Greenland offering first east coast oil drilling licences

Greenlandic authorities have opened bidding on oil prospecting licences to the east of the country for the first time. Interest is said to be strong, with over 70 oil companies attending the Greenlanders’ open meeting on the subject last month in Copenhagen.

The areas for which search licences are being offered lie in the high Arctic; far north of Iceland and not too far from Svalbard. They are north of Scoresbysund between 75 and 79 degrees north. The areas are being offered in two stages; the first in 2012 and the second in 2013. Applications from oil companies to be permitted to take part must be received by the 1st March and for specific location licences, by the 15th December. The exploration licences will last for 16 years, with the option for extension up to 30 years.

It is now ten years since oil exploration licences were first offered off western Greenland and the country has since offered a new area for exploration on average once every two years, Ví reports. There are some 20 licences currently active, which are held by companies including Statoil, ExxonMobil, BP, ChevronTexaco, Shell and Japan Oil. Canada’s Husky Energy has announced it will drill two test wells in Greenlandic waters in summer 2013.

The first company to find oil and gas in Greenland was the UK’s Cairn Energy in the autumn of 2010 off Disko Island, 200 km north of Nuuk. The company put its programme on hold this winter, however, after drilling eight holes at great cost, without finding enough evidence of fossil fuels to make it worthwhile.

This disappointment does not seem to have dampened the spirits of other oil companies. The head of Greenland’s oil and minerals directorate, Jörn Skov Nielsen, told reporters that all of the world’s oil giants are interested in the east Greenland prospecting auction. Norway’s now-successful oil industry had a similarly disappointing start and the idea was nearly dropped after three years of expensive and fruitless searching.

There is strong opposition to Arctic drilling among environmental groups who say the fragile Arctic ecosystem is less able to cope than other regions and that a major oil spill would be next to impossible to clean up.