The challenges facing world's smallest national oil company

Hans Kristian Olsen, the managing director of Greenland's national oil company, talks about environmental concerns and the new bidding round.

Hans Kristian Olsen says he hopes oil will be discovered in commercial quantities in the coming 10 years. Pawan Singh / The National

Executives from Shell, BP, Chevron, Statoil and other oil majors gathered in a Copenhagen hotel last December. They thought they were going to learn about Greenland's latest round of exploration licensing.

Instead, they were treated to a 20-minute lecture on the environmental risks of drilling in the Arctic. The activist group Greenpeace had lured the prospectors to a different floor to hijack the talks.

Resistance from groups such as Greenpeace is just one of the challenges that Nunaoil, Greenland's national oil company, faces in its quest for hydrocarbons.

The National spoke to Hans Kristian Olsen, Nunaoil's managing director, about the next licensing round as well as environmental concerns.

What's your drilling campaign for this year?

There are no plans for drilling this summer, but one of the major players in Greenland, Cairn Energy, has been drilling eight wells in the last two years and spent US$600 million [Dh2.2 billion] on that campaign. But unfortunately all the wells were dry. But as there are 20 exploration and production licences in Greenland at the moment and they are at different stages, we expect that there will be a lot more activity with regard to exploration drilling in the coming years.

How soon do you expect to strike oil in commercial quantities?

We hope that there would be a commercial discovery in the coming maybe 10 years.

What's your answer to environmentalists?

Of course we are a small nation. We are a small country. Greenland is part of Denmark, but we have a population of about 57,000 people and the main income is from fishing and hunting. So we are very cautious to avoid oil spills in our waters. And our authorities are using the highest standards, like the Norwegian regulations, with regards to drilling operations, seismic operations and the like.

In order to have a more diversified economy we need to develop our mining and hydrocarbon potential in Greenland.

Do you think organisations like Greenpeace will eventually leave you in peace as things progress?

Greenpeace has already been in Greenland in connection with Cairn's drilling and has also tried to stop the drilling operations. We are, under the circumstances, working to develop our economy but also to keep our environment clean. Production of oil in the Arctic is not new. It has been in progress for 40, 50 years. You can see it in Norway and the Bering Sea that it is possible to have exploration and production in Arctic regions.

Can you describe how you yourself came to Nunaoil and the oil and gas business?

I graduated as a mining geologist from a university in Denmark in the late '80s and got my first job at Nunaoil, which was a mining and petroleum company at that time.

After working 25 years in mineral exploration mainly in Greenland, then I became managing director in 2005, and today also work with eight employees. We are only nine employees at our company … We are the smallest national oil company in the world. But we partner with more than 10 companies and expect to be partners in more than 20 blocks in connection with the new bidding round. The big companies like Shell, BP, Statoil, Exxon and Chevron will have a preference right in that area and they will be our partners in the coming years.

How much oil would you like Greenland to eventually produce?

Well, we are aware that the use of hydrocarbons in the world is not being reduced. It's increasing every year and it's hard to say at what degree Greenland will have the potential to supply the world with energy. It will be a very limited amount, but it will be enough to create wealth and diversify the economy of Greenland.

* April Yee

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