By: Andy Maslowski
Nov/Dec 2011

The island of Greenland is more than three times larger than the state of Texas. It also has one thing scorching Texas could have used this summer — tons of ice! About 80 percent of Greenland is covered by a year-round ice sheet averaging about 1,000 feet in thickness.

The population of Greenland is close to 58,000, about the same number of people who live in Galveston, Texas. That means it also has plenty of space.

One thing that Greenland doesn’t have much of yet — is petroleum. But some companies are looking at this Arctic region as a future source of oil and gas. New drilling has already started!

Trailblazing companies are looking at the top of the world for new petroleum reserves.

Background
Erik the Red and his son, Leif Erikson, are thought to have visited Greenland, and possibly named it, more than 1,000 years ago. This indicates either the earth has cooled dramatically during the past 10 centuries, or they were clever geographers. Would most warm-blooded humans rather visit a place called Iceland or Greenland?

Make no mistake about it, the Arctic and sub-Arctic climate of Greenland is cold and harsh for most of the year. Living and working there is a challenge, especially if you are going to be involved with crude oil or natural gas exploration.

For most of the past three centuries, Greenland has been a colony of Denmark. However, Denmark approved home rule for the region in 1979. Because of this, Greenlandic place names came into official use. Inuit natives call their land, Kalaallit Nunaat, the “land of the Greenlanders.” The capital city is Nuuk.

Greenland turns to the sea and foreign lands for just about all of its income. According to the 2011 CIA World Factbook, fish is its principal commodity, accounting for about 82 percent of its exports. In addition, Greenland’s Home Rule Government receives about $650 million a year from Denmark, and consults with Danish officials regarding security, foreign affairs and other financial policies. That’s why the majority of Greenlanders do not want to become completely independent from Denmark, and least not at this time.

“Tourism also offers another avenue of economic growth for Greenland, with increasing numbers of cruise lines now operating in Greenland’s western and southern waters during the peak summer tourism season,” the CIA reported. With greater responsibility for internal affairs in recent years, the island’s government has also been pursuing more mineral development from within its borders, including aluminum, olivine sand, gold, and oil and gas.

New drilling
Much of Greenland is north of the Arctic Circle. During the past decade or so, various agencies like the U.S. Geological Survey and the Circum- Arctic Resource Appraisal (CARA) program have formulated reserve estimates for the Arctic Ocean region. These have ranged from about 90 to 160 billion barrels of oil and more than 1,000 trillion cubic feet (!) of natural gas for the entire province. Even if these estimates are off by 50 percent or more, the sedimentary basins of the Arctic could contain some of the largest, undeveloped petroleum resources on the planet.

Add Greenland to this mix. While Greenland touches the Arctic Ocean, geologists think most of its hydrocarbon potential lies off its eastern and western shores in the North Atlantic. And that’s where most of Greenland’s petroleum exploration efforts have been concentrated in recent years through seismic and seabed surveying, leasing, permitting and drilling. A number of companies have been involved such as Cairn Energy (from Scotland), Dong Energy (Denmark), Chevron, ExxonMobil, Husky Energy (Canada), PA Resources AB (Sweden) and Statoil (Norway).

The tale of Cairn Energy is of particular interest. Since 1988, Cairn has a history of working in frontier areas, especially in South Asia, where it has participated in more than 20 new oil and gas discoveries in India and Bangladesh. So at the invitation of the Greenland government, Cairn and a number of other oil and gas companies began to secure exploration licenses in 2007. Before this latest round of exploration, only six offshore wells had been drilled in Greenland — five in the 1970s and one in 2000. All were dry holes.

Cairn Energy has admirably jumped through all kinds of legal and environmental hoops to get a chance to explore in Greenland. As a result, it is leading the way in recent drilling attempts. In 2010, Cairn drilled three exploratory wells offshore Western Greenland in the Sigguk Block. The company reported these were drilled without “environmental incident” but did not realize any commercial discovery. However, they did confirm “the existence of a working hydrocarbon system” after encountering a number of oil and gas shows.

This summer Cairn was drilling two new wells in the same region. The AT-7 prospect was in the Atammik Block in a water depth of 905 meters and was located about 100 miles from Nuuk while the LF-7 test was in the Lady Franklin Block about 180 miles from the capital in a water depth of approximately 989 meters. Cairn was employing the semi-submersible Leiv Eriksson and drillship Ocean Rig Corcovado.

“We have a proven track record of creating and delivering transformational value through focused exploration and development,” explained Cairn’s founding chief executive Sir Bill Gammell (he was awarded a Knighthood in 2006 for services to industry in Scotland). “Our story is about pioneers and partners. We aim to build material positions in frontier areas whilst working with the communities in which we operate.” One example of this commitment is more than $4 million Cairn has provided toward e n v i r o n m e n t a l research in Greenland since 2008, plus $5 million in oil spill response equipment that will be kept in Greenland as a future national resource.

For its part, the Greenland government has put in place the most stringent and robust safety measures to protect its pristine environment. This includes detailed oil spill contingency and response plans, independent testing of blowout preventers, the use of water-based drilling muds, ice monitoring, and marine mammal and fish observations. Even helicopter flights to and from the drill sites take into account seabird nesting patterns. Greenland officials have also worked with regulators in other cold water drilling markets, such as those in Norway and Canada.

Opposition
The word “Arctic” derives from the Greek word for bear, a reference to the Big Dipper or Great Bear star constellation seen at the northern tip of the earth. Thus, at the opposite or antipode end of the world is Antarctica.

Besides their ice caps, the Arctic region and Antarctica have a great deal in common including climate, daylight-darkness cycles and polar magnetism (northern and southern lights). They are also at the forefront of global climate research by thousands of scientists who get paid to look for changes in weather patterns, planetary geology, wildlife behavior and other factors. (It shouldn’t surprise anyone they are finding changes. The earth is not static. It has been constantly changing for 500 million years as exhibited in the rock record so often drilled through at oil and gas wellsites.)

Because of its large ice sheet — second only to the one in Antarctica — Greenland is often included in the debate about global climate change. So naturally, all petroleum exploration in Greenland and elsewhere in the Arctic faces pressure from various environmental advocacy groups. Yes, from within and from without, the Green Movement for Greenland is strong.

“The risks of drilling and producing oil in this fragile and pristine natural ecosystem, one of the last great wilderness areas of the planet, are terrible,” stated one spokesman for Greenpeace earlier this year. So any trailblazing operator that secures an exploration license in Greenland has to be extremely careful what they do. The world is watching.

The world also needs the petroleum. Seven billion people now inhabit this globe and many require large doses of energy to survive, including naturally-occurring crude oil and natural gas and many of its man-made derivatives.

If and when any of Greenland’s wildcat wells — very rank wildcat wells! — come online, it could affect Greenland politically and economically. One sentiment of some native Greenlanders is that any new-found wealth “could destroy our culture.” It might also hasten the independence movement for Greenland, or allow new investment in education, health care or pension programs, which some locals also want.

The Antarctic Treaty, signed by more than 40 nations, prohibits mineral mining and protects the southern continent’s ecosystem. No such treaty exists for the Arctic region or Greenland.

And while Antarctica does not have any permanent residents, some 4,000 scientists of many different nationalities are routinely conducting research on its land, sea and ice in the summer months. Some babies have been born there. Even more eco-tourists visit the southern hemisphere, burning aviation gas or cruise ship fuel to fulfill their dream vacations.

How much energy does it take to transport all these people, fuel and supplies to the far side of the world? What if Antarctica had a few of its own producing oil and gas wells? Some geologists think the sedimentary basins of this southern land have petroleum potential too. This energy source would not be for export. It would just be used by all the scientists and tourists to keep them warm, cook their food, help them travel, etc. That’s not going to happen but it would lower the so-called carbon footprint for all these southern travelers.

The same argument could be made for Greenland. Energy has to come from somewhere.