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Greenland oil hunt strikes gas
The hunt for commercial volumes of oil in offshore Greenland by Cairn Energy turned up natural gas in small quantities just as the Scottish-based explorer is negotiating the sale of its Indian subsidiary and Greenpeace is targeting Greenland oil and gas activities.
Cairn said Aug. 24 it is encouraged by results from its first Greenland well which is still being drilled, but a second well has encountered problems penetrating volcanic rock.
The two wells are the first to be drilled in the highly-prospective Baffin Bay, and two more are scheduled for this year.
Most of gas biogenic Most of the gas found in the T8-1 well (deemed to be non-commercial) was biogenic gas, which Credit Suisse said was normally unrelated to the processes that form oil. More results from the two wells are expected in September.
The company’s deputy chief executive officer Mike Watts told analysts that there is no reason to assume that oil does not exist.
“From a technical viewpoint (the gas find) … gives us a base for the campaign,” he said.
Chief executive officer Bill Gammell said Cairn is “really focusing on Greenland, Greenland, Greenland” as it returns to its exploration roots after overseeing development of its onshore oil discoveries in India, 40 percent to 51 percent of which it is preparing to sell to metal and mining group Vedanta Resources for $6.5 billion to $8.5 billion.
Some of the proceeds from that windfall deal would be used to pay for the $400 million Greenland program, but the bulk would be distributed to shareholders.
To date, only five wells have been drilled in Greenland, in the 1970s and one in 2000, before Cairn showed up with the goal of becoming the lead operator.
‘Something very special’ “There’s a system out there,” said Watts. “It’s a question of finding it. We have the stamina for a campaign of roughly $1 billion. We think we’re onto something very special.”
Greenpeace shares that view, from a different standpoint, sending its protest ship Esperanza to confront the Stena Don rig that is drilling Alpha prospect. Stena Forth is drilling T8-1.
Greenpeace’s vessel has also encountered Denmark’s warship Vaedderen and been warned by Denmark – which runs Greenland’s foreign affairs, security and financial policy – that it will be raided and its captain arrested if it enters a 500-meter security zone around the rig.
Greenpeace wants a ban imposed on exploration for oil and gas in frontier regions such as the Arctic, arguing that the challenging environment makes it impossible to drill a relief well in the event of a Macondo-size blowout.
Cairn said offshore Greenland carries some of the “most stringent regulations globally,” modeled after Norway’s regime.
—Gary Park
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