-up ship to support them, should they run into trouble during the expedition. One can’t plan an accident to fit in with the schedule of a ship. Further to this, it is a hard and fast rule to get the permission of the South Georgia Government to do an expedition like this and I am sure the intrepid four managed this before setting off.

Even with a back-up ship and freeze-dried meals, it’s not going to be a Sunday picnic, as several attempts to circumnavigate the Island have failed. Earlier in 2005, a US team of two tried to kayak around the Falklands and had to abandon the full trip due to the adverse sea and weather conditions.

At 1657 hrs on Thursday, 06 October 2005, the Royal Falkland Islands Police received a report of two youths on motorcycles riding on the Greenbelt area on Ross Road East. Police attended the scene and discovered that the youths were not old enough to have a licence to drive motorcycles. The matter is being dealt with through the parents.

The Royal Falkland Islands Police would like to remind the general public that young people can ride motorbikes in the area of the old rugby pitch west of the Common.

FIG have issued a notice saying the Government Jetty, which has been in bad repair for decades now, is out of bounds to the public and not to be used.

The decision came about because Government insurers refused to provide liability cover for the jetty’s use in its current state of disrepair.

A meeting of the Stanley Lands Committee took place at 1330 hrs on Thursday, 06 October 2005 in the Liberation Room of the Secretariat. Present were Cllrs Edwards (Chair) and Cockwell, The Environmental Planning Officer, Mrs Dominique Giudicelli, Director of Public Works, Mr. Manfred Keenleyside, Crown Council “A” Mrs. Alison Ingles and the Director of Minerals and agriculture, Mrs. Phyl Rendell.

After apologies for absence and declaration of interest, matters arising from the minutes of the meeting held on 08 September 2005 were discussed. There was no contact about sineage on the firing range and the lease of the Government Boat House was put on hold until the new Trustees of the Sea and Marine Cadets had a chance to meet and discuss the lease. It was decided to lease land at Gordon Lines directly to the commercial entity that requested it, rather than going through FIDC.

The Grazing review provoked much discussion, with the loss of the investment for fencing being dealt with by saying that new grazing permits should be for three years. Not all grazing plots were the same size with one being nearly 30 acres while many were less than an acre. All but three permits would be terminated but the time of termination would be in late autumn when the riding season was over.

Traditionally it was the Governor who decided whether it was sheep or horses that grazed in the Triangle but now the Triangle would be added to the list of grazing plots. Executive Council will be deciding this. Land near the Beaver Hanger belonging to Robert Rowlands was discussed with a decision that the boundaries should be clarified before any fencing had to be removed.

There were two applications for building plots and the sale of one for Ms. Tara Heathman has gone through. There is a shortage of building plots and there would be a search for more plots as there are 71 people on the “A” List. A discussion would take place in ExCo about identifying new building plots.

As for ExCo decisions on land sales, a discussion about land for masts for Cable & Wireless resulted in the matter being shelved because the item was deferred in Planning and Building Committee. The Camber House has been sold on a 999 year lease with a 2-year building licence. A Crown Grant for the Falkland Islands Company was approved in return for sewerage works going across FIC land. Fic plan to fill in the bit between the yard and the causeway.

The Murrell River Draft Management Plan brought some discussion with Cllr Edwards saying that the whole thing needs to be looked at because the legislation, as far as she was concerned, was toothless and that the Murrell River had been designated a nature reserve, so why should it be designated a recreation area. She felt that there needed to be more public consultation.

The date of the next meeting was set at Thursday, 03 November 2005 at 1330hrs in the Liberation Room of the Secretariat.

Due to the non-arrival of the B-747, the Post Office will be closed on Saturday morning.

Would all sponsors of the TAB from Hillside Camp to MPA please make sure to pay the men at HQ Hillside Camp.

The Highways section of the PWD will be closing the North Camp Track on Monday, 10 October to allow installation of new culverts in Corral Creek, west of Estacia ouse. Diversion Signs will point to the old track. Note that it is passable only by 4x4 vehicles. Hopefully the work won’t thak more than 4 days. 27387 will get you more info.

The Royal British Legion will be meeting on Monday, 10 October 2005 at 1930 at Hillside Camp, where they will conclude the Annual Charity Ball arrangements and the Poppy Day collection.

Contributing Websites: http://www.falklandnews.com. http://www.tristantimes.com, http://www.the-islander.org.ac, http://www.sartma.com, http://www.news.co.sh, http://www.sgisland.org

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S.Atlantic : Sartma Daily (07/10/05)Submitted by SARTMA.com (Juanita Brock) 08.10.2005 (Article Archived on 15.10.2005)

S.Atlantic : Sartma Daily (07/10/05)
Submitted by SARTMA.com (Juanita Brock) 08.10.2005 (Article Archived on 15.10.2005)