Edinburgh-based Cairn Energy has said it may have found oil in the untapped waters of western Greenland.
Cairn, which is the only firm so far to have been allowed to drill for oil off Greenland, said that it has found gas in thin sands in the Baffin Bay basin, which could be a sign of oil. The area lies around 400 kilometres north of the Arctic Circle.
The company said it is still too early to gauge the significance of the find, as the well has not yet been drilled to its total depth.
Cairn has been drilling 110 miles off Disko Island in west Greenland since July, in water depths of between 300 metres and 500 metres. It will drill four wells at target depths of up to 4,200 metres a cost of £65 million each over the next few weeks.
The company expects to be able to provide an update towards the end of October.
It is thought that tough conditions and icebergs pose a risk to operations in the region. This means that Cairn would need to find large volumes of oil to make a project commercially viable—around 250 million barrels.
Much larger volumes of gas would be required as, given Greenland's distance from a major gas market, an LNG facility would need to be constructed at a likely cost of billions of dollars.
Commenting on the find, Cairn’s CEO Bill Gammell said: “I am encouraged that we have early indications of a working hydrocarbon system with our first well in Greenland, confirming our belief in the exploration potential. We look forward to assessing the results of the remainder of the 2010 drilling programme.”
