BP has been forced to abandon hopes of drilling in the Arctic, currently the center of a new oil rush, because of its tarnished reputation after the Gulf of Mexico spill.
The company confirmed on Wednesday night that it was no longer trying to win an exploration license in Greenland, despite earlier reports of its interest.
“We are not participating in the bid round,” a spokesman at BP’s London headquarters said without elaborating.
The setback, which follows the announcement this week of a major find in the region by British rival Cairn Energy, is the first sign that the Gulf of Mexico disaster may have permanently damaged BP’s ability to operate — not just in US waters, but in other environmentally sensitive parts of the world.
On Wednesday the Bureau of Minerals and Petroleum in Nuuk, the capital of Greenland, confirmed that the names of successful bidders for future exploration licenses would be announced in the next couple of weeks.
The bureau refused to comment on widespread industry rumors that it had specifically decided not to consider BP as a result of the recent Macondo well disaster in the Gulf of Mexico. However, senior sources said that both the Greenland government and BP had agreed it would be inappropriate for the company to be involved.
“With the Greenpeace ship already harassing Cairn off Greenland — a company which has an exemplary safety record — everyone realized it would be political madness to give the green light to BP,” one source said.
BP has traditionally been at the forefront of breaking into new frontiers such as Russia and Angola, as well as drilling the deepest wells in the Gulf of Mexico, but the blowout and enormous environmental damage in the southern states has completely changed its external image and its own ambitions.
There has long been speculation since the Deepwater Horizon accident in April that BP could find itself persona non grata, particularly in sensitive environmental regions such as the Arctic.
BP’s current interests around the Arctic region are centered on Alaska, but there has been extensive speculation that the company is in talks with rivals such as Apache to sell these off in a desperate attempt to raise cash to pay for expected oil-spill liabilities of more than US$30 billion.
Cairn’s announcement that it struck gas this week reinforced the views of the US Geological Survey, which said last year that it believed there could be 90 billion barrels of oil and 50 trillion cubic meters of gas in the wider Arctic region.
Environmentalists are particularly nervous about plans to open up Arctic seas for exploration because the cold conditions would make a spill far more damaging.
Last month a report by US government scientists concluded that a quarter of the 4.9 million barrels of oil estimated to have been spilled in the warm waters of the Gulf of Mexico had evaporated or dissolved. Oil spilled in the Arctic would be far harder to disperse and break down.
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