Oil exploration in the Arctic was a controversial subject in 2010: this summer, expect to see the issue rear its head again. On Tuesday, Cairn Energy – which last year drilled for hydrocarbons in offshore Greenland – confirmed that it had hired two ships to drill up to four exploratory gas and oil wells in the area this year.
Last August, the company, which is based in Edinburgh, said it had spotted indications of oil after its first year of drilling. At the same time, environmental group Greenpeace opposed the operations, saying oil exploration would damage the fragile Arctic environment.
In the end, none of the company’s searches turned up anything that could be commercially exploited, disappointing investors. “Drilling in Greenland is still seen as high risk … I wouldn’t describe the market as being confident that it will make a commercial discovery,” the ”https://www.guardian.co.uk/business/2011/jan/04/cairn-energy-greenland-desire-petroleum-falklands">Guardian quotes Richard Rose from stockbroker Oriel Securities.
The interest in obtaining licenses to search for oil off Baffin Bay is “fierce”, said Greenland’s government when in November 2010 it awarded seven new oil exploration licenses to eight companies, including Cairn Energy, Shell, Statoil and ConocoPhilips. If successful, oil exploration in Greenland could pave the way for longer-term hopes of exploiting natural resources further offshore in the Arctic, where countries are currently rushing to assert territorial claims.
Meanwhile, Shell’s plan to drill offshore this year in the Chukchi sea off Alaska looks to have been stymied. A successful legal challenge by conservation groups and those representing Alaskan communities has delayed its drilling permits – hard-won after the temporary suspension of offshore drilling following the Deepwater Horizon disaster. An appeals board at the US Environmental Protection Agency (EPA) said analysis of the oil exploration’s effect on people living in Alaska had been “limited” and ordered that the EPA and Shell rewrite the permits (Wall Street Journal).
Image: Cairn’s Stena Forth Drillship / Cairn Energy