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September 2007

Vol. 12, No. 35 Week of September 02, 2007

Greenland resources get fine-tuning in USGS report

A U.S. Geological Survey report gives a little more meaning to the “green” in Greenland.

In a study of the East Greenland Rift Basins Province, which covers about 500,000 square kilometers, the USGS figures almost 9 billion barrels of oil, 86 trillion cubic feet of natural gas and 8 billion barrels of natural gas liquids are undiscovered and would be technically recoverable from less than 500 meters of offshore water in the absence of sea ice.

USGS Director Mark Myers said in a news release that “knowing the potential resources of the Arctic — an area of tremendous resource potential, environmental sensitivity, technological risk and geological uncertainty — is critical to our understanding of future energy supplies to the United States and the world.”

The USGS said it undertook the assessment because of the Arctic’s “great potential” and expects to release assessments of all the Arctic “provinces” over the next year.

If the combined estimate of 31.4 billion barrels of oil equivalent is accurate, the “province” would rank 19th among the world’s other oil and gas “provinces,” the USGS said.

However, the new data is a “significant” shift in the geological understanding reached in a 2000 USGS assessment of northeastern Greenland.

New assessment: more gas

That assessment put the estimates at 47 billion barrels of oil, 81 tcf of gas and 4 billion barrels of NGLs.

The USGS said its new data points to significantly more gas generation than it previously interpreted.

How this assessment translates into industry will be of special importance to Greenland, the world’s largest island that enjoys a substantial degree of home rule from Denmark.

It has made only plodding progress towards a functioning oil and gas industry, attracting just one bid in a 2002 sale from EnCana, the big Canadian independent.

But the pace quickened earlier this year, with EnCana adding two offshore blocks in partnership with Greenland’s state-owned Nunaoil, while Husky Energy picked up two exploration licenses. EnCana has invited interest from a farm-in partner.

Activity offshore Greenland started in the early 1970s after comprehensive seismic surveys attracted six groups headed by Amoco, Chevron, Arco, Mobil, Total and Ultramar.

Five wells were drilled in 1976 and 1977 and all were dry, putting an end to drilling in 1978.

Later analysis of the Total well suggested it actually hit rich gas or condensate, which Nunaoil estimated might contain recoverable reserves of 500 million barrels.

There was another brief flurry of unsuccessful exploration interest in the 1990s by a partnership led by Norway’s Statoil.

Like Canada’s East Coast offshore, the Greenland government points out that many dry holes were drilled in the North Sea before the elephants were found.

—Gary Park






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