Things are starting to heat up in the cold waters of the South Atlantic. Last month Rockhopper Exploration announced plans to invest US$2bn to develop its Sea Lion discovery on the PL032 license off the Falkland Islands, after successfully completing its fifth appraisal well on the prospect. The firm estimates production from the discovery, which would be the region's first, could come online by 2016, with eventual flow rates of up to 120,000b/d.
Rockhopper's announcement provoked an angry response from Argentine President Cristina Fernández. Buenos Aires has long criticized the ongoing exploration campaign on grounds it undermines Argentina's sovereignty claims over the islands, currently governed as a British overseas territory. Earlier this year, Argentina's largest oil firm YPF drilled its first offshore well in the same Malvinas basin, and despite disappointing results, more wells are planned.
Despite best efforts of several other firms, Rockhopper so far is the only company to have found anything approaching a commercially viable resource in the area. Next year, however, Argos Resources and Borders and Southern are set to begin drilling operations.
BNamericas spoke to Borders CEO Howard Obee to learn about the company's drilling plans, and see if the Rockhopper announcement had any impact.
BNamericas: How are Borders' exploration plans coming along? Are you still expecting to begin exploration by year-end?
Obee: Well, earlier this year we signed a contract with Ocean Rig UDW to use the Liev Erikson rig, which is currently up in Greenland. As soon as its operations are finished we will get mobilized and take it down to the Falklands to start on our work. Consequently the actual start will depend on when they finish up work in Greenland.
BNamericas: Is it likely to be before Christmas?
Obee: As I understand they will have to finish operations in Greenland soon, because there is an ice problem. That means it will certainly be mobilized before Christmas.
BNamericas: How many wells will you be looking to drill?
Obee: We are drilling two wells. Darwin is first, and then the Stebbing prospect will be second. They are completely independent prospects, so if one is a failure it doesn't mean the other one is going to be.
BNamericas: Are we likely to see further wells after that?
Obee: It's unlikely. Depending on what we find we will make up our mind then whether or not we drill further appraisal wells, or more exploration wells, but at the minute we will just have a look at these first two wells. After that we give the rig to Falkland Oil and Gas, and they will be drilling two wells themselves.
BNamericas: What kind of resource potential are you looking at on these two prospects?
Obee: Pretty big. The range of Darwin is between 300Mboe and 760Mboe recoverable and the range on Stebbing is about 710Mboe up to 1.4Bboe recoverable.
BNamericas: There's been some talk among some of the other Falkland-focused explorers about farming out interests in their licenses. Borders and Southern has 100% interests in all its acreage, do you have any intention to farm out interests in those licenses at the moment?
Obee: No, we aren't looking for any partners. We are happy to drill this on a 100% basis.
BNamericas: How has the company been affected by Rockhopper's announcement that it foresees production start by 2016? Have you seen a lot more interest in the company as a consequence?
Obee: It hasn't really impacted our world at all. They are based in the north of the Falklands; we are in the south of the Falklands. The geology is completely different; they are completely different hydrocarbons systems, so you can't read anything across the north and the south.
We can't really base anything on their success, so we are just focused on drilling our first exploration well. Hopefully we can join them in finding some hydrocarbons.
BNamericas: There has obviously been a lot of talk about the diplomatic row over the Falklands between the Argentine, British and Falklands governments. Does the attitude of Argentine authorities ever give the company any concerns?
Obee: No it doesn't. We have the full support of the British government, and it hasn't impacted our operations at all. We source most of the equipment we use out of Aberdeen, but it quite honestly only adds a little bit on to the cost. Other than that it doesn't impact us too much.