December 30, 2011 2 Comments
The US Geological Survey has had a key hand in developing the enthusiasm toward Greenlandic offshore hydrocarbon exploration as it has, over the last years, put out a number of publications related to the undiscovered oil and gas resources of Greenland and eastern Canada.
The following related publications are available from the US Geological Survey
- Undiscovered Oil and Gas Resources of the West Greenland–East Canada Province (2008)
- Assessment of Undiscovered Oil and Gas Resources of the East Greenland Rift Basins Province (2007)
According to the USGS’s 2008 West Greenland-East Canada Province report, there lay an undiscovered 7,275 million barrels of oil, 51,816 billion cubic feet of natural gas, and 1,152 million barrels of natural-gas liquids in the area north of the Arctic Circle, between Canada and Greenland. These figures are staggering, and have quite obviously enticed investors and operators in securing the licenses shown within the above map. As of today, only western (and some southern) exploration licenses have been granted.
Licenses were awarded in late 2010 to some of the more notable exploration firms such as Shell, Statoil, ConocoPhillips, Cairn Energy, Maersk, Dong and NUNAOIL. Blocks were granted that cover an area of 70,768 km^2. Exploration has been in progress since, but as of yet there have been no major hydrocarbon discoveries. The Scottish Cairn Energy has come out with several press releases indicating that wells have been turning up dry. Other firms have had to follow suit.
It is all too easy to become struck with the Arctic fever. People tend to think big amongst rumours of fortunes. This has almost always been the case when it has come to freshly issued licensing blocks. People were referring to Greenland as the ‘Next Dubai’ while news sources such as the Washington Times were reporting on almost confirmed assumptions of future wealth.
A 2009 Washington Times article made the following comments toward the possible future independence of Greenland.
Denmark currently provides a large subsidy to Greenland’s government — about $700 million this year or more than $10,000 for every person in Greenland. The subsidy makes up about 60 percent of the government budget.
But when and if oil revenues start to come in, Denmark will reduce the subsidy accordingly. When the subsidy is fully paid off, Greenland officials say, they will begin to seriously discuss the possibility of becoming an independent country.
It is altogether obvious that the Greenlandic economy will continue to require Danish subsidies in order to maintain social programs if there will be no major discoveries. Apart from Danish subsidies, the economy is critically dependent on fish and textile exports along with whaling. Fortunately, the game is a bit like Battleship. It is entirely possible that as exploration continues again through 2012, a drill will be set up in just the right spot to yield the next monster hydrocarbon reserve. You can also bet your bottom Krone that upon such a discovery, independence would not be too far away.
The only problem with be that of cost. Millions have been spent in exploration yielding almost nothing. Environmental and Inuit groups have also been doing their part in holding down the brakes. Pro drilling parties are going to have to stand ground for a few years while pushing for more licensing blocks in eastern Greenland.