The E&P industry knows the Arctic is a unique environment. It poses such tough physical and technological challenges that few believed until recently that the sustained exploration and development of its massive hydrocarbon resources was possible.

But it is those huge reserves of recoverable oil and gas (estimated by the US Geological Survey, or USGS, at around 90 Bbbl of oil, 1,670 Tcf of gas, and 44 Bbbl of natural gas liquids) that are too tempting to ignore.

Alongside the current handful of pioneering and often ice-bound offshore activities established or being drawn up and implemented in areas such as Alaska, Canada, Russia, and northern Norway, upcoming licensing rounds offshore Greenland are exciting industry interest more than most.

This is largely because exploration activity in the US and Canadian territories has been delayed by offshore drilling regulatory and policy reviews, while Russia’s arctic activities in areas such as the Pechora and Barents seas continue to progress more slowly than hoped. Russia’s first commercial offshore Arctic field, the Gazpromoperated Prirazlomnaya project in the eastern Pechora Sea, is finally expected to start flowing oil by the end of 1Q 2012 via a fixed platform after originally being discovered in 1989. Meanwhile, the Shtokman field, discovered in 1988, has been delayed again while Gazprom and partners Statoil and Total consider how best to commercially develop the initial phase of this challenging gas field.

This slow pace has left the door open for Greenland to establish itself as an accessible and willing Arctic Cir- cle province, and the country is on a sustained campaign to attract more companies into its frontier areas. Already it is recognized as offering a favorable fiscal regime with a stable investment climate and a supportive administration.

The government is in the early stages of a North East Greenland licensing round for acreage in the Greenland Sea. The Bureau of Minerals and Petroleum (BMP) is holding two successive rounds in 2012 and 2013, including a pre-round for members of a consortium that already holds acreage in the area (the Kanumas Consortium, consisting of ExxonMobil, Statoil, BP, Japan National Oil Corp., Chevron, Shell, and state oil company Nunaoil AS) and an ordinary round for nonconsortium companies. The total area on offer covers nearly 50,000 sq km (19,305 sq miles) divided into 19 blocks.

The most active company in Greenland is UK independent Cairn Energy, which has carried out a sustained multibasin frontier campaign offshore West Greenland, with no discoveries so far but some encouraging results.

The company – the largest acreage holder in the country – admits this is all part of the risk of being a “first mover” in this frontier region, where the rewards could be company-transforming.

The “yet-to-find” volumes of oil and gas offshore West Greenland are put by the USGS at 7.3 Bboe and 54 Tcf of gas. Cairn has amassed a 85,000-sq-km (32,820-sqmile) database of 2-D seismic, and last year the company completed two 3-D surveys.

Cairn drilled three wildcats in 2010 followed by a further five in 2011. Last year’s program saw wells drilled in both shallow and ultra-deep waters, with the LF7-1, Gamma-1, Delta-1, AT7-1, and AT2-1 wells all failing to find any significant hydrocarbons.

The AT7-1 well in the Atammik Block in the South Ungava Area is a good example of the activities the company is undertaking. The well was drilled by the Leiv Eiriksson semisubmersible rig in 909 m (2,982 ft) water depth approximately 200 km (124 miles) offshore the capital of Nuuk. The well hit a 113-m (371-ft) gross interval with 53 m (174 ft) of net reservoir quality sands of Cretaceous age.

Cairn reported that severe mud losses and poor hole conditions hampered the full evaluation of this interval, which was thought to be of potential interest because of oil and gas shows. A modular dynamic tester (MDT) program recovered fluid samples to surface, revealing only mud filtrate and failing to establish hydrocarbons. A set of sealed MDT samples have been sent to laboratories in the UK for further analysis.

The company is pushing on with a 3-D seismic program covering 1,500 sq km (580 sq miles) in the Pitu Block in Baffin Bay currently being processed with fully migrated results expected this year. It added that the results of shallow borehole geochemical analysis confirmed micro seepages of oil and gas in the immediate vicinity of the main structures identified on the previous 2-D seismic data.

It also is processing 3-D seismic data shot over parts of southern Greenland and expects fully migrated results by mid-2012.

An additional 3-D seismic survey over the Lady Franklin and Atammik region is under consideration for 2012, with the potential for further drilling in the West Greenland basins in subsequent years.

Meanwhile, Cairn is planning to seek farm-in partners to assist in funding future activity phases. With the company holding 11 blocks out of the 20 currently licensed, it is likely to find plenty of willing partners.

The Toisa Vigilante subsea support vessel visits Nuuk Harbor, Greenland, while supporting operations for Cairn Energy. (Photo courtesy of Cairn Energy)

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