Cairn takes several stabs at Greenland deepwater exploration - none of them have struck oil, yet

By Phaedra Friend Troy

In its oil and gas drilling campaign offshore Greenland, Cairn Energy (LON:CNE) has completed the first exploration well, and it is non-commercial. 

Cairn is currently employing two offshore drilling rigs for an exploration campaign in the Arctic waters offshore Greenland. The drilling campaign is limited by the weather window in the area, and much suspense hangs on the success of the wells in the potentially new province. 

Located 300 kilometers offshore Nuuk on the Lady Franklin Block in the South Ungavva area in waters measuring 1,002 meters deep, the LF7-1 exploration well was drilled to its target depth, but no commercial hydrocarbons were encountered. 

The Ocean Rig Corcovado transected a thick Upper Cretaceous section with cemented sandstones, but the anticipated stratigraphically deeper reservoir remained elusive. The rig is currently working to plug and abandon the LF7-1 well. 

“Although no reservoir has been found in the LF7-1 well, the first in the basin, we are encouraged by further indications of pre-Tertiary oil-prone source rocks across our Greenland acreage,” said Simon Thomson, chief executive of Cairn Energy. “The exploration challenge remains to find the reservoir sands. We continue to be optimistic about the remainder of our 2011 four-well, multi-basin exploration program offshore Greenland.” 

Once abandonment operations are complete, the Ocean Rig Corcovado will move to the Eqqua Block in the West Disko area to drill the Gamma prospect in 1,520 meters of water. 

Arctic Weather Window Opens 

On the Atammik Block, in waters measuring 909 meters deep about 200 kilometers offshore Nuuk, the AT7-1 exploration well has been temporarily suspended above the target objectives. The Leiv Eriksson rig suspended the exploration well, which will be re-entered and drilled to its total depth at a later date. 

Cairn moved the Leiv Eriksson 750 kilometers north to the West Disko area to drill the Delta-1 exploration well when a weather window opened for the effort. Located on the Napariaq Block, the Delta-1 well was spud in waters measuring 293 meters deep about 100 kilometers off the coast of Greenland and about 110 kilometers northeast of the Alpha-1S1 well drilled by Cairn in the Sigguk Block in 2010. 

The cost of the four-well drilling campaign is estimated at $600 million, and Cairn has dropped on the London Stock Exchange on the news of the dry well.

Arctic Promise

Widely considered a new oil and gas province, Greenland has captured the attention of oil and gas companies, as well as investors.

Cairn holds interest in eight blocks offshore Greenland, and this is the second summer in which Cairn has drilled here. In the summer of 2010, Cairn drilled three wells using the Stena Forth and the Stena Don rigs.

Two of those wells, T4-1 and T8-1, encountered noncommercial hydrocarbons and were plugged and abandoned. The third exploration well, Alpha-1S1, was suspended because the drilling season ended, and the well allows a possible re-entry to sidetrack or deepen it.

Prior to Cairn's activity, only six wells had ever been drilled offshore Greenland -- five in the 1970s and one in 2000.

Offshore Greenland is considered to be one of the world’s largest yet undiscovered oil and gas provinces. A recent study of the Arctic Shelf concluded that there is potential to discover some 17 billion barrels of oil equivalent in the West Greenland-East Canada Basin, 31 billion barrels of oil equivalent in East Greenland and 3.3 billion barrels of oil equivalent in Northern Greenland.

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