-
8 February 2014 FM 2014/133
_______________ FM 2014/133 IASN-2013-093824
Greenland’s oil and mineral strategy 2014-2018
Appendices
Government of
Greenland
February 2014
-
2
Contents:
Appendix 1: Detailed description of Greenland's oil and gas strategy 2014-2018
Appendix 2: Oil and gas taxation model (government take)
Appendix 3: Detailed description of Greenland's mineral strategy 2014-2018
Appendix 4: Mineral taxation model (government take)
-
3
DETAILED CONTENTS
APPENDIX 1 OIL/GAS STRATEGY FOR 2014-2018 ........................................................... 8
1.1 Knowledge – status and assessment of the current strategy ................................................. 8
1.2 New licence strategy objectives ................................................................................................. 10
1.2.1 Future licence policy ............................................................................................................................ 13
1.2.2.1 Onshore Disco & Nuussuaq Peninsula ............................................................................................. 14
1.2.2.2 Baffin Bay ......................................................................................................................................... 15
1.2.2.3 Davis Strait – Nuuk West – 63°-67°N ................................................................................................ 16
1.2.2.4 Open door area South-West Greenland ........................................................................................... 17
1.2.2.5 Open door area onshore Jameson Land ........................................................................................... 18
1.2.2.6 Licence strategy 2014-2018.............................................................................................................. 18
1.3 Environmental conditions in the proposed areas ................................................................... 19
1.3.1 Baffin Bay ............................................................................................................................................. 19
1.3.2 Offshore areas in the Davis Strait west of Nuuk .................................................................................. 20
1.3.3 Onshore area of Jameson Land ........................................................................................................... 22
1.3.4 Onshore area of the Nuussuaq Peninsula ........................................................................................... 23
1.3.5 Areas offshore South Greenland and South-West Greenland ............................................................ 23
1.4 Physical conditions in the proposed areas .............................................................................. 25
1.4.1 Baffin Bay ............................................................................................................................................. 27
1.4.2 Davis Strait ........................................................................................................................................... 28
1.4.3 South-West Greenland ........................................................................................................................ 28
1.4.4 Jameson Land ...................................................................................................................................... 28
1.4.5 Nuussuaq Peninsula............................................................................................................................. 29
1.5 Emergency response .................................................................................................................... 29
1.5.1 Oil spill response .................................................................................................................................. 29
1.6 Licence terms for the licensing round and the open door procedure ................................. 31
1.7 Licensing terms and conditions ................................................................................................. 32
1.7.1 Prequalification of operators ............................................................................................................... 32
1.7.2 Special licence terms and licensing terms and conditions for onshore areas ..................................... 33
1.8 Regulatory processing of licences and data ............................................................................ 34
1.9 Marketing of the oil/gas potential ............................................................................................... 35
1.10 Oil/gas scenarios ........................................................................................................................... 35
APPENDIX 2 OIL AND GAS TAXATION MODEL (GOVERNMENT TAKE) .............. 37
-
4
2.1 Benchmark analysis of oil and gas tax models (government take) ..................................... 37
2.1.1 Base case of exploitation of a field ...................................................................................................... 37
2.1.2 Tax rules ............................................................................................................................................... 37
2.2 Comparison of effective tax and royalty rates etc................................................................... 38
2.3 Government take levels of other countries .............................................................................. 39
2.3.1 Corporate tax ....................................................................................................................................... 39
2.3.2 Diversity over simplicity or vice versa ................................................................................................. 40
2.3.3 Royalty – pros and cons ....................................................................................................................... 40
2.3.4 Who has successfully increased taxes? ............................................................................................... 40
2.3.5 State participation ............................................................................................................................... 41
2.3.6 Export duty and withholding tax on dividend ..................................................................................... 41
2.4 Analysis of Greenland's government take model .................................................................... 43
2.4.1 Corporate and withholding tax rates ................................................................................................... 43
2.4.2 Royalty ................................................................................................................................................. 43
2.4.3 Other taxes .......................................................................................................................................... 43
2.4.4 Export taxes ......................................................................................................................................... 44
2.4.5 State participation ............................................................................................................................... 44
2.4.6 Auctions ............................................................................................................................................... 44
2.4.7 Administration of control and collection of government take in Greenland ...................................... 45
2.5 Alternative Greenland models for consideration .................................................................... 45
2.5.1 Analysis of the different models .......................................................................................................... 47
2.5.2 Surplus royalty ..................................................................................................................................... 47
2.5.3 Effect of increased costs ...................................................................................................................... 53
2.6 Recommendation .......................................................................................................................... 55
APPENDIX 3 GREENLAND'S MINERAL STRATEGY 2014-18 .................................... 58
3.1 Knowledge – status and assessment ........................................................................................ 58
3.2 New focus areas ............................................................................................................................ 60
3.2.1 Global perspective ............................................................................................................................... 60
3.2.2 Iron alloy metals and base metals ....................................................................................................... 61
3.2.3 Critical minerals ................................................................................................................................... 62
3.2.4 Gold ..................................................................................................................................................... 64
3.2.5 Uranium ............................................................................................................................................... 64
3.3 Special conditions for North Greenland north of 81° N .......................................................... 65
3.4 Small-scale licences ..................................................................................................................... 66
3.5 Marketing activities ....................................................................................................................... 66
3.5.1 Scenarios for minerals ......................................................................................................................... 67
3.6 Licence policy and Greenland's minerals ................................................................................. 68
-
5
APPENDIX 4 MINERAL TAXATION MODEL (GOVERNMENT TAKE) .............................. 71
4.1 Benchmark analysis for mineral taxation models (government take) ................................. 71
4.1.1 Base case of exploitation under an extraction licence ........................................................................ 71
4.1.2 Tax rules ............................................................................................................................................... 72
4.2 Iron ore ............................................................................................................................................ 74
4.2.1 Base case of exploitation of iron ore ................................................................................................... 74
4.2.2 Figure of government takes – iron ore ................................................................................................ 74
4.2.3 Level of government takes – iron ore .................................................................................................. 75
4.2.4 Corporate tax – iron ore ...................................................................................................................... 75
4.2.5 Diversity over simplicity or vice versa – iron ore ................................................................................. 75
4.2.6 Royalty – pros and cons – iron ore ...................................................................................................... 76
4.2.7 Withholding tax on dividends and interest – iron ore ......................................................................... 76
4.2.8 Comparison of government takes – iron ore ....................................................................................... 77
4.3 Gold.................................................................................................................................................. 78
4.3.1 Base case of exploitation of gold ......................................................................................................... 78
4.3.2 Figure of government takes – gold ...................................................................................................... 78
4.3.3 Level of government takes – gold........................................................................................................ 79
4.3.4 Corporate tax – gold ............................................................................................................................ 79
4.3.5 Diversity over simplicity or vice versa – gold ....................................................................................... 79
4.3.6 Royalty – pros and cons – gold ............................................................................................................ 79
4.3.7 Withholding tax on dividends and interest ......................................................................................... 80
4.3.8 Comparison of government takes for gold .......................................................................................... 80
4.4 Copper ............................................................................................................................................. 81
4.4.1 Base case of exploitation of copper .................................................................................................... 81
4.4.2 Figure of government takes for copper ............................................................................................... 82
4.4.3 Level of government takes – copper ................................................................................................... 82
4.4.4 Corporate tax – copper ........................................................................................................................ 82
4.4.5 Diversity over simplicity or vice versa – copper .................................................................................. 82
4.4.6 Royalty – pros and cons – copper ........................................................................................................ 82
4.4.7 Withholding tax on dividends and interest – copper .......................................................................... 83
4.4.8 Comparison of government takes for copper ..................................................................................... 83
4.5 Rare earth elements ...................................................................................................................... 84
4.5.1 Base case of exploitation of rare earth elements ................................................................................ 84
4.5.2 Figure of government takes – rare earth elements ............................................................................. 84
4.5.3 Level of government takes – rare earth elements .............................................................................. 85
4.5.4 Corporate tax – rare earth elements ................................................................................................... 85
4.5.5 Diversity over simplicity or vice versa – rare earth elements.............................................................. 85
4.5.6 Royalty – rare earth elements ............................................................................................................. 85
4.5.7 Withholding tax on dividends and interest – rare earth elements ..................................................... 85
4.5.8 Comparison of government takes for rare earth elements ................................................................. 86
4.6 Gemstones...................................................................................................................................... 87
4.6.1 Base case of exploitation of gemstones .............................................................................................. 87
-
6
4.6.2 Figure of government takes – gemstones ........................................................................................... 87
4.6.3 Level of government takes – gemstones ............................................................................................. 88
4.6.4 Corporate tax – gemstones ................................................................................................................. 88
4.6.5 Diversity over simplicity or vice versa – gemstones ............................................................................ 88
4.6.6 Royalty ................................................................................................................................................. 88
4.6.7 Withholding tax on dividends and interest ......................................................................................... 88
4.6.8 Comparison of government takes for gemstones ............................................................................... 88
4.7 Zinc .................................................................................................................................................. 89
4.7.1 Base case of exploitation of zinc.......................................................................................................... 89
4.7.2 Figure of government takes – zinc....................................................................................................... 90
4.7.3 Level of government takes – zinc ........................................................................................................ 90
4.7.4 Corporate tax – zinc ............................................................................................................................. 90
4.7.5 Diversity over simplicity or vice versa – zinc ....................................................................................... 90
4.7.6 Royalty – pros and cons ....................................................................................................................... 90
4.7.7 Withholding tax on dividends and interest ......................................................................................... 90
4.7.8 Comparison of government takes for zinc .......................................................................................... 91
4.8 Uranium ........................................................................................................................................... 91
4.9 Main observations and trends as well as changes under consideration ............................ 91
4.9.1 Government take level ........................................................................................................................ 91
4.9.2 Royalty ................................................................................................................................................. 92
4.9.3 Alternative Greenland models for consideration ................................................................................ 92
4.9.4 Iron ore, gold, copper and zinc ............................................................................................................ 92
4.9.5 Administration of control and collection of government take in Greenland ...................................... 93
4.10 Recommendations ........................................................................................................................ 93
4.10.1 Recommendations for future taxation of all metals and minerals, except for uranium, rare earth
elements, copper, gold and gemstones ........................................................................................................... 93
4.10.2 Recommendations for future taxation of gold and copper...................................................... 94
4.10.3 Recommendations for future taxation of rare earth elements ................................................ 95
4.10.4 Recommendations for future taxation of uranium .................................................................... 95
4.10.5 Recommendations for future taxation of gemstones ............................................................... 95
-
7
Appendix 1
Detailed description of Greenland's oil and gas
strategy 2014-2018
Appendix 1 to proposal for Greenland's oil and mineral strategy 2014-2018
-
8
APPENDIX 1 Oil/gas strategy for 2014-2018
1.1 Knowledge – status and assessment of the current strategy A central element of the current strategy has been the preparation and launch of oil/gas licensing
rounds. Licensing rounds have typically been carried out at intervals of about two years since
2002 in the
form of a
combination
of licensing
rounds and
”open door
procedures”.
The regular
launch of
licensing
rounds and
open door
procedures
has resulted
in a number of
exclusive
licences
having being granted for oil/gas exploration and exploitation activities in Greenland. Below follows
a brief summary:
The licensing rounds in 2002 and 2004
resulted in the Canadian exploration
company Encana being granted two
exploration and exploitation licences,
referred to as the Lady Franklin and
Atammik blocks offshore to the west of
Nuuk. The licenses have subsequently
been assigned to Cairn Energy
(Capricorn Greenland Exploration A/S).
The licensing rounds in the Disco-
Nuussuaq region in 2006 and 2007
resulted in some of the world's biggest
oil companies being granted a total of
seven exploration and exploitation
licenses. The licence holders are
distributed over the following licences:
Sigguk and Eqqua (Cairn Energy,
Nunaoil), Puilasoq (DONG, ExxonMobil,
Chevron, Nunaoil), Orsivik (ExxonMobil,
Husky, Nunaoil), Kangerluk and Ikermiut
(Husky, Nunaoil) and Naternaq (PA
Resources, Nunaoil).
What is a licensing round?
In the dossier, the Government of Greenland describes the licence
terms, the licence blocks available, the application date, the selection
criteria, etc.
After the application date, the applications are then evaluated at the
same time. If there are two or more applicants for the same licence
block, the applications will be evaluated on the selection criteria.
What is an open door procedure?
In an open door procedure, the
Government of Greenland designates
an open door area which will be open
for ongoing licensing. In the dossier,
the Government describes the licence
terms, the open door areas available,
the selection criteria, etc.
Applications are considered in the
order received.
-
9
In 2008, Cairn Energy and Nunaoil were granted four exploration and exploitation licences in the
open door area off South-West Greenland, called Kingittoq, Saqqamiut, Sallit and
Uummannarsuaq (Cairn Energy, Nunaoil).
In 2010, a licensing round was carried out in the Greenlandic part of Baffin Bay. The Bureau of
Minerals and Petroleum received 17 applications for exploration and exploitation licences and
following a thorough evaluation of the applications based on the selection criteria specified in the
dossier a total of seven exclusive licences for oil and gas exploration and exploitation were
granted to the following oil companies: Qamut (ConocoPhillips, DONG, Nunaoil), Anu and Napu
(Shell, Statoil, GDF SUEZ, Nunaoil), Pitu, Napariaq and Ingoraq (Cairn Energy, Nunaoil) and Tooq
(Mærsk Oil, Nunaoil). Statoil and Tullow have subsequently become parties to the Pitu and Tooq
licences, respectively.
In 2012 and 2013, a two-phase licensing round was carried out in the Greenland Sea in North-
East Greenland. The licensing round consists of a pre-round and an ordinary round. It is
anticipated that between five and seven new licences will be granted in this region. As a result, an
extensive data collection effort will be conducted in this area in the next years.
As in connection with earlier licensing rounds, a number of in-depth studies have been made prior
to the launch of this licensing round, including a strategic environmental impact assessment of the
area, an assessment of its geological potential, a benchmark analysis of fiscal terms as well as ice
studies. The preparatory work follows e.g. from the hydrocarbon strategy 2009.
The strategic environmental impact assessment of the Greenland Sea has contributed, among
other things, to determining the areas to be made available for exploration activities – and the
areas which will not be available to the industry. SEIAs are also used to determine the factors in
the environment and nature which the companies must take particular care to provide for in their
planning and operations in the areas.
From a geological perspective, the area is one of the most interesting areas in Greenland as
regards its oil/gas potential. In a report from 2008, the USGS estimated that the area may hold
31bn barrels of undiscovered oil/gas resources (middle estimate). This estimate is obviously
subject to high uncertainty, and any finds which are made may turn out to deviate substantially.
When the coming years’ prospecting programmes have been completed, it will most likely be
possible to say whether oil/gas occurs in commercially viable quantities and, if so, the size of such
quantities.
The first phase of the licensing round in the waters off North-East Greenland (the pre-round) was
the result of the preferential position of the so-called KANUMAS companies under the so-called
KANUMAS agreements (from 1989 and 2009). It is thus a requirement in the pre-round that the
operator in the group of applicants must be one of the KANUMAS companies (StatoilHydro, BP,
ExxonMobil, ChevronTexaco, Shell, Japan Oil, Gas and Metals National Corporation) or a
subsidiary of one of these companies.
On the final application date, the Government of Greenland received eleven applications for
oil/gas exploration and exploitation licences. The applications came from three different groups of
applicants who competed for the most coveted licence blocks. The applications received were
evaluated on the basis of the selection criteria specified in the dossier. Based on an overall
assessment, the Government of Greenland decided to grant four exclusive oil/gas exploration and
exploitation licences. The licences were granted to the following oil companies: Statoil,
ConocoPhillips and Nunaoil, Block 6 (”Avinngaq”), ENI, BP, DONG and NUNAOIL, Block 8
-
10
(”Amaroq”) and Chevron, GreenPex, Shell and NUNAOIL, Block 9 (”Umimmak”) and Block 14
(”Nerleq”).
On the final application date for the second round, the Government of Greenland had received
three applications for oil/gas exploration and exploitation licences and the applications came from
two different groups of applicants. The evaluation process was still in progress at the time of
drafting of this strategy (at the end of December 2013).
The Government of Greenland believes that the current licence strategy has resulted in a
satisfactory number of licences. Thanks to the strategy, the interest of the foreign mineral
resources companies in carrying out exploration activities in Greenland has successfully been built
up and maintained.
Oil exploration activities are characterised by substantial investments and not least substantial
exploration risks. A key element in the planning of an oil/gas licence strategy is thus to maintain a
continuously high level of exploration activity in different regions of Greenland.
The reason for this is that it is impossible to predict in advance which region will first lead to the
desired breakthrough in the oil activities. It may thus be expected that not all existing licence areas
will lead to commercial finds.
In step with the geological knowledge about the subsoil improving, it may thus be expected that
exploration activities in some licence areas will be intensified. At the same time, it must be
expected that other licence areas will be relinquished if the geological parameters are not
considered promising enough when viewed against the expected cost level of initiating additional
exploration activities.
One example of this natural development is Cairn Energy's exploratory drillings in 2010 and 2011.
Based on the initial geophysical exploration results, the company found that the potential in some
of the licence areas was so promising that the company wished to intensify the exploration by
carrying out exploratory drillings. A total of eight drillings were completed in 2010 and 2011. The
wells were drilled in different sedimentary basins offshore West Greenland and in several of these
Cairn Energy found small quantities of oil and gas which were not big enough for commercial
exploitation though. Cairn Energy's drillings in 2010 and 2011 ran into a total of around DKK 6bn.
The map in Figure 1 provides a status of exclusive licences for exploration and exploitation of
oil/gas in Greenland currently granted.
1.2 New licence strategy objectives In the Government of Greenland's opinion, the oil/gas licence strategy pursued so far has
delivered on its objective of creating and sustaining industry interest in oil exploration in
Greenland. The Government of Greenland’s objective is to carry on its efforts to attract investors
in oil exploration activities in Greenland. The Government of Greenland’s objective is to have oil
exploration activities in different regions of Greenland. The current licence level is regarded as
satisfactory. In order to maintain the current level of activity, it is necessary to make new licence
areas available at regular intervals in order to compensate for the licence blocks which will be
relinquished over time.
As described in the next section, the geological assessment is that the following areas will be of
particular interest:
Onshore areas of Disco and the Nuussuaq Peninsula
-
11
Onshore area of Jameson Land
Areas offshore South Greenland and South-West Greenland
Offshore areas in Baffin Bay
Offshore areas in the Davis Strait west of Nuuk
-
12
Figure 1: Exclusive hydrocarbon exploration and exploitation licences, active as at 31 December 2013.
-
13
1.2.1 Future licence policy Within the next five-year period, the goal is to conduct licensing rounds at intervals of approx. two or
three years. As opposed to previous years' licensing rounds where very large blocks of 10,000 square
kilometres or more were made
available particularly in the
Disco West and Baffin Bay
licensing rounds, it is
proposed as a result of
improved data coverage in the
different regions to license off
smaller blocks of 1,000-4,000
square kilometres instead.
The blocks will be defined to
ensure that each of them has
at least one attractive target
for exploration. This procedure
was also followed in the
licensing round for the
Greenland Sea in North-East
Greenland.
Similarly, it is recommended to
use a grid of 10 by 30 arc
minutes to divide the blocks, a
procedure that was also
followed in the licensing round
for the Greenland Sea (see
Figure 2).
Below follows a description of
the different regions which the
Government of Greenland
intends to make available over
the next five years.
Figure 2: Grid of 10 by 30 arc minutes, to be used for the new licence
areas. New blocks will be defined according to this grid.
-
14
1.2.2.1 Onshore Disco & Nuussuaq Peninsula Since 2003, no oil/gas licences have been available for the Disco-Nuussuaq region. Since then, there
have been a lot of inquiries particularly for the Nuussuaq Peninsula concerning the possibility of
applying for oil/gas exploration licences, mostly from small and medium-sized oil companies.
At the same time, mineral companies have shown an interest in taking out drill cores in the northern
part of the area for mineral
exploration purposes. Seismic data
have also been collected on the
western part of Disco Island. Those
data will be important in the
assessment of the future potential
of the area. On Disco Island and
the Nuussuaq Peninsula,
hydrocarbon seeps have been
observed in the volcanic layers and
horizons of coal have also been
found. The onshore area of the
Nuussuaq Peninsula which is
proposed to be included in the
licence area to be made available
in 2016 is 6,000 square kilometres
(see Figure 3). The entire Disco
Island has been included in the
coming licensing round. The blocks
which will be made available will be
somewhat smaller than in the areas
offshore. The blocks will be defined
to ensure that each of them has at
least one area of interest.
The first discoveries of oil seeps in
the Disco-Nuussuaq-Svartenhuk
region were made in 1992, and
extensive geological surveys have
been carried out since then.
The results from onshore drilling activities have shown that there are several levels of oil impregnated
rocks in the area and some intervals with gas under pressure. Geochemical analyses of the organic
material in the layers have shown a content of five different oil types in the layer series, and in one of
the units the oil is of the same type as in an important source rock known from the shelf off
Newfoundland in eastern Canada. Overall, the results from the Nuussuaq Basin are regarded as
positive and showing possible oil deposits in the onshore area between Disco and the Svartenhuk
Peninsula.
The onshore area of Disco-Nuussuaq will be made available in an ordinary licensing round in 2016,
when important data from adjacent offshore areas will have been released. Results from exploration
activities on Disco-Nuussuaq will provide important information which will also be of relevance to
offshore exploration activities in the area. The results may therefore be used in the future strategy for
Figure 3: Onshore licence area on Disco Island and Nuussuaq.
-
15
the areas offshore Disco-Nuussuaq for which no exploration licence will be granted in this strategy
period. The current state of knowledge of the area suggests the presence of several prerequisites for
success.
1.2.2.2 Baffin Bay In Baffin Bay, North-West Greenland, five exploration and exploitation licences were granted in 2011.
Since then and in future, a large amount of new data will be collected. The data collected will form the
basis of an ongoing evaluation of the areas in Baffin Bay and will be used in the evaluation of how
those areas may be expanded in future to also include larger licence areas in those geological
provinces.
Exploratory drillings are expected in
Baffin Bay in 2014/2015. The
Government of Greenland will decide
whether to conduct a licensing round
in the area in 2016/2017, depending
on the results of the exploratory
drillings planned in the region for the
coming years. The areas which will be
made available have been selected to
ensure that they are within the
boundaries of the continental shelf.
The blocks will be defined by following
the grid of 10 by 30 arc minutes.
Over the past six years, extensive
geophysical surveys have been made
in the north-eastern part of Baffin Bay,
and seabed samples with organically
rich upper cretaceous shales indicate
the potential presence of source rock
in the area. Taken as a whole, all
components in an active hydrocarbon
system are present in the northern part
of Baffin Bay, but exploration will be
challenging, subject to local geological
conditions. And results from new
exploratory drillings will therefore be
crucially important to the region.
In the southernmost part of Baffin Bay
bordering onto the Davis Strait
(northern Disco West), five offshore
exploratory drillings were made from
2010 to 2011. Four of those drillings
are located just south and west of the
proposed licence area (Figure 4).
The fifth drilling is located inside the proposed licence area (Delta-1). The drill did not go all the way
through the volcanic basalts and into the underlying targets for exploration. One of the drillings (Alpha-
1S1 – see Figure 4) showed signs of hydrocarbons in volcanic rocks, while another showed the
presence of gas in thin sandstone layers.
Figure 4: Map of the proposed licence area in Baffin Bay (red
cross-hatched areas), depending on drilling results in existing
exclusive licences in Baffin Bay (grey areas).
[Billedtekst: Current exclusive licences New licence areas – Baffin Bay]
-
16
Active hydrocarbon systems have been demonstrated to exist on several locations in the regions
around the area made available. This includes, for instance, oil seeps of five different types of oil along
the Disco coast and also the Nuussuaq and Svartenhuk peninsulas east and south-east of the licence
area. In addition, oil seeps have been extensively documented to exist in the Scott Inlet on the
opposite Canadian side of Baffin Bay (approx. 72°N latitude). The proposed licence area stretches
from approx. 71° to 75°N latitude, but has been divided into two segments: a small northern segment
(approx. 6,600 square kilometres) and a large southern segment (approx. 40,000 square kilometres) –
see Figure 4.
A licensing round in the Baffin Bay area north of 71°N in 2016/2017 will depend on the results of the
expected drillings in the northern part of Baffin Bay. The results will contribute to eliminating some of
the geological uncertainties which exist in the area. In case of a positive result, it would be natural to
also make this southern area of Baffin Bay, which has several similarities with the northern part of
Baffin Bay, available for exploration activities.
1.2.2.3 Davis Strait – Nuuk West – 63°-67°N It is currently considered to include an area in the Kangâmiut, Nuuk and Lady Franklin basins, offshore
West Greenland between 63°N and 67°N (also known as Nuuk West – see Figure 5) in one of the
coming licence rounds. This licence area in the Davis Strait totals approx. 82,000 square kilometres,
excluding the two existing exploration blocks (Lady Franklin and Atammik).
The Government of Greenland will therefore divide the total licence area into two smaller segments,
a northern segment from 65°N to 67°N containing
the Kangâmiut and Nuuk basins and a southern
segment from 63°N to 65°N containing the Hecla,
Fylla and Maniitsoq rises.
The area is not included in the USGS 2008
estimate for West Greenland/East Canada, but is
the southern extension of the USGS assessment
unit AU-2, which has been estimated overall to
contain around 6,000m barrels of oil equivalents
(average estimate).
Parts of this area have been included in a previous
licensing round, and this is where the first
exploration activities began in the 1970s and the
first exploratory drillings were made in Greenland.
Since then, large volumes of data have been
collected, particularly 2D seismic data (0.61 line
kilometre/square kilometre) and four exploratory
drillings have been made. Together with the
seismic data, analyses of the earlier drillings have
shown that there are several large areas of
interest. Furthermore, surveys have shown the
presence of a thick clay pack which may be a
potential seal. The drillings in 2011 also revealed
the presence of an active hydrocarbon system in
the area.
Figure 5: Map of the Nuuk West licence area –
indicated by the red lines.
-
17
Similarly, seabed samples were taken around the Qulleq-1 drilling in 2012 for the purpose of
documenting the presence of an active hydrocarbon system, and it is expected that a large data
processing operation of old seismic data may provide new information about the area.
The Nuuk West area will be made available for licensing in the last part of the strategy period as large
volumes of important data will be released and re-processed over the strategy period. It is important
that those data are available when a licensing round is launched to ensure that the exploration
activities are as efficient as possible. Previous surveys have shown that the area contains several
large untested structures which will be in focus in connection with a coming licensing round.
1.2.2.4 Open door area South-West Greenland
The area offshore South-West Greenland between 60°N and 63°N and west of 42°30’W and south of
60°N has been an open door area since 2008 (see Figure 6). Since early 2009, Cairn Energy PLC has
held four exploration licences in the coastal parts of the open door area, two of which they have
requested to relinquish.
In the past five years, 2D and 3D
seismic data have been collected,
but data are still limited and mostly
concern the coastal areas where the
water depth is less than 2,000
metres. Exploration activities in this
open door area are subject to some
uncertainty, but the new data
indicate the presence of quite deep
sedimentary basins with larger
structures, similar to those existing
on the Canadian side of the
Labrador Sea where a promising
hydrocarbon system has been
shown to exist.
The open door area will be
maintained in its present form, but in
future licences will be defined based
on the grid of 10 by 30 arc minutes
which has been introduced.
The recently collected data show the
presence of fault blocks which are
interesting from an exploration
perspective, but the low data density
of the area means that the area will
remain an open door area until data
density increases.
Figure 6: Open door areas, South-West Greenland.
[Billedtekst: Existing exclusive licences Open door – South Greenland]
-
18
1.2.2.5 Open door area onshore Jameson Land
In the 1980s, Jameson Land saw some
exploration activity when ARCO started
exploring the area. In that connection, 2D
seismic data were gathered in the area,
but since then no other geophysical data
have been collected.
Even so, there have been several
geological field trips to the area and
campaigns to map the area. It is believed
that the next exploratory step will be
collection of 3D seismic data or a drilling.
The area has been an open door area
since 2002, and it will remain so
throughout this five-year period (see
Figure 7).
There are several mineral companies in
the area which hold a licence to explore for
minerals, and any operator of a
hydrocarbon exploration licence would
have to carry out its activities with due
regard to the current exploration activities.
The onshore area of Jameson Land will be
made available as an open door area due
to the relatively modest data coverage.
1.2.2.6 Licence strategy 2014-2018 Summing up, the Government of Greenland will pursue the following strategy for its licence policy in
the area:
The licence areas and the order in which they will be made available have been determined with a
view to prospectivity as well as to availability of important data from surrounding areas. In several
cases, there will thus be a connection between the results from licence areas which have already
been made available, on the one hand, and the availability of improved data sets on the licence areas,
on the other hand, to ensure efficient exploration. Similarly, the licence strategy reflects the fact that
some of these areas may form part of a more long-term strategy for as yet unexplored areas in and
around Greenland with potential oil/gas prospectivity.
The following areas will be designated open door areas from and including 2014:
o Areas offshore South/South-West Greenland south of 63°N
o Onshore area of Jameson Land
Licensing round for onshore areas of Disco-Nuussuaq in 2016
Figure 7: Open door area onshore Jameson Land shown as red
cross-hatched area.
-
19
Licensing round for offshore areas in Baffin Bay north of 71°N in 2016/2017, subject to the
result of anticipated drillings
Licensing round for offshore areas in the Davis Strait west of Nuuk (63°N-67°N) in 2018
It is recommended to maintain the multi-pronged approach to oil/gas exploration activities with
exploration activities being carried out in a number of Greenland's geological provinces. This is
recommended in order to increase the understanding of the geology of the areas but also due to
differences in climate, ice conditions and the resulting differences in what will be possible from an
operational perspective. These factors are duly reflected in the proposed strategy.
The following sections provide a summary of the environmental and physical conditions prevailing in
the areas. Then follows a brief description of the proposed licence terms and licensing terms and
conditions.
1.3 Environmental conditions in the proposed areas In co-operation with the Greenland Institute of Natural Resources (GINR), DCE prepares strategic
environmental impact assessments (SEIAs) which form part of the data on which the political decision
to make a sea area available for oil exploration is based. Strategic environmental impact assessments
describe the biological and physical background condition of the relevant area and estimate the impact
of oil activities on nature and environment and how to best limit such impact.
At the same time, strategic environmental impact assessments help identify the need to increase and
improve the knowledge base about the areas and their ecological contexts.
1.3.1 Baffin Bay The environment of the Baffin Bay licence area is described in the strategic environmental impact
assessment report published in an updated edition in 2012 (www2.dmu.dk/Pub/SR9.pdf). The area is
also covered by an environmental oil spill sensitivity atlas for the coastal zone
(www2.dmu.dk/Pub/FR828.pdf) and an additional atlas covering the northern part is currently being
prepared.
The strategic environmental impact assessment report describes the marine environment as being
characterised by the presence of sea ice a large part of the year. Even so, the area is very rich in a
biological/ecological sense. This leads to concentrations of marine mammals and birds, and also
made it possible for human beings to settle permanently in the area about 1,000 years ago. Along the
shorelines of Greenland, more than 80% of the global population of the very abundant little auk is
found – estimated at more than 30 million pairs. But also the shorelines in the Upernavik area have
large populations of breeding birds (particularly the thick-billed murre) because the sea ice breaks up
early there. The birds which are found in the area include nationally and internationally important red-
listed species such as thick-billed murre, eider, black-legged kittiwake, Arctic tern and Atlantic puffin.
The marine mammals include important (nationally as well as internationally red-listed) species such
as polar bear, walrus, narwhal, Beluga whale and bowhead whale. There is a special population of
narwhals which spend their summer in the inner parts of Melville Bay, which is an important source of
income for the people living in near-by settlements.
Greenland halibut and shrimp are utilised on a commercial basis in the southern part of the licence
area, and hunting and fishing for local use are important activities along the inhabited coasts.
The inner part of Melville Bay is a designated nature reserve, primarily to protect polar bear and
narwhal. A number of the major bird cliffs in the Upernavik area have been designated bird protection
areas, and all of the sea bird colonies, including the very large and extensive little auk colonies in the
area around Thule, are generally protected against disturbance (see the Bird Protection Order). The
-
20
coastal zone atlas points outs that particularly the coastal waters are extremely sensitive to oil spills.
The Mineral Licence and Safety Authority's field rules and various guidelines identify a number of
"areas of importance to wildlife" and protection areas in connection with seismic activities. The "areas
of importance to wildlife" are several coastal areas where activities are subject to regulation in
vulnerable periods, and the seismic areas include important narwhal and walrus habitats.
In connection with the first edition of the strategic environmental impact assessment report (2009), a
number of studies were made of the environment in Baffin Bay, including a survey of benthic fauna,
fish, polar bear and narwhal, which have been incorporated into the updated edition from 2012. But
additional knowledge is needed, which will help to:
a) assess, plan and regulate activities to minimise the risk of environmental impact
b) identify the most vulnerable areas
c) establish a knowledge base for "before and after" studies of the impact of major oil
spills
Similarly, it is important to continuously track any impact of oil/gas activities, including seismics, on
narwhals in Melville Bay.
By way of example, the following additional studies are needed: surveys of predictable and localised
occurrences (hot spots) of high primary production and biodiversity, including studies of their
ecosystem, the prevalence of larvae of shrimp and crab and their drift with sea currents and
settlement on the sea floor, identification of sensitive areas for benthic fauna and flora as well as
studies of important populations of birds, marine mammals and commercial species of fish.
For oil spill response purposes, there is a need for a number of studies to be made and then shared
with the other licence areas described here. By way of example, the following studies are needed: the
potential for degradation of oil in the water column and sediments, studies of the impact of oil (toxicity)
on key species in the area, impact and degradation of residues from oil burning at sea, the potential
for bioremediation of beached oil and the likelihood of an oil spill from an offshore licence site
contaminating the fjord areas.
It is proposed to increase co-operation with Canada to determine the possible cross-border effects of
Greenlandic oil activities.
1.3.2 Offshore areas in the Davis Strait west of Nuuk The environment of the Nuuk West area is described in the preliminary strategic environmental impact
assessment report for the Davis Strait (www2.dmu.dk/Pub/SR15.pdf). The Nuuk West area is also
covered by the environmental oil spill sensitivity atlas for the coastal zone made by DCE and GINR
(www4.dmu.dk/1_viden/2_Miljoe-tilstand/3_natur/sensitivity_mapping/62_68/atlas.pdf).
The preliminary strategic environmental impact assessment report points out, among other things, that
the relatively shallow-water banks, the different water masses which meet and the presence of sea ice
during winter particularly in the northern part of the area are important factors for the biology/ecology
of the area.
The biodiversity of the free water masses is generally low, but several species are very numerous and
found in dense concentrations, and are characterised as ecosystem key species because the
populations of birds and marine mammals are entirely dependent on them. The banks on the seabed,
however, are characterised by high biodiversity.
Fish fauna is dominated by demersal species such as Greenland halibut, redfish, wolffish and other
non-commercial species. One area of importance is the primary spawning ground of Greenland halibut
-
21
from the entire Baffin Bay and the Davis Strait which is located in deep waters on the boundary
between Greenland and Canada. All Greenland halibut which are caught further north, e.g. in the
Disco Bay, are most likely from this area. Sandeels are found in dense schools at the fishing grounds
and are a key prey for fish, seabirds and baleen whales. In coastal waters capelin and lumpsucker
spawn. Capelin is an important prey for larger fish, seabirds and marine mammals. Cod is found in the
fjords, and cod and lumpsucker (the eggs) are utilised commercially. Char is also an important species
in coastal waters. Other species which are utilised on a small scale, commercially or non-
commercially, include salmon, Atlantic halibut and wolffish.
There are rich bird populations in the area – along the shorelines during the six months of summer,
particularly the species breeding in colonies such as black-legged kittiwake, thick-billed murre, Atlantic
puffin and razorbill, as well as populations of moulting divers such as harlequin ducks (listed as "near
threatened" (NT) on the Greenland Red List). During the six months of winter, there are very large
populations of seabirds along the coasts and on the banks. The area is very important as a wintering
area for birds from all over the North Atlantic region, and the most abundant species are thick-billed
murre, common eider, king eider and black-legged kittiwake. The birds are particularly sensitive to
disturbance and oil spills.
Marine mammals are an important part of the ecosystem. Among the most important and most
sensitive species are walrus, which winter in the northern part of the area, and hooded seals, which
whelp on the sea ice far off the coast west and south-west of Nuuk. The very rare harbour seal, which
is listed as "critically endangered" (CR) on the Greenland Red List, is found in some of the fjord areas.
Among the whales which are sensitive to disturbance from seismics and other activities are species
which are found during the winter (bowhead whale, beluga whale and narwhal – all listed on the
Greenland Red List, the latter two also on the international red list) and also species which are found
during the summer (baleen whales, harbour porpoise, sperm whale, northern bottlenose whale and
others).
There is widespread human use of natural resources throughout the area: Recreational fisheries and
small-scale commercial fisheries in the coastal areas, and significant commercial shrimping and
Greenland halibut fisheries in open waters.
There are no sites in the Nuuk West area or in the near-by coastal areas which have been designated
a nature protection area under international conventions. The only site which is protected under
national legislation is an area of geological interest (the island of Akilia). Along the shorelines there are
many seabird breeding colonies (see the Bird Protection Order).
In open waters, the coastal zone atlas identifies the coastal area of the banks from Maniitsoq and
further south as extremely sensitive to oil spills.
The strategic environmental impact assessment is preliminary and points out that a strategic
environmental research programme should be developed and carried out in the same way as in the
Baffin Bay and Disco West licence areas. The purpose is to strengthen the assessment, planning and
regulation of activities, to identify the most vulnerable areas and to establish a knowledge base for
"before and after" studies of the impact of major oil spills. Such studies could include: surveys of
predictable and localised occurrences (hot spots) of high primary production and biodiversity with
studies of their ecosystem, the prevalence of larvae of shrimp and crab and their drift with sea currents
and settlement on the sea floor, identification of sensitive areas for benthic fauna and flora as well as
studies of important populations of fish (commercial), birds and marine mammals. Like in other areas,
there is a need for a better understanding of the impact of seismic surveys on marine mammals.
-
22
For oil spill response purposes, there is also a need for a number of studies: the impact of oil on key
species in the area, the potential for degradation of oil in the water column, impact and degradation of
residues from oil burning and the potential for bioremediation of beached oil.
The most recent coastal zone atlas identifying areas which are particularly sensitive to oil spills is from
2000. There are therefore plans to update it with the new research.
1.3.3 Onshore area of Jameson Land
Jameson Land is described in a strategic environmental impact assessment report published in 2012.
The report points out that Jameson Land is unique in a Greenland context due to its large continuous
lowland areas. The only alpine areas are to the north, with long and wide valleys. The lowlands and
the valleys have a rich nature with relatively luxuriant vegetation in numerous fens and dwarf scrub
heath, and there are several salt marshes along the shoreline bordering Hall Bredning. Those areas
have rich flora and wildlife, the most important being muskoxen, geese and waders.
Jameson Land is home to the largest and most dense population of muskoxen in East Greenland, and
it is utilised by the inhabitants of Ittoqqortoormiit. The oxen are mostly found in the lush lowlands with
Ørsted Dal and its neighbouring valleys as some of the most important areas for the species.
Two species of geese – barnacle and pink-footed geese – are abundant in the area. They are found in
the lush wetlands, and moulting birds in particular are seen in dense concentrations around lakes,
rivers and salt marshes. They are so abundant that several areas in Jameson Land have been
designated wetlands of international importance to the two species.
Other important birds include waders which are dispersed over the lowlands and also some species
which are rare to Greenland such as Sabines gull, whimbrel and golden plover.
Several of the species mentioned are listed as endangered (red-listed) in Greenland: wolf, polar bear,
gyr falcon, golden plover, whimbrel, Sabines gull and Arctic tern.
The flora is rich with several endemic species (i.e. species only found here) and species which, as far
as Greenland is concerned, are restricted to Jameson Land.
The large population of geese has meant that two areas of Jameson Land have been internationally
designated as "wetlands of international importance" (Ramsar sites).
Muskoxen and geese in particular are sensitive to disturbance from the many activities entailed in oil
exploration. In connection with the previous oil activities in the area, areas were designated as "areas
of importance to wildlife" (see the Mineral Licence and Safety Authority's field rules) where disturbing
activities are subject to regulation in order to prevent impact on geese and muskoxen.
The strategic environmental impact assessment report concludes that general knowledge about the
environment in Jameson Land is good. However, it proposes that a number of surveys, particularly of
the muskoxen population, should be carried out before any activities are commenced.
Finally, the report points out that oil exploration in Jameson Land will lead to increased marine traffic in
the area and thus a potentially increased risk of marine oil spills and disturbance of marine wildlife.
The marine environment around Jameson Land is described in the strategic environmental impact
assessment report on the Greenland Sea (www2.dmu.dk/Pub/SR22.pdf), which also points out the
need for more knowledge of the area. No environmental oil spill sensitivity atlas has been made for the
coastal zones of the area.
-
23
1.3.4 Onshore area of the Nuussuaq Peninsula The environment of this licence area is described in a preliminary strategic environmental impact
assessment report (www2.dmu.dk/Pub/FR652.pdf) from 2008. It only concerns the Nuussuaq
Peninsula, and no similar report for Disco Island exists.
The report for the Nuussuaq Peninsula describes the region as dominated by alpine areas. The
lowlands are limited to narrow coastal fringes and the large central valley in the hinterland. Most
wildlife and continuous areas of vegetation are found in the lowlands, and a large part of the oil
exploration activities are expected to take place there.
Disco is also characterised by alpine areas, but with significantly larger expanses of lowlands, in part
along the coasts and in part in several large valley systems. The vegetation in these lowlands is very
luxuriant and includes a number of special plant communities, for instance around the many
homoeothermic springs.
Onshore, the most important and most vulnerable wildlife is caribou and geese. Caribou is found only
on the Nuussuaq Peninsula, and they are a small isolated population which is sensitive to disturbance
from seismic surveys and other activities. There are several species of geese, with the Greenland
white-fronted goose as the most important because its breeding site is limited to central West
Greenland – it is endemic to Greenland. The population is on the decline, and the Greenland white-
fronted goose is listed as "endangered" (EN) on the Greenland Red List.
Along the coasts there are sensitive populations of seabirds, both moulting divers and breeding
colonies, particularly of fulmar, cormorant and kittiwake.
Three areas – all on Disco – have been internationally designated as "wetlands of international
importance" (Ramsar sites). In addition, the Mineral Licence and Safety Authority's field rules
designate parts of the central valley on Nuussuaq and three areas on Disco as "areas important to
wildlife", where activities are subject to regulation to prevent disturbance to vulnerable goose
populations. On Disco, two coastal areas with vulnerable populations of moulting ducks have also
been designated as such areas.
The many homoeothermic springs are protected under national legislation, and some minor sites on
Disco are protected under national conservation legislation.
Onshore oil activities will lead to increased marine traffic in the area and thus a potentially increased
risk of marine oil spills and disturbance of marine wildlife. These issues are described in an updated
strategic environmental impact assessment report on oil exploration in the sea off Disco and
Nuussuaq from 2013 and in an updated coastal zone atlas from 2012.
The strategic environmental impact assessment report on Nuussuaq points out that a number of
studies are needed to avoid or minimise disturbance to key species and for the purpose of deciding
the lay-out of pipelines in case production is commenced: counting and surveys of moulting Greenland
white-fronted geese, surveys of the caribou population, including surveys of calving grounds and
migration routes, as well as general surveys of sensitive flora and fauna, including field and satellite
surveys of vegetation types.
There is also a need for a strategic environmental impact assessment of oil activities on Disco, among
other things to identify the need for future environmental studies.
1.3.5 Areas offshore South Greenland and South-West Greenland The environment in the South-West Greenland licence area is described in the strategic environmental
impact assessment reports on South Greenland and the Davis Strait published in 2012. The area is
-
24
also covered by the environmental oil spill sensitivity atlas (coastal zone atlas) published by DCE and
GINR in 2004.
The strategic environmental impact assessment reports point out that a major part of the assessment
area consists of deep water (> 2,000 m, maximum depth 3,700 m), the continental shelf in this part of
Greenland being relatively narrow. The coastal topography is complex, with many archipelagos and
fjords, and most shorelines are rocky with a relatively large tidal range.
As in other waters around Greenland, primary production peaks in spring when the water column
stabilises, and declines during summer as nutrients disappear. The highest productivity occurs in
areas where nutrient-rich water is brought from the bottom up to the surface, for instance along the
shelf break. Sea ice in the form of drift ice is brought to this area with the sea currents from East
Greenland.
The biodiversity of the free water masses is probably low and dominated by a few, but abundant
species. The copepod Calanus finmarchicus is an important food source for small pelagic fish (e.g.
capelin and sandeel) and larvae of larger demersal fish (e.g. cod). The deep waters of the Labrador
Sea are one of the most important overwintering areas for the copepod, and copepods originating
from this area are likely to support commercial fisheries in Greenland and Canada.
Not much is known about benthic flora and fauna (algae at less than 50 m). But, like further north in
the Davis Strait, a rich and varied fauna is expected to exist on the banks and a rich flora consisting of
seaweed is expected to exist along the shorelines.
Most species of fish and shellfish in the assessment area are demersal. Northern shrimp and snow
crab are common. Greenland halibut is less abundant than further north in Greenland, while the
largest populations of Atlantic cod in open waters in West Greenland are found in the assessment
area. Redfish is abundant in deep waters. The coastal zone is particularly important for spawning
capelin and lumpsucker. The ecologically most important species are pelagic schooling fish
(particularly capelin and sandeel), which are key prey for many larger fish, marine mammals and
seabirds.
The populations of breeding seabirds in the assessment area are relatively small, but highly diverse.
The most important colony is Ydre Kitsissut, which has the largest population in Greenland of the
common murre (listed as "endangered" (EN) on the Greenland Red List) and the largest population in
the assessment area of thick-billed murre and razorbill. The shorelines of the area are important for
moulting birds, particularly Harlequin ducks (red-listed as "near threatened" (NT) on the Greenland
Red List) along the outer shores. In late summer and in winter, the area is very important for common
eider and thick-billed murre. However, very little data exist on the prevalence of seabirds in the areas
outside the continental shelf.
With regard to seals, the assessment area is particularly important for the harbour seal (listed as
"critically endangered" (CR) on the Greenland Red List). In addition, an important whelping area of
harp seal was recently discovered in the drift ice off the South Greenland coast, and very large
numbers of hooded seals migrate through the area between their breeding and moulting sites. There
are important foraging areas for baleen whales, particularly humpback, minke, sei and fin whale, in the
area and sperm whale, harbour porpoise, bottle-nosed whale and other toothed whales are also in
common occurrence.
Commercial fisheries in the assessment area are relatively small-scale and have been declining in
recent years. The most important species are northern shrimp, snow crab, lumpsucker and Atlantic
-
25
cod. The most important fishing grounds are Julianehåb Bugt and the continental shelf break. Cod
fisheries are expected to increase in the coming years if a local spawning stock is re-established.
Commercial hunting and recreational fisheries and hunting take place near all villages and
settlements. Around a quarter of the landings of minke whale in Greenland are taken in the
assessment area, and harbour porpoise is also important for local fishers.
In the assessment area there are two areas which have been designated as "wetlands of international
importance" (Ramsar sites), more specifically the archipelago of Ydre Kitssiut and the Ikkattoq Fjord
north of Paamiut Isblink. The Ikka Bay at the Arsuk Fjord is protected under national legislation due to
a geologically unique occurrence. According to the coastal zone atlas, the banks, including the
continental shelf break, are identified as being extremely sensitive to oil spills.
The reef-growing cold water coral Lophelia pertusa was recently discovered in deep waters in the
licence area. Such reefs are on the OSPAR Convention list of particularly sensitive habitats. As a
result, special care must be taken to identify such reefs in connection with the background studies of
the environment to be conducted by oil companies when they apply for drilling licences.
The strategic environmental impact assessment report on South Greenland concludes that a strategic
environmental research programme with supplementary studies should be initiated, like in the Baffin
Bay and Disco West licence areas. The purpose is to strengthen the assessment, planning and
regulation of activities, to identify the most vulnerable areas and to establish a knowledge base for
"before and after" studies of the impact of major oil spills. Like in other areas, there is a need for a
better understanding of the impact of seismic surveys on marine mammals.
For oil spill response purposes, there is also a need for a number of studies to be made. Due to the
deep waters prevailing in a major part of the licence area, it is important to analyse a number of
factors, including the potential for degradation of oil in the water column and sediments, as the
experiences drawn from the Deepwater Horizon spill in the Gulf of Mexico in 2010 show that a large
part of the oil remained dispersed in the water. Other relevant studies would be studies of the impact
of oil (toxicity) on key species in the area, impact and degradation of residues from oil burning at sea,
the potential for bioremediation of beached oil and the likelihood of an oil spill from an offshore licence
area contaminating the fjord areas (relevant in connection with the Ikaite columns and the numerous
Norse ruins).
1.4 Physical conditions in the proposed areas The climatic changes as we witness them today with warming and melting of sea ice around
Greenland and the Arctic Ocean, melting of the Greenland ice sheet and thawing of permafrost are all
factors which are anticipated to affect the area of mineral resources.
Climate change will probably make future exploration activities easier, both at land and at sea. Higher
temperatures and thus longer field seasons, shorter winters, a longer season with open waters and a
decrease in ice extent and icebergs are all factors which will greatly increase the possibilities of
companies initiating activities to explore for mineral resources in Greenland.
In co-operation with the National Space Institute (DTU Space) and the Danish Meteorological Institute,
the Government of Greenland has carried out studies of ice conditions in Baffin Bay and North-East
Greenland. A study has also been made of the development in ice conditions in the Arctic Ocean and
its effects on Baffin Bay and North-East Greenland.
The most important physical environmental problem in relation to oil exploration in Greenland is sea
ice and icebergs. The prevalence of sea ice affects how and in which periods oil exploration activities
-
26
can be carried out at the current state of the art, and in certain areas drifting icebergs constitute an
operational challenge. When exploring for oil/gas along the eastern coast, it is important to look at the
impact on ice conditions in the Arctic Ocean, as large volumes of sea ice float from the Arctic Ocean
down along the eastern coast.
As will be seen from the figure below, the past decade has seen a significant decrease in Arctic sea ice extent.
Figure 8: Average monthly Arctic sea ice extent, September 1979-2013.
Figure 9a: Percentage age distribution of sea ice, 1983-2013, the University of Colorado, Boulder.
http://www.google.gl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=p_2A1TgiAREfGM&tbnid=qHAjl0v
-
27
Icebergs are everywhere in the waters around Greenland and originate from a large number of glaciers along the shorelines. The largest icebergs are calved from glaciers at Ittoqqortoormiit on the eastern coast and in the Disco area on the western coast and also in the area north of the bay.
Figure 9b: Sea currents in Greenlandic waters. Figure 10: General drift pattern of icebergs.
In the strategy period, additional studies will be made of ice conditions and the physical environment in
general. The studies will be conducted by government authorities as well as private oil companies.
The findings of the studies will form part of the basis on which the potential drillings which are
expected to be carried out after the geological and geophysical studies proposed for the next ten
years are planned.
1.4.1 Baffin Bay The major part of the area is in the high Arctic region (average temperature in July is below 5°C). The
warm East Greenland current does not reach the area. The northern part of the area is dominated by
the cold southward flow of water and ice from the Arctic Ocean. The cold water inflow from the
northern Arctic Ocean is at its highest in the period from May to July, while the inflow of warmer water
from the Atlantic Ocean to the south is strongest during autumn/winter. The warmer water from the
south flows along the western coast of Greenland, but the deeper waters further west are colder. As a
result of weather phenomena from the North American continent as well as from the Greenland ice
sheet, there are often very strong winds in the entire West Greenland waters from Cape Farewell in
the south to Qaanaaq in the north.
The area is dominated by two types of sea ice: Drift ice and fast ice. Fast ice is anchored to the coast
and spreads to the west by as much as about 100 kilometres from the coast in the month of March.
Fast ice is first-year ice. Drift ice is primarily found in the western part of the area and is mainly first-
year ice, but its multi-year ice content may vary from 10% to 30%. In the month of January, 95% of the
area is typically ice-covered. But the ice is flexible and mobile, and in some places there are open
waters. The ice in the area is thicker than in the southern part of the West Greenland waters. When
the ice breaks, its thickness is usually 120-150 cm – with a thickness of up to 130-180 cm in Melville
Bay.
-
28
The coastal current brings icebergs from glaciers from as far south as the Disco Bay into the area.
Moreover, icebergs drift into the area with the current from the Arctic Ocean. An estimated 25,000-
30,000 icebergs flow through the area every year.
1.4.2 Davis Strait The major part of the area is in the sub-Arctic region (average temperature in July is above 5°C). The
cold water inflow from the northern Arctic Ocean is at its highest in the period from May to July,
whereas the inflow of warmer water from the Atlantic Ocean to the south is strongest during
autumn/winter. The warmer water from the south flows along the western coast of Greenland, but the
deeper waters further west are colder. As a result of weather phenomena from the North American
continent as well as from the Greenland ice sheet, there are often very strong winds in the entire West
Greenland waters from Cape Farewell in the south to Qaanaaq in the north.
The area is dominated by two types of sea ice: 'Storis' and West ice. West ice is mainly first-year ice
formed in Baffin Bay and the northern parts of the Davis Strait. West ice dominates the eastern part of
the area. Storis is mainly first-year ice with a multi-year ice content of 10-30% as well as a few
icebergs encapsulated in ice floes. Storis dominates the central and western parts of the area. Ice
density in the area varies a great deal. In the month of March, an average of 5-10% of the sea is ice-
covered in the south-eastern part of the area, while up to 80% of the sea in the north-western part of
the area is ice-covered. The ice in the Davis Strait is not as thick as in Baffin Bay and will usually not
be thicker than 120 cm when the ice breaks.
The icebergs in the area generally have a smaller volume than icebergs north of 66°N. A major part of
the icebergs in the area originate from East Greenland where they follow the current around Cape
Farewell, floating northwards along the western coast of Greenland to as far north as Maniitsoq.
1.4.3 South-West Greenland The area is in the sub-Arctic region (average temperature in July is above 10°C). As a result of
weather phenomena from the North American continent as well as from the Greenland ice sheet, there
are often very strong winds in the entire West Greenland waters from Cape Farewell in the south to
Qaanaaq in the north. Due to the instability of the current flow in the area, the warmer water flowing
northwards along the coast disseminates farther into the deep waters than is the case along the
western coast of Greenland.
At Cape Farewell, the front between the Polar water and the Atlantic water is relatively sharp,
particularly in September and October. The front is more diffuse further north.
The area is usually not ice-covered, but in late winter parts of the area are sometimes covered by first-
year ice. The area is dominated by multi-year ice in the form of 'Storis', which originates from the
eastern coast of Greenland. Multi-year ice is normally found in the area all year round. The multi-year
ice reaches the area in December and January, depending on the current flows along the eastern
coast of Greenland, peaking in early summer. The multi-year ice reaches the area in December and
January, depending on the current flows along the eastern coast of Greenland, peaking in early
summer.
The icebergs in the area originate from East Greenland where they follow the current around Cape
Farewell. Due to the instability of the current flow in the area, some of the icebergs drift further west
and south-west instead of following the northward current along the western coast of Greenland.
1.4.4 Jameson Land Jameson Land is in the Arctic climate region with temperatures during summer (mid-June - August) of
0-10°C. Jameson Land covers an area of approx. 168 x 96 kilometres bordering the national park to
-
29
the north. The weather is characterised by long periods of stable weather and low precipitation.
Topographically, the area is characterised by the higher areas being in the south-eastern part with
Rødstak (1,285 m) as the highest peak. The south-western part of the area is dominated by salt
marshes. The salt marshes stretch northward along the western coast of the area until they are
gradually replaced by rocks and alpine areas. At the northern shorelines the salt marshes also
dominate. Inshore, salt marshes are replaced by marshes and tundra with extensive vegetation and
numerous lakes. The sea and the fjords of the area are ice-covered during winter, and a few (like
Carlsberg Fjord) are usually also ice-covered during summer. Since Jameson Land is well north of the
Arctic Circle, midnight sun and winter darkness are dominant features of the annual cycle.
1.4.5 Nuussuaq Peninsula The Nuussuaq Peninsula is in the Arctic climate region with an average temperature below 5°C in the
warmest month of the year (July). Situated north-east of Disco Island, the Nuussuaq Peninsula is
approx. 175 kilometres long and 50 kilometres wide. The waters surrounding the peninsula are usually
ice-covered in the period from December to May. The area is dominated by alpine areas reaching as
high as 2,144 m. Extensive glaciers cover the highest parts of the area, and meltwater flows from the
glaciers to the rivers which lead some of the meltwater down to larger lakes in the central part of the
area, where the Aaffarsuaq valley is located. The valleys of the area are characterised by pingos (mud
volcanoes). The coasts are primarily steep rocky stretches, and the only salt marsh is found at the
mouth of the Aaffarsuaq valley.
1.5 Emergency response Under the Mineral Resources Act, anyone engaging in mineral resources activities is responsible for
planning an adequate emergency response to prevent and abate pollution. Before any activities are
commenced, the Government of Greenland must have approved the emergency response plan for the
activity in question. The mineral resources authority of the Government of Greenland will evaluate on
an ongoing basis if the emergency response plan is adequate and will supervise the response
capability as well. In addition, all activities are required under the Mineral Resources Act to be
consistent with the best international standards and practice, and to incorporate the best anti-pollution
measures available. This means that licence holders may be required in the relevant licences and
approvals to operate in accordance with international regulations, conventions and standards which do
not normally apply in Greenland or have not been officially adopted by Greenland.
Licence holders with a licence to explore for and extract mineral resources are responsible at all times
for operating their activities according to state-of-the-art safety standards. The emergency response
must be co-ordinated and suitable for co-operation with government emergency response resources.
Licence holders and their subcontractors, if any, are responsible at all times for maintaining an
efficient emergency capability to respond to hazards and accidents which may cause injury or loss of
human life, pollution or substantial property damage.
The licence holder is responsible for planning an adequate emergency response to prevent and
combat pollution caused by a mineral resources activity.
In future, it will still be a mandatory requirement for licence holders to ensure that their emergency
response plans for mineral resources activities are consistent with the best international standards and
reflect internationally recognised good practice in similar conditions.
1.5.1 Oil spill response Responsibility for the marine environment and thus the oil spill response in Greenland is generally
apportioned as follows:
-
30
Inside the 3 nautical mile zone the Self-Government of Greenland has taken back
responsibility for the marine environment, with the Ministry of Housing, Environment and
Nature as the competent authority. In practice, the operational emergency response lies with
the local municipal emergency response units, which have equipment stockpiled in most of the
larger towns in Greenland.
Outside the 3 nautical mile zone Denmark is responsible for the marine environment, except
as regards mineral resources activities. In practice, the operational emergency response
lies with Arctic Command.
As far as mineral resources activities are concerned, no distinction is made as to whether an
emergency takes place inside or outside the 3 nautical mile zone as the Self-Government of
Greenland has taken back responsibility for the marine environment in connection with mineral
resources activities. This is reflected by the fact that licence holders which are engaged in
mineral resources activities are required to prepare an oil spill response plan and set up an
adequate oil spill response, while also providing an adequate financial guarantee to cover
clean-up activities in the event of an oil spill where the licence holder is not capable of carrying
out such activities