Oil hunters invade the Falklands  

The Times has an article on oil exploration in the Falkland Islands - Oil hunters invade the Falklands.

For two months a sky-blue tug boat has been puttering across the Atlantic dragging a 14,400-tonne oil rig.

It has been slow going — about 6mph — but this week the odyssey will end when it delivers the rig, called Ocean Guardian, to its destination just north of the Falkland Islands.

It will be a big occasion. Twelve years have passed since oil companies last went prospecting round the Falklands, 300 miles off the coast of Argentina.

All but one of the half-dozen wells that were drilled by Shell and others in the 1998 campaign showed signs of oil. In those days, though, the oil price was hovering around $10 a barrel, making it uneconomic to develop fields in such a remote location.

There was cheaper oil elsewhere. Talk of production also angered Argentina, which disputes Britain’s ownership of the islands, with protesters mobbing Shell forecourts.

More than a decade on, several things have changed. The oil price is seven times what it was — Brent crude closed at $70.55 on Friday. Drilling technology has developed in leaps and bounds. And it is becoming harder to find fresh reserves, pushing explorers into new regions in the hope that there may yet be another big find or two (see panel on right).

In the past few months investors have handed over more than £250m to four London-listed firms that are trying their luck in the Falklands.

“This is one of the most anticipated drilling campaigns of the year,” said Paul Wheeler, managing director at Jefferies International, the investment bank. “Last time they tried there were five wells that had oil or gas shows. The basins around the Falklands merit further exploration and this will be a fascinating few months.”

The region is one of a handful that has come back in vogue after years of being ignored. Later this year Cairn Energy, the FTSE 100 company, will drill the first new wells in more than a decade in the icy waters off the coast of Greenland.