Greenland: benefiting from global warming?

greenland weather

Nowhere on Earth is climate change happening faster than in the Arctic. Over the past 20 years, the melting of the Greenland ice sheet has been responsible for roughly a sixth of the annual rise in global sea levels, adding about 0.5 of the 3.2 millimeters by which the world’s oceans rise each year. However, despite the negative affect of global sea levels, the warming temperatures are making it possible to get access to mineral and energy resources including iron, zinc, diamonds, deposits of gold, uraniam and oil and gas reserves.

The political establishment in Greenland has made natural resource extraction a central part of its plans to become economically self-sufficient, and ultimately politically independent, from the Kingdom of Denmark.

Oil and gas opportunities

In recent years, Greenland’s oil and gas reserves have been a hot topic. According to Ove Karl Berthelsen, minister for industry and mineral resources minister of Greenland, “oil has the greatest potential to help us achieve economic independence”. Indeed, the US geological survey (USGS) have concluded that more than a fifth of the world’s undiscovered oil and gas resources lie north of the Polar circle.

In 2008, the United States Geological Survey estimated that the Arctic contained about 410 billion barrels of undiscovered oil and oil equivalent. Within that total, some 90 billion barrels is believed to be oil, representing about 13% of the estimated global total of undiscovered oil and approximately three times the current total proven reserves of the United States. Almost 70% of the reserves – over 45,000 trillion cubic metres – was estimated to be natural gas, equivalent to 30% of global undiscovered natural gas – this equals approximately Russia’s entire current proven reserves. Indeed, these estimates put the oil reserves in Greenlandic waters at some 52 billion oil barrels, 17 billion of which would lie between the island’s west coast and the eastern coast of Canada’s Baffin island, and 31.4 billion to Greenland’s north-east.

Greenland becomes a promising land for oil firms

According to Charles Ebinger, director of the Energy Security Initiative at Brookings, many companies are looking to Greenland as preferred alternative to more politically unstable regions in the Middle East, Russia or elsewhere. Ebinger further adds that “despite the problems of an area like Greenland, they’re still seen by many oil companies as less politically risky”. Companies believe that they can handle the technological challenges in the Arctic better than they can handle the political vagaries of the Middle East. As a result, the world’s biggest oil companies have indicated interest in looking for oil resources in Greenland, which first drew commercial interest amid crude oil price spikes in the 1970s.

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Indeed, International Oil Companies (IOCs) believe that Arctic resources in the future will become important to meeting the world’s energy demand. As a result, several IOCs have been attracted to Greenland. Last year, three consortia of oil companies, which include BP, ConocoPhillips, ENI, Chevron, Shell and Statoil, were granted four exploration/exploitation licenses for Northeast Greenland. The costs are estimated to be about $100 million to drill one exploration well and $6 billion-7 billion to develop an entire field, could also prove prohibitive, the report said. Under optimistic circumstances, commercial oil production could begin in 10 years, but said 20 years is more likely.

If you are looking to know more about the oil and gas industry in Greenland, visit:

http://www.thearcticinstitute.org/2014/01/greenlands-new-frontier-oil-and-gas.html

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