Tue, Sep 14, 2010 - Page 16 News List

The rush for Arctic oil

Greenland is a land apart — where many people welcome global warming, dislike Greenpeace, and hope the arrival of Big Oil will transform their lives. But at what price to this pristine wilderness?

By Terry Macalister  /  THE GUARDIAN, LONDON

At around four times the size of Britain, Greenland is the least densely populated country in the world, and desperately dependent on fishing, a small amount of tourism, and one working gold mine. The national books are balanced courtesy of a US$515 million annual handout from the Danish taxpayer. While the hunting of seals and other local animals is still practiced by a handful of Greenlanders, the bulk of the population finds work in the public sector — in schools, hospitals or administration. But all that would change if the oil industry moved in.

The town of Nuuk is a strange mixture of attractive clapboard houses painted in bright colors typical of the Nordic region, and drab apartment blocks with graffitied stairwells that might look more at home in the former Soviet Union. Mineral extraction — be it oil or gas, gold or diamonds — is seen as a huge opportunity by the residents here. Already, crude oil has been found leaking out of the rocks in the Disko Bay area, and offshore, Greenland’s west coast is believed to possess the same basic rock formations as those on the Canadian east coast, where massive oil finds have already been made.

According to a 2009 US Geological survey, there could be 90 billion barrels of oil — a third of the size of Saudi Arabia’s reserves. Tentative drilling has already been happening all the way from the Chukotka Sea off Alaska to the Faroe Islands north of Scotland, although some has been halted while safety agencies reconsider the risks in the light of the Deepwater Horizon spill.

Few regions, though, have been pushing as hard to attract Big Oil as Greenland. As early as this week, its government may announce the winners of new exploration licenses, with many of the big names including Shell and Statoil of Norway — but not BP — expected to begin frontier-drilling here for the first time. With the continued rise in global commodity prices, this could yet turn into a fully fledged oil rush.

And, while the Cairn gas discovery has centered attention on hydrocarbons, there is a parallel drive to uncover all sorts of precious metals including diamonds, rubies and other rare earth products. This autumn, the Greenland government will decide whether uranium for nuclear power stations could also be mined here.

Dennis Thomas, a veteran British mining prospector, is currently making his first visit to Greenland in more than 40 years, as he scouts the world for new projects. “I have seen gold prospects, iron, copper, rare earths,” he says. “It’s all very early stage, but the time is right in terms of the economics and the willingness of the government [to open up].”

But it is not going to be easy. While global commodity prices have boomed over the last decade because of demand from countries such as China, Greenland remains a high-cost place to mine, not least because of the treacherous weather conditions. “You have to bring in everything by helicopter and you might have only a three-month season to do the work,” Thomas says. But the prospector, who lives near Yeovil in Somerset but works for financial and mining investors around the world, still describes Greenland as an “exciting” prospect.

As for the islanders themselves, they are very focused on self-determination and self-sufficiency. Unemployment in some towns now runs as high as 15 percent, and the standard of food in the shops is often rudimentary. And while the number of people living below the poverty line was last measured at 9 percent — lower than in the UK — the suicide rate here increased from a historically very low level in the 1970s to one of the highest in the world by the mid-1990s, at 107 per 100,000 people.

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