Greenland opening Arctic sea to oil wells

updated 11:01 a.m. ET July 19, 2006

COPENHAGEN, Denmark - Several of the world’s largest oil companies hope to tap into possible offshore oil and gas reserves as Greenland opened a new round of concessions for exploration licenses in the fragile Arctic region.

Eyes of an oil-thirsty world have turned to the shores of the semiautonomous Danish territory amid rising fuel prices, Mideast instability and concerns over future supplies.

The Greenland government hopes to make big gains from any reserves found in its icy waters, but environmentalist say oil exploration there could damage a sensitive region already under threat by global warming.

“We know that we have oil. We hope we have it in profitable amounts,” Greenland’s Oil Minister Joergen Waever Johansen said as a three-day meeting between oil company and government officials started Tuesday in Ilulissat, on the giant island’s west coast.

Stability a selling point
“The oil prices are pretty high these days and the companies seem to be eager to start exploring here,” he said. “We’re one of the few countries in the world with stable politics and have neither wars nor terror.”

Violence in the Middle East sent oil prices near $80 a barrel last week, as strong demand collides with worries about supplies, pipeline sabotage in Iraq, unrest in Nigeria and Iran’s standoff with the West over its nuclear program.

Government officials declined to say which companies were attending the meeting and what conditions the Greenland government would put forth for exploration in the Disko Bay — the area being opened for the current round of concessions.

“All I can say is that the top 15 biggest in North America and Europe are here,” said Joern Skov Nielsen, manager of Greenland’s Bureau of Minerals and Petroleum.

The fact that those attending the meeting have bought seismic data collected in the Disko-Nuussuaq region, was “an unmistakable sign of interest,” Skov Nielsen said. The deadline for bids is Dec. 15.

Exploration in one of the most remote corners of the globe is no easy task. Bidders should be able to tackle rough weather and ice while avoiding damage to Disko Bay’s fragile ecosystems.

Skov Nielsen said an environmental impact assessment will be performed in the area to identify possible consequences of oil exploration, but environmental activists said that was not enough.

Activist: 'Insane' policy
Tarjei Haaland of Greenpeace Denmark said it was “insane” to even think about oil exploration in the sensitive environment.

“We all know that it’s an extremely difficult region to work in and if there is an oil disaster in the area, it can be harmful,” Haaland said. He suggested money devoted to oil exploration would be better spent on developing alternative fuels.

Oil exploration off west Greenland started in the 1970s but stopped after five failed drillings. Activities resumed in 2001 off Nuuk, the Greenland capital. Canadian company EnCana last year became the first company to win a license for offshore oil and gas exploration off Nuuk.

In 2008, EnCana is expected to start drilling in an area it believes has reserves ranging from 400 million to 1.2 billion barrels of oil.

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