To succeed in the emergent High North, companies need to find original solutions and set examples for others, not only technically but also organizationally.
One demonstration of the inventiveness needed was the fresh approach to collaboration taken in Greenland last year. Four major companies were developing plans for offshore exploration in the same area: Maersk Oil, Cairn Energy, ConocoPhillips, and Shell. But rather than conducting separate social baseline studies they took an unusual approach – they came together to do a joint study. The tactic paid off, as the Golder Associates-led effort proved a success and enabled active engagement from local communities.
Most people in Greenland see oil and gas exploration as a lucrative opportunity, and there is a broad political consensus about pursuing natural resource extraction. The people who live there do not want to live in a museum, but wish to benefit from the island's vast resources while being accountable to the highest of standards. Discovering unintended consequences, such as overburdening of local labor and infrastructure, is vital for upholding these standards.
By cooperating on the recent social baseline study, the operators were able to coordinate their activities to minimize such negative impact on local communities. The proposed drilling was scheduled to take place between 2014 and 2017. While not yet finalized, the plans can now be coordinated so that operators drill at different times. A possible scenario is for two of them to drill in 2015 and the others in 2017. This can maximize the potential for using the Greenlandic workforce while reducing strain on infrastructure – feats that would be difficult to achieve with solo approaches.
Because sparsely populated communities only had to deal with one research team, not four, cooperation also prevented stakeholder fatigue. If all companies operating in the Arctic were to conduct interviews separately, locals would spend most of their day talking to researchers. This is in no one's interest. A cooperative approach fosters local engagement instead of disengagement.
The correct understanding of specific local conditions cannot be overestimated as a reason for why exploration efforts succeed. In Greenland, this means accepting that there is no such thing as "one Arctic." Greenlandic concerns are specific to Greenland and must be treated accordingly. Operators with experience in Russia or Canada may find that their previous knowledge cannot be seamlessly transferred. Such knowledge gaps are best discovered by actively engaging with locals.
This local engagement is not only relevant in remote locations like Greenland, but also closer to home, as shale gas debates in North America and Europe have shown with full clarity. However, as Golder has experienced, it is of particular importance when operating in some of the toughest territories in the world such as in the Arctic, along the Mekong River, or in inland Australia.
When considering territories with tough climates, it does not get much tougher than Arctic Greenland. Across Baffin Bay from Canada's northernmost territory, Nunavut, the Qaasuitsup municipality covers all of western Greenland and is larger than France; but has a population of less than 20,000. It is here – just north of the town of Upernavik, the northern known limit of Viking exploration – that Maersk Oil, Cairn Energy, ConocoPhillips, and Shell are planning their new projects. With most towns on the frosty island situated in the south, local communities in the north are truly local.
In Qaasuitsup, a particular concern is that the traditional and the formal economy impact on each other, because residents have to divide their time between the two. In addition to fishing, Greenlanders hunt sea mammals, land mammals, and birds. However, since 2007, the number of hunting licences has decreased, as the economy slowly shifts toward larger hubs. The unemployment rate, at 9.4%, is higher than in the UK but lower than in France.
With this backdrop, the social baseline study found potential generational and geographical disputes over the speed and nature of development. Employment opportunities for local residents was highlighted as important, but preserving the fishing and hunting industries was also emphasized. The study found the two targets to be somewhat conflicting, as locals could lose their fishing and hunting licences if their formal employment became too extensive. Additionally, it found that environmental risks, or even just perceived risks, could change harvesting activity. This could in turn have far reaching effects on culture, diet, and food security.
The cooperative social baseline study in Greenland was a pioneering project for exploration drilling. By sharing insights and supporting innovation, companies can better their standings and expand their operations into new territories in a sustainable manner. The High North is becoming a central arena for future oil and gas extraction, and understanding the Arctic will hence be essential for the industry.
It can sometimes seem convenient for international companies to take the approach that "it would be easier to just do it our way" when surveying new territories. However, Golder has worked on engaging Arctic communities for decades and understands the benefits of drawing on local knowledge. Bringing together the skillsets of different companies is another key step for succeeding in exploring such remote locations. As the Arctic opens up for further resource extraction, the lessons from Greenland are worth keeping in mind.
Hans Christian Krarup
Associate and Danish Country Director
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