Event Report: “The geology and business of oil and gas exploration off the Falkland Islands.” Dave Bodecott

“The geology and business of oil and gas exploration off the Falkland Islands.” – Dave Bodecott Wednesday 21 February 2018 at the Braithwaite Institute.

Dave started his talk by paying tribute to his geology teacher at Cockermouth Grammar School 50 years ago which stimulated his interest in geology.

He explained that his talk would be a personal view based on his experiences working on the Falklands for 20 years, and particularly at Rockhopper Exploration plc.

The Falkland Islands are a similar size to Cumbria and the north west and at a similar latitude to London. There are some 775 islands including 3 main islands. Rainfall is a mere 10 to 15 inches per year in the driest parts and the climate is cold, arid and windy. The onshore rocks are Palaeozoic quartzites and sandstones. The islands are close to the South American continent and sit on a continental shelf with mostly extensional faults. The economy had been totally based on sheep farming but efforts were made in the 1980’s to diversify, including to fishing, tourism and oil exploration.

There are 2 main offshore exploration areas, the North Falkland Basin(NFB) and the South Falkland Basin(SFB). The NFB is close to where the Atlantic tried but failed to open. It was a fresh water basin with a N/S trending lake system some 300km long and 50km wide with an asymmetric trap door geometry and lake-turbidite facies within. The SFB is a large complex hostile environment with deep water, having been a marine basin since the Jurassic.

Wells were first drilled in 1998 and though technically successful they were not commercial. Shell missed the main Sea Lion field (2010) by a small distance. As the oil price dropped below $10 the big companies pulled out but some small companies continued. By 2004 the oil price had risen to some 25$, but the existing small companies were short of finance. There was some commercial reorganisation and Rockhopper was formed and took part interests in some of the NFB licences. Drilling began in 2010, and Sea Lion was found shortly thereafter. Between 2010 and 2015 19 wells were drilled in the NFB with a high success rate, and 6 in the SFB with just 1 success. In order to have the necessary finance there were several commercial reorganisations and finance was raised on AIM. Falkland oil is expected to be on stream in 2021 or later. As an example of the volatility of oil exploration the Rockhopper share price was 11p on issue, increased to £5 in 1.5 years and now stands at 23p. This volatility reflects the development lag and the relatively low oil price from 2014-2017.

After questions Dave was thanked for his interesting talk covering both the financial as well as the geological aspects of oil exploration.