Oil minor Faroe Petroleum is to continue the search for recoverable oil reserves to the west of Shetland after reporting that it has abandoned a deep water well in the Lagavulin field.
In a statement the company, which has offices in Aberdeen, Torshavn and Stavanger, said oil had been found in the well which is in 1,567m of water but no reservoir existed. The well will now be plugged and abandoned.
Poor weather hampered the Chevron-operated Stena Carron drillship, causing delays and adding significantly to the costs of the project.
However, the company will now carry out work in two other exploration wells in the west of Shetland area, the shallow water Fulla well near the Clair field in June and the North Uist well next year.
Graham Stewart, chief executive of Faroe Petroleum, said: “Lagavulin was a true high risk frontier exploration well, offering material upside in a success case. Whilst the outcome of the well is a disappointment, the presence of hydrocarbons has however now been proven and offers encouragement to continue our deep water exploration plans in the region.
“The Group is well funded and, despite the cost over-run on Lagavulin, none of our forward drilling programme will be impacted. Faroe has a healthy cash balance and strong cash flows from our portfolio of production assets, with group production expected to be approximately 9,000 barrels of oil equivalent per day by the year end.”
He added: “From an operational standpoint, Lagavulin was a deep and complex well, with no neighbouring drilling history, and it was drilled safely by the partnership led by Chevron. A great deal has been learned from this well, which will serve to significantly reduce the cost of any future wells in the region. As we now proceed to analyse the data from the well, our exploration programme continues on apace through 2011 and beyond, as we test our considerable portfolio, which currently has a 17 well, fully funded programme, offering very material upside potential.”