Greenland To Open New Licensing Round
Greenland said a new licensing round for oil exploration off its west coast will be launched by the end of 2002, reviving a failed initiative of 10 years ago. Greenland's Mineral and Petroleum Bureau presented on Thursday the licensing round to oil companies including TotalFinaElf, Shell, ChevronTexaco, Statoil, ENI and RWE-DEA.
``We know that extensive exploration is the first step towards the establishment of production of oil and gas, and thus towards making mineral resources one of the mainstays of the economy,'' Premier of Greenland, Jonathan Motzfeldt, said at the meeting in Copenhagen. Greenland, whose economic mainstay is fishing and which enjoys limited home rule under the Danish government, is offering licenses in the area between latitudes 63 and 68 degrees North off the island's west coast. The deadline for application is July 16.
Greenland's oil company Nuna Oil, 50 percent owned by DONG and 50 percent by Greenland's home rule government, will take a 12.5 percent stake in all licenses. Nuna Oil will pay its share of production costs if the search turns into a find to be developed, but will not pay for exploration.
Oil exploration in Greenland first took off in the 1970s but all wells drilled were dry. Twenty years later Statoil and Phillips Petroleum were granted two licenses but both licenses have been returned after exploration proved to be unrewarding. Nuna Oil managing director Arne Rosenkrands Larsen said an oil find should at least have reserves of 200 million barrels to be profitable, based on an oil price of $20 per barrel. The reserves of the largest field in the Danish part of the North Sea, the Dan field, are 350 million barrels. A gas find needs to be at least 300 billion cubic meters to be profitable, Larsen said. Europe's largest onstream offshore gas field, Norway's Troll, was discovered in 1979 with estimated recoverable reserves of 1,300 billion cubic meters. Based on a 500 million barrels oil find, Nuna Oil estimated the cost of an exploration well would amount to $25 million. On Monday, Greenland's authorities will meet with more oil companies in Houston, including BHP Billiton, ExxonMobil, Occidental Oil & Gas, Marathon Oil Company, Kerr-McGee and Conoco.