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Greenland Oil Allure 'Enormous' on Ice Thaw, Prices (Update1)
2011-01-07 13:00:42.427 GMT
(Updates with Cairn 2011 drilling cost in sixth paragraph,
adds Greenland oil potential in fifth.)
By Gelu Sulugiuc and Christian Wienberg
Jan. 7 (Bloomberg) -- Greenland's energy bureau said it's
met "enormous interest" in licensing rounds planned for the
next two years as rising oil prices and ice thaw fueled by
global warming make Arctic exploration more feasible.
With crude oil rising to a 27-month high of $92.58 a barrel
earlier this week and tighter legislation in the Gulf of Mexico
threatening to hamper drilling there, oil companies are turning
to less hospitable regions. Greenland awarded seven licenses
last year to eight companies including Statoil ASA, Royal Dutch
Shell Plc and A.P. Moeller-Maersk A/S. Cairn Energy Plc started
drilling off Greenland's west coast last year and said it found
oil in one of its wells.
"We are seeing enormous interest from the oil industry in
the northeast Greenland licensing rounds of 2012 and 2013,"
said Joern Skov Nielsen, director of Greenland's bureau of
petroleum and minerals, at a press conference in Copenhagen
today.
Cairn is planning a "multi-year exploration campaign" for
oil and gas off Greenland's shores, said Simon Thomson, a legal
and commercial director for the Edinburgh-based company, at the
same press conference. Cairn said this week it hired two rigs to
drill four wells off Greenland in 2011. The Jan. 4 announcement
sent its stock 2.8 percent higher.
Investment
Greenland's north east holds 31.4 billion barrels of oil
equivalent while a further 17 billion barrels may lie under the
sea floor between Greenland and Canada, according to the U.S.
Geological Survey. The Organization of Petroleum Exporting
Countries produced 29.2 million barrels of oil a day in December
last year, according to Bloomberg estimates.
"We expect to spend $450 million to $500 million drilling
in Greenland this year, roughly the same as last year," Thomson
said, adding it will take seven to 10 years after any discovery
before oil production can start. The company last year failed to
make any commercial finds.
Other companies including Danish state-owned gas and oil
company Dong Energy A/S had made six failed attempts at
commercial discoveries in the past three decades.
Greenland's home rule government wants to ensure firms
applying for licenses to drill its natural resources have the
financial means to pay for the fallout from any spills, Nielsen
said.
"Companies applying for licensing round must have a good
environmental record," he said. "They also have to have a lot
of money. We want guarantees upfront that you can pay for
cleanup and compensation in case of an oil spill."
In April, an explosion at BP Plc's Deepwater Horizon rig in
the U.S. Gulf of Mexico triggered a record oil spill. Last
month, the U.S. Justice Department sued BP, the owner of the
rig, Transocean Ltd. and two other companies alleging they
violated environmental laws.
For Related News and Information:
More on Greenland: NI GRNLND <GO>
News on Arctic oil: TNI ARCTIC OIL <GO>
Today's main energy news: TOP NRG <GO>
Cairn earnings: CNE LN <Equity> TCNI ERN <GO>
--Editors: Tasneem Brogger, Jonas Bergman.
To contact the reporters on this story:
Christian Wienberg at +45-33-457-121 or
cwienberg@bloomberg.net
Gelu Sulugiuc in Copenhagen at +45-33-45-7120 or
gsulugiuc@bloomberg.net
To contact the editor responsible for this story:
Tasneem Brogger at +45-33-457-130 or
tbrogger@bloomberg.net
