Offshore oil exploration and impact assessment in Greenland

Anne Merrild Hansen

Houses in Kullorsuaq.

Houses in Kullorsuaq.

 

According to the United States Geological Survey, the Greenland basin is estimated to contain 17 billion barrels of oil and potentially138 billion cubic feet of natural gas (Bird et al. 2008). Other, more moderate, models predict that Greenland contains “substantial reserves” (see eg. Cavallo 2002, Geuns 2012). Oil development is therefore high on the agenda in Greeland. It is being pursued both as the means to grow the economy and as a path to increased economic and political independence from Denmark (Østhagen 2012).

Oil projects are expected to produce benefits for Greenlanders, but these benefits cannot be achieved without careful planning and project management. To ensure that negative impacts are mitigated and that positive outcomes are achieved, Impact Assessments (IA) have been implemented to promote sustainable development in the sector. Additional Impact Benefit Agreements (IBA) have to be negotiated between the affected communities, the government, and oil companies to ensure that social investments are made to secure long-term benefits for local communities.

Oil Development in Greenland

Naalakkersuisut – the Government of Greenland – has offered up offshore blocks in Greenland for oil exploration during five licensing rounds between 2002 and 2013. Twenty-three offshore exploration licenses have been granted to companies such as Husky, Shell, ENI and Statoil. Site surveys have been conducted, seismic testing undertaken, and geological features mapped (Nunaoil 2015). Fourteen exploration wells have been drilled in Greenland since the 1970s, but no commercial oil or gas deposits have yet been discovered (Nunaoil 2015). Expectations are still high, however, for the future of oil development in Greenland (Kay & Thorup 2014, Olsen & Hansen 2014).

Direct and indirect revenue from oil exploration activities and related services are already contributing to local and national economies in Greenland (The Committee for Greenlandic Mineral Resources to the Benefit of Society 2014; Angaasaqarnermut Siunnersuisoqatigiit 2014). But even though the oil is considered a potential pathway to increased independence and a more sound economy, individuals and organisations in Greenland express concerns regarding the potential undesired effects of oil activities. Mitigation of potential negative impacts and enhancement of potential benefits are therefore at the core of project management in Greenland, while Naalakkersuisut is trying to balance the need for development and environmental protection. Impact assessments are one tool being used to ensure environmental and social concerns are taken into consideration when important decisions are made in relation to Greenland’s oil and gas sector.

What Is an Impact Assessment?

Impact assessments (IA) are a globally recognized tool to promote sustainable development, and are a process used for identifying future consequences of a current or proposed action (IAIA 2015). The impact is the difference between what would happen with the action and what would happen if the action does not take place. The concept of the environment in IA evolved from an initial focus on the biophysical components of the land to a wider definition, including the physical-chemical, biological, visual, cultural, and socio-economic components of the total environment.

The oldest, most well established type of IA is the environmental impact assessment (EIA). EIAs were first introduced in developing countries during the 1960s, and remain a key requirement in most countries. Some EIA systems focus on the analysis of impacts on the biophysical environment, while others also include assessments of potential social and economic effects of development proposals.

The need to apply IA to broader levels of decision making – such as policies, legislation, strategic plans, and programs – led to the development of strategic environmental assessments in Europe (SEA) (Tetlow & Hanousch 2012). Following a 2001 directive of the European Union, most European countries implemented SEA requirements in national legislation. Other types of IA focus on specific type of impacts like Social Impact Assessment (SIA), or Health Impact Assessment (HIA). SIA and HIA are not always embedded in a legal framework, as it is the case for EIA. However, SIAs are often required in relation to extractive projects in the Arctic region. Sometimes the different types of IA are integrated in the same “Integrated IAs” (IAIA 2015).

IA and oil development activities in Greenland

There are various potential effects that can occur as a consequence of oil development, activities. According to Koivurova & Hossain (2008) seismic testing, exploration drilling, site development and production have been demonstrated to negatively effect marine mammals by disturbing migration routes and fish stocks from increased vessel traffic and noise. The level and magnitude of the effects are dependent on the time and scale of operations, on the level of activity in the area, and on the size of the operations. According to Greenlandic law, IAs are to be prepared prior to licensing, approval of seismic and drilling exploration programs, and production, including development production and decommissioning programs.

Before making offshore blocks available for bidding, Greenland has mandated that regional SEAs are carried out prior to licensing rounds. The SEAs are undertaken according Mineral Resources Act. The Act lays down principles for the administration of activities related to extractive production, including hydrocarbon exploration. The SEAs are initiated and managed by Naalakkersuisut.

However, these SEAs are not carried out according to regulatory guidelines. The assessments do not typically include public participation during the process, but the SEA’s are subject to public hearing, made available on the Naalakkersuisut website, before final approval.

Hansen Map

Hansen Map

Stages of oil projects

Project specific IAs are then required in the development process of an oil project. When operating companies apply for approval of exploration programs, including seismic activities and site surveys, the application needs to be followed by an EIA statement documenting an assessment process according to an environmental assessment guideline. Later during the exploration phase, the operating companies are responsible for carrying out a new environmental assessment covering the impacts of the planned activities and a social IA. If further wells are drilled within the same area, then new environmental assessmentss are required, while the social IA is expected to cover all drilling activities. The social IA leads to an Impact and Benefit Agreement (IBA) with local communities before projects can gain approval to continue. The Danish Centre for Energy and Environment, together with the Greenland Institute of Natural Resources, review the assessments and advise Naalakkersuisut in relation to quality control and management of the IAs conducted by oil and gas companies. Finally, prior to approval of an operating company’s application to start production and decommissioning, a new and more extensive environmental and social impact assessments, including IBAs, are to be carried out. These need to cover the development, production, and decommissioning phases.

Challenges securing Local Benefits

Offshore oil projects are expected to create significant revenues for national economies (Østhagen 2012). At the same time, projects can have negative effects on nearby communities. Although governments and oil companies may have the best intentions to secure local benefits, this is not always the end result of oil ventures. Emphasis in social assessments is often placed on initiatives to train and educate locals and thereby prepare locals to take part in the ongoing development.

But during interviews with residents in the settlements in the Upernavik district in Northwest Greenland in May 2013 (related to the study presented in Hansen & Tejsner 2015), I found that community members expressed a clear aspiration to continue the traditional way of living, rather than being interested in taking on potential jobs in the industry.

Community members described being fishers and hunters as a way of life, rather than just as a livelihood. At the same time, participants expressed an understanding that to secure a continued existence for their communities, change was necessary. Some community representatives expressed a positive attitude towards the oil industry, which they saw as a potential facilitator of some of the needed change.

Companies cannot be licensed to engage in both fishing/hunting and extractive production due to the current licensing systems, limiting the ability of community members to participate in both. Securing a high degree of local content in oil projects in the Upernavik District and thereby securing local benefits requires not only willingness from the companies to train and hire locals, but also legislative adjustments of the hunter licensing system and motivations of the locals to change occupations.

It would be interesting to also investigate which and how other types of benefits can be secured besides incomes from jobs in the industry. It seems that it would be wise to develop a general vision for the settlements in the area, based on a partly general public and partly locally informed debate, to serve as a point of departure for planning.

Based on the situation as presented in the former sections, I suggest that if oil is discovered, there will be a need for local strategies for development, identifying and addressing the necessary initiatives and investments to achieve a sustainable local development. Social impact assessments could be the tool to secure this, but it would require a different approach from Naalakkersuisut, including broadening the scope of social assessments and the understanding of how benefits are secured. But while no commercial discovery has yet been made in Greenland, another maybe even more important question is what will happen if oil is not discovered? There is a present need for further research to serve as baseline information for strategic planning and to guide future impact assessments of the potential development in Greenland. ◉

Endnotes

This work has been supported by a Fulbright grant through the Arctic Initiative. The content does not represent an endorsement or approval by the Government of the United States or any representative agency. I thank the Fulbright Arctic Initiative for providing the opportunity to visit the Nunavut Research Institute in Iqaluit in May 2015. And I would also like to thank Mary Ellen Thomas, senior research officer at the Nunavut Research Institute in dialogue with whom the idea for this paper evolved.


 

Dr. Anne Merrild Hansen is an Associate Professor in the Department of Planning at Aalborg University in Denmark, and Professor and Director of the Arctic Oil and Gas Research Centre at the University of Greenland.

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