So There Is Oil in the Falklands

oilbarrel.com (05/12/2010)
"So there is oil in the Falklands. There is going to be a bonanza. Share prices are already going crazy. There is talk that from just one prospect up to 200 million barrels of oil could be forthcoming. That is a lot of oil. The Falklanders will never have to worry again. Right? Wrong! It is usually not that simple. There is probably going to be lot of worry henceforward. But not let us be churlish just now. A windfall is a windfall.

I was a student when there was another oil bonanza in a frontier area. That was a long time ago but it was not far away. It was the North Sea. Ever since the 1920s, thousands of onshore wells by the hopeful in Western Europe had disappointed. Production had never exceeded 250,000 barrels a day.

Then in 1959, in Groningen in Holland, Shell and Esso discovered a vast gas field, the largest then known outside the USSR. On the back of this some companies continued to look for oil but without much success. Phillips Petroleum from Bartlesville, Oklahoma was one of them. It started drilling in 1962. By 1969 after a string of dry holes, the company decided to call it quits. Including Phillips own efforts, some 32 wells had been drilled on the Norwegian continental shelf and not one of them had been commercial.

But in a grand tradition stretching back to Colonel Drake who found the first black oil in Pennsylvania in the US in 1859, Phillips decided to give it one more go. In November 1969 it made a major find on Block 2/4. The flood gates were open.

Today, 40 years on the North Sea is said to be in decline, there has not been a world-class discovery since the Buzzard field in 2002. Britain is now a net importer of gas having been self sufficient for years. There are, accordingly, great concerns about security of supply and what those difficult Russians might get up to.

And yet, according to respected consultants Hannon Westwood the North Sea is still alive and kicking. A report from this group says there were 42 wells drilled in 2009 (compared with 77 in 2008) of which 28 were successful in appraising or finding additional technical reserves—a 68% success rate compared with 47% in 2008. The success rate in 2009 was more than double the long-term UK average. Some 1,224 million barrels of appraised and new technical reserves were found in 2009 compared with UK production of 836 million barrels—a technical replacement of 146%.. . .A high oil price combined with technical innovation has made all kinds of things possible that were not achievable just a few years ago. One of the companies at our 34th conference is producing clean methane gas from abandoned coal mines. Another is pushing up output of oil from fields in Spain more or less written off by previous license holders. Yet another is participating in the great shale gas boom in the U.S. Three years ago, no one knew how to exploit tightly held shale gas economically. Now they reckon it is possible to produce enough of it to keep the U.S. in business for 100 years."

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