Faroe Petroleum back in action as it drills new well west of Shetland

INDEPENDENT oil and gas explorer Faroe Petroleum has begun drilling a well in the rough waters off the west of Shetland after abandoning a different prospect in the region last month.

The exploration minnow yesterday announced it had commenced on the Fulla exploration prospect, which the firm hopes could lead to a combined development project with its nearby Freya oil discovery.

Freya was drilled by Mobil in 1980 and encountered oil-bearing Devonian Clair reservoir sands. Faroe hopes to find a similar reservoir sands on the Fulla structure.

The well is located close to the BP-operated Clair oil field, which is under phased development, and has produced in excess of 75 million barrels of oil since 2005, with current rates at approximately 40,000 barrels per day.

Aberdeen-based Faroe is targeting potentially oil-bearing sands at a depth of 2,100 metres. Faroe, which operates mainly in the Atlantic margin, the North Sea and Norway, shares a UK licence for Fulla and Freya with Canadian Overseas Petroleum.

The company said if these objectives were met, "uncertainties related to a possible Freya and Fulla combined development project" would be significantly reduced.

Graham Stewart, chief executive of Faroe, who described the Atlantic margin where the Fulla well is based as "the final frontier in UK waters", said: "We are delighted to be drilling the Fulla prospect, as operator. Should the Fulla drilling operations be successful, this will present an excellent opportunity for a significant standalone field development."

Last month Faroe abandoned a deep-water well further north in the Lagavulin field after "disappointing" results.

The west of Shetland is a key area for Faroe, which has the third-largest acreage in the region, behind Dong and StatOil.

Shares in the explorer at the close of market last night were 2.4 per cent up to 173p.