Greenlanders Eager to Be New Deepwater Oil Frontier

Cairn Energy's gas find sparks hopes that Greenland can ditch its reliance on fishing and tourism

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by Terry Macalister, Guardian

The rain was tipping down on the cluster of multicolored buildings in the heart of the capital of Greenland but there was no dampening the spirits of Nuuk’s residents following news that hydrocarbons had been found.

"We have always believed there was oil and gas off this island. We been waiting for something like this to happen for decades," said Kenni Rende, a 44-year-old shop assistant at the town’s only electronics shop. "I hope it will provide income for Greenland so that we can finance our way to becoming a more independent nation," he added.

The mood of elation was shared at the Bureau of Minerals and Petroleum, one block away, where Henrik Stendal was preparing for a presentation in a small room packed with maps and rocks.

"It is exciting. This amounts to an appetizer for all oil companies to come here and do more exploration, seismic and data," said Stendal, who is the head of the bureau’s geology department.

Greenland’s government had been hopeful that Cairn Energy had found signs of hydrocarbons but the ultra-secretive nature of the business – and its extraordinary importance – meant the British oil company had told no one in advance.

Bill Gammell, Cairn’s chief executive, said there were signs of oil and gas bearing sands, but the hole still needed to be drilled to its target depth. Stendal said it was highly encouraging given the six wells drilled over the last 40 years had been completely "dry". A one-in-seven hit rate would mark this area out as exceptional; the North Sea equivalent is around one in 30.

It reinforces the views of the US Geological Survey which said last year that it believed there could be 90bn barrels of oil and 50tn cubic meters of gas in the wider Arctic region.

Enormously positive then for a Greenland desperate to move away from dependence on fishing, tourism and handouts from the Danish state which has sovereignty over the world’s largest island. But nervous moments for Greenpeace and other environmentalists keen to keep one of the Earth’s last wilderness areas away from the oil industry.

Whatever the eco-warriors want, Big Oil is coming and the Cairn discovery could not be better timed.

In around two weeks time the Bureau of Minerals and Petroleum will announce the winners of a new licensing round.

Stendal would not say who they were but he admitted that most of the leading lights – that means the likes of ExxonMobil and Shell – are queuing up to drill in Baffin Bay off the west of Greenland.

And the find will heat up interest in two new licensing rounds in other parts of the country that are already being lined up to take place in 2011 and 2012.

It is not just Greenland that it keen to explore in an Arctic region whose natural environment is already being eroded by global warming.

Iceland, Norway and Russia are also looking at handing out exploration rights, although BP’s blowout in the Gulf of Mexico has sent a ripple of anxiety through the west’s safety authorities.

Cairn and the Greenland authorities claim the water depths being drilled by the Stena Don and Stena Forth floating rig and drillship are less than one-third of the 1,500 meters of the Gulf.

They also point out that there are 16 vessels working on standby around the Cairn well, T8-1, and six of them are specifically given over to guiding icebergs out of the way.

Stendal says Greenland drilling regulations are tougher than those enforced in the North Sea, and far stricter than the lax rules of the Gulf.

He is confident that all is being done to ensure that there can be no recurrence of the Deepwater Horizon blowout in freezing waters where oil would break down much more slowly than in the warm currents off Louisiana.

But this will not reassure Greenpeace, which has taken its ship Esperanza into the region to highlight its concerns.

The environmental group said the move was wrong, not least because Cairn was a relatively small company with no experience of drilling in harsh conditions and had made its name discovering onshore oil in India.

"We think it is completely irresponsible for Cairn to proceed with these operations when the US, Canada and Norway have imposed tough new restrictions on deepwater drilling until lessons can be learned about what exactly went wrong in the Gulf," said Mads Flarup Christensen, secretary general of Greenpeace Nordic. "Drilling in these kinds of waters is very sad. It shows the way the oil industry is being forced into the last frontiers by trying to exploit tar sands and deep water."

Cairn management recently visited the Greenland capital to reassure the public that it would stick to the highest possible safety standards in line with an agreement signed with the government.

"Security has always been the most important in everything we do and so we want it to continue," commercial director Simon Thomson said.

He does not need to convince Stendal who says that Greenpeace is "not welcome" by the people of Greenland, who see the organization as a threat to their future economic well-being.

"You cant live on fish alone," he says dryly. But at the Nota Bene electronics shop, Rende is not quite so equivocal: "We had heard of the catastrophe in the Gulf of Mexico but I hope the [Cairn] security makes us safe."

Republished with permission

(Photo: Jerzy Strzelecki)