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The Falkland Islands contain significant oil reserves.
1970s–1990s: initial exploration
Geological surveys of the Falklands began in the late 1970s, when two petroleum services companies undertook seismic surveys of the Falklands and the surrounding seafloor. Although the data appeared to indicate the area was a viable site for exploratory drilling, the islands' government was not prepared to grant licences for drilling. With the growth of oil extraction in the North Sea, most crude extraction in British waters was confined to the North Sea area. Some limited surveying did continue, but this was halted entirely following the invasion of the Falkland Islands by Argentina in 1982 and the subsequent conflict.
In 1992 the Falkland Islands government contracted the British Geological Survey to resume geological survey work in the Falklands. After an initial investigation showed the presence of several Mesozoic basins in the waters surrounding the islands, the first round of exploratory licences was granted covering the most promising of these basins, a fractured basin of elongated shape in relatively shallow waters north of the islands. Other candidate basins, located to the south and east of the islands, present a greater technological challenge, as they are located in considerably deeper waters.
1990s–2010s: exploratory drilling
When the Falkland Islands government granted licenses in 1996, seven companies agreed upon an exploratory drilling campaign. Six exploratory wells were drilled as planned for the first five-year period of the licences.
Along with geological and geophysical data obtained during the exploration campaign, environmental data were also gathered. On the other hand, new investigations in this local were carried out during the drilling campaign and were the object of study in recent years . Investigations of oil reserves in the Falklands area continued, but no large-scale extraction has yet commenced.
A new programme of exploratory drilling was scheduled to begin in February 2010[1] when the Ocean Guardian begins an expected programme of ten exploration wells for Desire Petroleum plc and its associate companies.
Sea Lion project
In February 2010, exploratory drilling for oil was begun by Desire Petroleum,[2] but the results from the first test well were disappointing.[3] Two months later, on 6 May 2010, when Rockhopper Exploration announced that "it may have struck oil",[4] Argentina's Foreign Minister warned that his country would take all possible lawful steps to impede British oil exploration and production there.[5] On 17 September 2010, Rockhopper Exploration published the results of the borehole analysis – the well was drilled in water 451 m deep and a flow test showed that a payable oil column of 53 m was capable of producing over 2,000 barrels per day (320 m3/d).[6] In February 2011 Rockhopper Exploration commenced an appraisal programme of the Sea-Lion discovery. An update of the first appraisal drill was released on Monday 21 March 2011 indicating a significant reservoir package with a downhole mini Drill Stern Test flowing oil at better rates then the September 2010 flow test: confidence in the commerciality of the Sea Lion discovery has been increased by this first appraisal.[7]
On 14 September 2011 Rockhopper Exploration announced plans are under way for oil production to commence in 2016, through the use of Floating production storage and offloading (FPSO) technology, replicating the methodology used on the Foinaven oilfield off the Shetland Islands.[8] The proposal envisages a FPSO vessel located 200 km offshore servicing 24 production wells and 12 water injection wells in about 450 m of water. The wells will be arranged in clusters of 6 wells per drill centre.[9] The two water injection well clusters will be 3.0 km from the four oil well clusters.[10] Oil will be transferred from the FPSO vessel to shuttle oil tankers.[11] Each year thereafter the production date has been pushed back another year.[12]
The production site will require approximately 110 people working offshore and another 40 working onshore.[13] The oil expected to trade at 90 - 105% of the Brent crude price.[14]
In May 2015 oil was discovered in Isobel deep by a consortium of oil companies including Falkland Oil & Gas, Premier Oil, and Rockhopper Oil & Gas.[15][16][17] In 2023, Rockhopper (working with Tel Aviv-listed Navitas Petroleum) indicated that it had been presented with a new development plan for its Sea Lion project that aimed to cut costs and proceed in phases. It was stated that: "If realized, the new plan — with a total price tag of $2.2 billion — could lead to 80,000 barrels per day of production (up to 100,000 b/d at peak) via a leased floating production, storage and offloading unit". A final investment decision was targeted for early 2024, though it experienced some delays.[18]
A public consultation on the project took place in the summer of 2024 and was reported to have garnered widespread support from Falkland Islanders. Since Britain's newly elected Labour Government banned similar oil projects in the United Kingdom, this created the prospect for a potential conflict between the Falkland Island's government and the British government. Nevertheless, the authority to approve oil development around the islands was said to rest solely with the Falkland Island's government.[19] In November 2024, the Falkland's government Executive Council indicated that, while the public consultation process had been successfully concluded, "some matters" related to the Environmental Impact Statement required "further discussion" and that any development and production program would need to be considered separately by the Executive Council.[20]
Navitas Petroleum subsequently indicated that a final investment decision was delayed to mid-2025 with first oil not anticipated until late 2027, at the earliest. Although certified gross 2C recoverable oil resources had increased from 791 million bbls to 917 million bbls, phase 1 costs had increased to $1.4 billion.[21]
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Four sedimentary basins that could potentially contain hydrocarbons have been identified in the Falkland Island waters.[22] They are:
- North Falkland Basin which is located to the north of the islands.
- Falklands Plateau Basin which is located to the east of the East Falkland.
- South Falklands Basin which lies to the south-east of the islands and extends up to the Falklands Trough.
- Malvinas Basin which lies to the south-west of West Falkland, between that island and Tierra del Fuego at the head of the Falklands Trough. Part of this basin lies in Argentine waters.
The latter three basins are part of a larger contiguous formation.
An agreement signed in 1995 with Argentina had set the terms for exploitation of offshore resources including large oil reserves[23] as it was thought that there might be up to 60 billion barrels (9.5 km3) of oil under the sea bed surrounding the islands.[24] However, in 2007 Argentina unilaterally withdrew from the agreement.[25] In response, Falkland Oil & Gas has signed an agreement with BHP Billiton to investigate the potential exploitation of oil reserves.[26] Climatic conditions of the southern seas mean that exploitation will be a difficult task, though economically viable, and the continuing Falkland Islands sovereignty dispute with Argentina is hampering progress.[27]
Some 2012 exploration results have indicated that taxation on oil revenues, even though they will be amongst the lowest in the world, are expected to more than double[clarification needed] the country's revenue.[28]
As of 2011 the East and South Falklands Fields had not been fully evaluated. In 2012, Leiv Eirikson, a 5th generation semi-submersible drilling rig, had been expected to drill two exploratory wells for Falkland oil and gas in 2012.[29] drilled in the East Falklands Basin.[30][31]
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The petroleum survey area of the Falkland Islands is in the sea to the north of the islands, covers 400,000 km2, and contains several sedimentary basins from the Mesozoic era. After conducting seismic reflection studies and three-dimensional exploration, six test wells were drilled. Five of the six wells produced samples of petroleum. However, none produced indications of commercial amounts.[32]
According to British Geological Survey studies led by the geologist Phil Richards, the petroleum occurs at 2,700 metres below sea level and a maximum generation would be found beginning at 3,000 metres below sea level. The main petroleum source rocks have still not been penetrated because they are located at a depth deeper than 3,000 metres. It is considered probable that more than 60 billion barrels have been generated, that is, produced by natural forces, in deposits in the North Falkland Basin. These figures are based on the studies of pyrolysis obtained from wells and assume the existence of a mature rock interval of 400 metres thickness and covering an area of 40 by 40 km.[33]
However, even with more conservative figures for the thickness and surface area of the source rock, the rich potential generator of petroleum, it is calculated that significant quantities can be extracted. For example, in an area of mature rock 35 by 12 km and 200 metres thick more than 11.5 billion barrels of petroleum could exist, including the production of 8 kilograms of hydrocarbon per tonne. [citation needed]
The brown lacustrine sediments are similar to the lacustrine source rocks of the Upper Permian to the south from the Junggar basin, which are among the richest source rocks for oil in the world. According to calculations of the Potential Production Index (obtained when multiplying the organic content of the rock by its thickness and potential production of hydrocarbons) they suggest the rocks of the North Falkland basin are second only to the Junggar basin in petroleum potential. [citation needed]
Although the wells indicate a potentially productive source rock, they also indicate that many of the target reservoirs are composed of volcaniclastic rocks with low porosity due to secondary mineralisation[34] and are thus unlikely to store hydrocarbons in large quantities. This is not an anomalous view based solely on published data from one well, but based on information from multiple sources. Volcaniclastic-rich deposits are probably present in many parts of the basin, which is to be expected, given the major volcanic sediment source that lay to the west at the time of sedimentary deposition.
The petroleum system in the North Falkland Basin
The petroleum exploration discovered a system of source rock in the North Falkland Basin capable of generating more than 102 kg of hydrocarbons per tonne of rock. Although a great portion of the thickness of the source rock is geologically immature, it is capable of generating hydrocarbons below 2,000 metres. The rock generating the largest quantity of hydrocarbons is located at a depth of nearly 3,000 metres. The calculations of the volume of rock that lies just inside the bordering fringe of the petroleum deposit ranges from 36 billion cubic metres to 400 billion cubic metres, depending on the interpretation of the seismic survey data. In general, it is believed that the basin could have generated up to 60 billion barrels of petroleum. The petroleum exploration discovered that under the principal interval of source rock is a layer of sandstone approximately 100 metres thick with porosities reaching 30%. Up to now, very few sandstones with good reserve properties have been found in the succession of rifts below the interval of principal source rock, but very few wells have penetrated into this zone.
The absence of high pressure in the basin suggests that whatever quantity of petroleum was produced could have migrated laterally and thus could be trapped in rift reservoirs developed below and to the side of the source rock and could function—given its low level of porosity—as a seal for the deeper rock and would only be cut on the borders where it is intruded upon by faults.
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