Scottish oil exploration company Cairn Energy has struck oil near Greenland, becoming the first company to make a find in the area.
The wider industry has been watching Cairn’s exploits in the icy Arctic waters with interest, but yesterday’s announcement of an oil strike is not expected to prompt a rush of other energy firms to Greenland.
Edinburgh-based Cairn said further analysis was needed for the gas and two types of oil it encountered in drilling operations in the untapped Baffin Bay basin.
Oil was discovered only “intermittently” in the well, which has so far reached depths of more than 14,100ft, the company added.
Jim Hannon, founding partner at industry consultant Hannon Westwood, said it remained to be seen how much oil there was, and even if it led to production it would be many years before development projects got under way.
Greenland could offer opportunities for energy service firms based in the north-east but only in the long-term, he said, adding: “I would not expect to see a sudden switch in emphasis by any of these companies.”
The current global financial climate makes it unlikely that oil explorers will go rushing off to Greenland on the back of Cairn’s find, according to Mr Hannon.
He said: “This is in its very early days and most oil and gas firms have got more than enough on their plates seeking the finances and resources to drill what is already in front of them.”
Supermajors were the only firms big enough for the “massive” investment that would be needed to exploit the area commercially, with most smaller companies probably being left to watch from the sidelines with envy, he added.
Andrew Reid, the Aberdeen-based managing director of energy consultancy Douglas Westwood, said the providers of support services to Greenland were likely to hail from north America.
He added: “The reality is, however, that Arctic exploration and particularly development is still an evolving area and somewhat ‘frontier’ as far as offshore production is concerned. There are still a number of technical, operational and environmental challenges to overcome.”
Subsea UK chief executive Alistair Birnie said service companies in the UK would have to act quickly to get in on the action if activity grew in Greenland.
Mr Birnie added: “We are well placed with the necessary industry expertise and know-how, particularly for managing the environmental aspects.”
Cairn, which is led by former Scottish rugby international and founder Sir Bill Gammell, is the only firm so far to have been granted permission to drill for oil near Greenland.
Its work in the area was disrupted earlier this month when environmental protesters scaled the semi-submersible rig Stena Don to demonstrate against what they claimed were the “huge risks” energy companies were taking with the environment by drilling for oil in deep water.
Yesterday’s announcement by Cairn offset news that the firm had abandoned an earlier well off Greenland, which caused excitement last month when the firm said it had found possible signs of oil. It is writing off £54.3million in costs after revealing the well was not a “commercial discovery”.
The Baffin Bay basin is a similar size to the North Sea but the industry has only recently revisited the region for the first time since the 1970s.