Energy firm Cairn signals possible oil find off Greenland.
EDINBURGH-BASED explorer Cairn Energy yesterday hailed signs of a possible oil discovery in the untapped waters off the coast of Greenland.
Cairn - the only firm so far to have been granted permission to drill for oil offshore in Greenland - told investors there were "early indications of a working hydrocarbon system" in the Baffin Bay basin.
The group said it had discovered gas in thin sands in the area, which signals potential for oil.
The news is expected to spark a rush of interest in the Arctic waters from the oil industry - but campaigners were quick to raise concerns in the wake of BP's Gulf of Mexico oil spill disaster.
Greenpeace warned that Cairn's announcement was "grave news" and threatened the fragile Arctic environment.
Cairn said it was too early to gauge the potential of its find, with the well not yet drilled to its target depth.
It has been drilling in the area 110 miles (175km) off Disko Island in west Greenland since July, with plans to reach water depths of between 985ft (300m) and 1,640ft (500m) - more than twice the 500ft (152m) drilling moratorium initially imposed by US President Barack Obama after the Deepwater Horizon explosion.
Greenpeace, whose Esperanza ship is positioned within sight of Cairn's rigs in Greenland, claimed Cairn was risking another devastating oil spill by targeting "ever more dangerous, difficult-to-reach places".
It said tough conditions and icebergs posed a risk to operations in the region.
Campaigner Leila Deen added: "If a spill happened here, this pristine area would face an environmental catastrophe.
The BP disaster in the Gulf of Mexico showed what can happen when they drill in deep and remote places."
The oil industry has only recently revisited the Arctic waters off Greenland for the first time since the 1970s, when explorations were unsuccessful.
But a Cairn spokesman said: "Cairn is operating offshore Greenland at the invitation of the Greenlandic government, which believes that oil and gas exploration offers the potential opportunity for Greenland's economic and social development.
"The Greenlandic government has established some of the most stringent regulations globally. These policies are modelled on those applied in Norway and recognised as being some of the strictest regulations in the world."
Cairn has around 200 people working on its operations in Greenland, with two wells being drilled. Its T8 well - which made the gas discovery - is expected to reach its target depth of 1,640ft (500m) by the end of August.
Cairn stressed that its crew were managing icebergs "successfully", with an average of two or three icebergs a day coming within a 15.5-mile radius of the drilling units. News of its potential oil discovery came as Cairn released half-year results showing underlying pre-tax profits of $88m (pounds 11.6m) in the six months to June 30.
Cairn, which is led by former Scottish rugby international and founder Sir Bill Gammell, recently announced the sale of most of its majority stake in Cairn India to Vedanta Resources.
Proceeds of the deal - for up to $8.5bn (pounds 5.5bn) - are set to be used partly to fund exploration in the waters off Greenland, as well as a return of cash to shareholders.
But analysts at Numis Securities said the Greenland operation was high risk/reward, adding the firm's risk profile "changes dramatically" after the sale of the Indian operation - "from cash cow to speculative explorer".
Shares in Cairn fell 3% yesterday.
Cairn Energy is the only firm so far to have been granted permission to drill for oil offshore in Greenland
|Printer friendly Cite/link Email Feedback|
|Publication:||Western Mail (Cardiff, Wales)|
|Date:||Aug 25, 2010|
|Previous Article:||Aer Lingus is flying high again.|
|Next Article:||Persimmon restores dividend as housing trade improves.|