The exploitation of oil and gas resources can benefit the economy of any state, provided development is regulated and monitored properly. But knowing how to do that can be a major obstacle, especially for a small jurisdiction. A Member of the Falkland Islands Legislative Assembly explains how her South Atlantic territory is handling this potential windfall industry.
Hon. Jan Cheek, MLA, in Port
Stanley. Mrs Cheek, a former teacher and businesswoman, is the Member of the Falkland Islands Executive Council responsible for, among other portfolios, Mineral Resources. A Member of the Legislative Assembly since 2009, she previously served in the Assembly from 1997 to 2005.
The Falkland Islands are a United Kingdom Overseas Territory with full internal self-government and a population of 3,000. The Islands have traditionally relied on fishing, sheep farming and tourism as the main sources of income. However, their offshore geology has led to increased interest over the last 15 years and the Falkland Islands government is now hoping to exploit available hydrocarbon resources responsibly and sustainably by adopting industry and regulatory best-practice in environmental, health and safety, and socio-economic matters.
Exploration offshore Oil exploration in the waters offshore the Falkland Islands began in the mid-nineties, when seven licences were awarded to a number of consortia including big players such as: Shell, Amerada Hess and Lasmo. Six wells were drilled in 1998 and although oil
302 | The Parliamentarian | 2011: Issue Four
Hon. Jan Cheek, MLA
shows were encountered, the low oil price at the time (around U.S.$10 a barrel) made further exploration uneconomical and the licences were wholly relinquished or taken up by smaller, independent partners. Further licensing was carried out in the subsequent years under an “open-door” licensing system whereby operators could approach the Islands’ government and apply for licences rather than taking part
in a more traditional licensing round. Following extensive analysis of existing well results and additional seismic surveys, a rig was secured by Desire Petroleum in late 2009 to begin another round of exploration drilling. The first well of this round was drilled in early 2010 and since then a further 14 wells have been drilled, including one in the previously undrilled South Falklands Basin. The “Sea Lion” prospect, drilled by Rockhopper Exploration, was declared an oil discovery and additional testing and appraisal wells have produced encouraging results. However, much work remains before this prospect can be deemed commercially viable and, in the event that it is, several years of preparation would be required before production began in earnest. Another well, on Desire’s Liz prospect, was confirmed as a gas discovery. Other wells have resulted in oil