Demand for drilling rigs globally has weakened as the number of planned exploration and appraisal wells has fallen, leading to 40% lower day rates for deepwater rigs in some cases. Other well service costs are also starting to fall.
With this in mind, B&S has been looking to secure partners to fund next-phase drilling on Darwin. However, the costs of a multi-well deepwater program off the Falklands remain high, and for many potential farminees, this would be a new geography, far removed from the world’s current exploration hot spots.
In B&S’ favor is the fact that Darwin is potentially a strong commercial proposition due to the competitive fiscal terms offered by the Falkland Islands government and the structure’s high quality reservoir, which suggests the number of production wells needed would be low. B&S says development would be economic even at oil prices lower than current levels.
Darwin has a high liquids component (46-49° API), meaning that the condensate gravity is typical of an ultra-light crude oil. B&S assesses the most likely recoverable volume of condensate at 263 MMbbl, but that figure could rise substantially following further drilling.
Potential partner companies that undertook detailed technical analysis confirmed that, following a successful appraisal campaign, an FPSO development would be viable.
B&S lacked the funds to participate in the current six-well drilling campaign offshore the islands using the semisubmersible Eirik Raude drilling rig. However, it still hopes to secure partners to allow it to negotiate a new contract for the rig at the end of its current schedule.
If this proves to be unfeasible, the company would seek to mobilize another rig as soon it has secured funding, similar to its experience in 2012 when it contracted the Leiv Eiriksson for two firm wells.
Otherwise, the company’s analysis of its two merged 3D seismic surveys suggests the area surrounding Darwin could represent an important sweet spot in the South Falkland basin. Questions remain however, that can only be answered by drilling, such as: Does Darwin have an oil leg? And: Do the mapped amplitude anomalies close to Darwin represent oil?