Falklands Gusher: UK Looks for Oil-Rich Payback

Source:

"Find could prove transformational to Britain's long-term debt problem."

Two hundred million barrels of oil is a drop in the ocean compared to the reservoir that produced the voluminous gusher of BP's Gulf of Mexico oil spill. It is just 120 days' worth of consumption in the UK or a mere 10 days of U.S. consumption. But Rockhopper Exploration's announcement in May that it had struck oil in the North Falklands region at the first drilled well threatens a bittersweet drama of its own for David Cameron's new British administration.

According to the British Geological Survey, the strike—the first in the Falklands Basin—could prove to be the first fruits in a region that could prove to be Britain's new “North Sea.” Signs of an investor frenzy setting in have sent share prices rocketing. But the early find has already significantly ratcheted up tensions with Argentina—and talk of a second Falklands War.

Map of Falklands Gusher

The early strike in Rockhopper's Sea Lion prospect saw its share price surge by 500%. It also led to more modest jumps in the share prices of other British rivals, Desire, Arcadia and Argos, operating licensed tranches in the north Falklands Basin.

A conservative estimate of reserves across the Falklands Basin suggests a minimum recovery of 3.5 billion barrels of oil. The estimate of the British Geographical Society suggests around 60 billion barrels—the equivalent of the UK's North Sea deposits. Though such a figure, as some oil executives said, may be an optimistic figure. Even so, with an additional assessment of 9 trillion cubic feet of gas deposits, the finds could prove transformational to Britain's long-term debt problem, as well as making millionaire 'oil barons' of the island's 3,000 residents.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe