Shares in Cairn Energy are up 2.95 per cent to 439.40p this afternoon in London after the Edinburgh-based oil and gas explorer said it had found oil off the shores of Greenland. The company, led by founder Sir Bill Gammell, has been drilling there since early summer.
Cairn said its Alpha-1S1 well in Baffin Bay, between Greenland and Canada, “observed oil intermittently over a 400m section” and initial analysis of various hydrocarbon samples recovered from the well confirms the presence of two oil types.
“The presence of both oil and gas confirms an active, working petroleum system in the basin and is extremely encouraging at this very early stage of our exploration campaign for the Sigguk block and the entire area,” said Sir Bill in a statement.
It is not the discovery that some might have hoped for but it’s significant nonetheless, given that Greenland’s offshore waters are one of the world’s largest under-explored frontier areas. Wood Mackenzie, the consultancy, estimates there could be 20bn barrels of oil and gas in Greenland – part of the Arctic-wide reserves the US Geological Survey believes could account for a quarter of the world’s undiscovered oil and gas.
The Alpha well is in the process of being deepened, Cairn said on Tuesday, while drilling of a third well is ahead of schedule. Its first well was plugged after failing to result in a commercial discovery.
Cairn is not the only one going after Greenland’s assets. The industry is still waiting to hear which companies have been awarded licences in the latest bid round. Greenland is a story that will continue to run.