RBS goes Arctic

Article 1 Apr 2009 admin

This article was first published in Platform’s Carbon Web newsletter, issue 11.

In mid-March 2009, after the most recent bailout, RBS financed exploration work in previously untouched regions of Greenland’s Arctic. Acting as joint bookrunner with Merrill Lynch on March 11, RBS placed shares worth £116 million for Cairn Energy, a Scottish oil company. Although Cairn’s main existing production lies on the Indian-Pakistani border, the placing statement made clear that money raised would go towards “accelerated drilling” in Greenland.

Recent political posturing about the Arctic is fed by expectations of significant undiscovered oil & gas reserves. Greenland is considered to have major reserves, with the US Geological Survey estimating over 16 billion barrels equivalent of oil and gas off its western coast. Yet until now exploration has been limited, with only six offshore wells drilled – five of them in the 1970s. This compares to 500,000 wells drilled in Canada.

However, Cairn intend to change this. With the Exploration Director describing Greenland as “a true frontier country where oil and gas exploration is at an embryonic stage”, the company has built up licences covering 72,000 square kilometres of acreage off the country’s west coast, covering an area half the size of England. Cairn has described its Arctic exploration plans as high-risk but potentially “transformational” – stating that “costs will be large so the size of the prize needs to be big“ and “There’s going to need to be a lot of wells drilled before you’re successful.”

Cairn intends to push back the boundaries of current oil & gas exploration, in a relentless drive for new fossil fuel deposits. A slide used in one of Cairn’s presentations appears to show receding ice in the Arctic, and implies that the current licences are only the company’s “entry position” to the region. Reduced heavy sea ice makes exploration work easier around Cairn’s two most “promising” licences, off Disko Island.

However, icebergs in the region have shrunk so significantly that Disko Island is a frequent destination for political and cultural figures inspecting the impact of climate change. Meanwhile, Greenland’s Inuit population has been warning of the threats to their physical and cultural survival that climate change creates, and has been building solidarity links with campaigns against fossil fuels elsewhere in the world. Local leader Aqqaluk Lynge acted as a witness in the court trial of  ‘The Kingsnorth Six’ who had been charged with disrupting a coal fired power station in Kent.

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