Cairn Energy, the Edinburgh-based oil and gas operator, said yesterday its exploration acreage off Greenland could hold billions of barrels of oil.
It said it had established a significant frontier exploration position offshore west and south Greenland through its exploration subsidiary Capricorn and had done an extensive seismic survey programme.
Chief executive Sir Bill Gammell said: “We are already seeing some very large structures with the potential to be five or 10 times the size of Mangala.”
That is Cairn’s oil field in India previously said to have estimated oil in place of 1.29billion barrels, of which 478million barrels could be recoverable.
Sir Bill added: “The Arctic basins of Greenland are increasingly being recognised as a world-class prospective area and only last year the US Geological Survey (USGS) estimated they could potentially contain 50billion barrels of oil equivalent in the largest unexplored prospective area for petroleum remaining on Earth.”
A previous study by the USGS in 1996 recognised Greenland as one of the world’s top 10 potential hydrocarbon destinations for “yet to finds”.
Sir Bill said the first Cairn exploration drilling in Greenland was planned for 2011 but it was planned to undertake at least three surveys and to buy certain long-lead items this year to preserve the option, should a suitable rig become available, for exploration drilling in 2010.
Cairn said the prospective geological basins around the coast of Greenland were at a very early stage of evaluation with only six offshore wells and one onshore well having been drilled to date, and most of those during the 1970s.
Sir Bill warned, however, it would be very costly to drill off Greenland, with a single well costing £40-70million to drill, depending on the drilling programme.
Cairn said that meanwhile it was progressing well towards first production from its Rajasthan development in north-west India, including the Mangala field, which was expected in the second half of this year. It has already invested almost £1.43billion in the state of Rajasthan and expects to invest around £640million more before its fields come on stream.
Cairn reported yesterday 2008 pre-tax profits of £315million, including an exceptional gain of £254million on the sale of 4% of Cairn India, down from profits of £1.13billion the year before, the latter reflecting a £1.1billion exceptional gain on the flotation of Cairn India in Mumbai.
The company had revenues for last year of £213.57million, up from £205.71million in 2007. Cairn also announced yesterday the appointment of Mike Watts, formerly exploration and new business director, as deputy chief executive of the company.