Oil in Greenland Black stuff in a green land

When Cairn Energy, a British petrochemicals company, this week announced the first firm indication of worthwhile oil deposits off Greenland’s coast, inhabitants of Nuuk, the island’s gritty capital, greeted the news with their customary equanimity. “That’s nice,” said a housewife less interested in the implications of a possible oil bonanza than in negotiating her country’s sole pedestrian crossing in the sleeting rain.

Several hundred miles north in Baffin Bay, Greenpeace eco-warriors seeking to halt offshore oil exploration in the Arctic faced down a Danish warship. The government hotly contests Greenpeace’s claim that, because oil degrades far more slowly in freezing waters, a Mexican Gulf-style oil spill would mean calamity for the fragile environment. “Our safety standards are the highest in the world,” says Henrik Stendal, chief geologist at the Government Bureau of Minerals and Petroleum.

In recent months the bureau has run an extensive public-information program in Greenland, drawing full houses at meetings throughout the sprawling country. A plethora of newly enacted legislation is designed to avert offshore accidents and to prevent a small spill becoming a big catastrophe should something go wrong.

Most of Greenland’s 56,000 inhabitants seem persuaded. Despite the vulnerability of the country’s ice sheet to global warming, a recent Greenpeace meeting in Nuuk drew a paltry 45 people. Even this minimal interest in the environmentalists’ message could fall further as the implications of this week’s news start to sink in.

Greenland has been searching for the black stuff for decades. Five wells drilled in the 1970s turned out to be dry, as was a sixth in 2000. But this one looks like the game-changer. Cairn says it has found natural gas in thin sand layers in one of its test wells, indicating the presence of oil. Overall, it estimates that the acreage it is licensed to drill in holds 4 billion barrels of oil. Data from the United States Geological Survey suggest the seabed between Greenland and Canada holds a total of 17 billion barrels.

There may be further riches off the vast island’s eastern coast. According to some estimates the bedrock beneath the Greenland Sea could hold more oil than the North Sea, which has partially powered the British, Dutch and Norwegian economies for decades. This area will be opened for exploration in 2012.

Greenland’s exploration adventure does not stop there. Dozens of mining companies are trawling the narrow strip of land abutting its 44,087-kilometer coastline for diamonds, gold and rubies and possibly more exotic treasures.

Sniffing opportunity, even before the oil starts flowing and the rubies glisten, the world has started to arrive in Greenland. Australian and American accents are commonplace in Kangerlussuaq international airport. The restaurant at Nuuk’s only upmarket hotel has no difficulty attracting clients for its exclusive wagyu beef fillet.

It is impossible to estimate how much money this bounty could generate for Greenland’s cash-strapped government. But although the potential to transform the economy is obvious, there is no talk yet of using the proceeds to buy full independence from Denmark. Self-government became law only last year, and it will take decades to wean Greenland off its annual DKr3 billion ($500m) grant from Copenhagen—which accounts for over half of Greenland’s revenues.

As for the locals, having had their hopes raised and dashed so many times before, they are taking nothing for granted. “We won’t get rich overnight,” says Brian Juhl, a supermarket manager. “But perhaps in the future.”

Source:
The Economist, "Oil in Greenland: Black stuff in a green land", accessed August 26, 2010