ExxonMobil appears set to pull out of exploration in Arctic waters off Greenland and was not among bidders in the country’s latest licensing round, with block awards likely to be issued shortly.

The country’s Bureau of Minerals & Petroleum (BMP) could make an announcement before Christmas regarding awards for 19 blocks on offer off north-east Greenland under the round, ahead of a scheduled date of 15 January 2014, Danish online publication business.dk reported.

There is likely to be keen competition for the frontier tracts, covering a total area of almost 50,000 square kilometres and estimated by the US Geological Survey to hold potential hydrocarbon resources of 31 billion barrels of oil equivalent.

Bidders believed to be in contention include heavyweights BP, Shell, Chevron and Statoil, but ExxonMobil – the world’s biggest oil company – is not among the participants in the blocks tender.

“ExxonMobil has not participated in the recent licensing round and has no exploration operations in Greenland at this time,” a company spokesman confirmed to Upstream.

The US giant has already relinquished one concession held off west Greenland and is set to hand back another to the authorities as it refocuses its efforts on exploitation of North American onshore shale resources, the report stated.

Despite the promise of high resource potential, the Greenland blocks on offer will require spending of around $500 million on seismic surveys and drilling of up to two exploration wells over the 16-year licence term, according to BMP director Jorgen Hammeken-Holm.

However, he does not expect drilling to kick off for at least another 10 years due to the need to develop new technology to tackle challenging Arctic conditions off east Greenland including extreme sub-zero temperatures, icebergs and year-round ice.

While ExxonMobil has yet to confirm its withdrawal from Greenland, the spokesman underlined the company remains strongly involved in Arctic exploration in different parts of the world including Canada and Alaska, as well as through a tie-up with Rosneft for work off Russia where it plans to drill in the Kara Sea next year.

“It is more a question of where we will prioritise funds for exploration,” he said.

Arctic exploration to date has not been without its challenges for industry players, while also provoking protests by environmental groups such as Greenpeace.

French giant Total has warned against Arctic exploration, with chief executive Christophe de Margerie claiming the environmental risks are too great and that an oil spill off Greenland would be a “disaster”, not least for an oil company’s public image.

Anglo-Dutch Shell supermajor Shell carried out an abortive drilling effort in Alaska last year that was dogged by technical issues and a rig grounding, while Norway’s Statoil is stalling on its exploration plans off the US state.

Shell intends though to reboot its exploration work off Alaska next year using Transocean semi-submersible Polar Pioneer.

UK independent Cairn Energy failed to make a discovery during an earlier extensive two-year, multi-billion dollar campaign off west Greenland in 2010 and 2011 that is believed to be one of the most costly ever carried out by an explorer.

Costs for drillers are set to be exacerbated by Greenland’s stringent safety rules, including a requirement for an extra rig to be available for drilling of a relief well in the event of a blowout as well as heightened demands for blowout preventors.

ExxonMobil is currently part of Greenland’s Kanumas group of operators – also including Statoil, BP, Chevron, Shell, Japan Oil, Gas & Metals Corporation and state-owned Nunaoil – eligible to bid for 11 of the 19 blocks on offer in a pre-licensing round, with any unawarded tracts to be transferred to the ordinary round.

http://www.upstreamonline.com/live/article1346574.ece