It was the biggest oil exploration campaign ever in the Arctic. It cost over a billion dollars. And Cairn has absolutely nothing to show for it.
Today, at the end of the drilling season, Cairn has announced that it made no commercial oil discoveries beneath the icy Arctic waters this year.
Cairn has spent a fortune hiring huge rigs to work in some of the most inhospitable waters on the planet, and all it has managed to do is drill a few dry holes. After analysing samples from two wells in the Atammik Block, the wildcat British firm has found no commercially extractable oil at all. The wells have been blocked up, abandoned and the drilling programme terminated.
However Cairn tries to spin this, the company's Arctic misadventures have cost it dearly. As well as the astronomical costs of its drilling operations, Cairn's share prices fell 5.6 per cent after the announcement; they're now down 38 per cent this year.
The City has responded with such dismay because Cairn’s announcement blows much of the rationale for Arctic oil drilling clean out of the water. It has spent a fortune drilling, risking an ecological disaster in the process, but has absolutely nothing to show for it.
Whilst Cairn’s boss, Simon Thomson, clings to his delusions that not finding oil is encouraging, the small print in the announcement suggests a different story - that this year’s dismal failure has put Cairn’s entire Arctic project in doubt.
Oil analyst Richard Rose certainly thinks so: "Effectively these are write-offs," he says. "That's the end of the programme, rigs are going to disappear, and we won't see any drilling there next year."
Cairn may do some 3D surveys but there will be no further exploratory drilling off Greenland for the foreseeable future. As one Tweet put it: "#Cairn preparing to announce new strategy: become a non-profit charity dedicated to studying the geology of Greenland".
The company is now actively entering into discussions about “farm outs” of parts of its acreage to other oil companies, in what is tantamount to an acknowledgement that the costs of operating there are so astronomic that it needs partner companies to spread the risk. The days of Greenland being Cairn’s “A, B and C strategy" seem a million miles away.
Despite this warning about the financial risks of Arctic drilling to the oil companies involved, the madness looks set to carry on in 2012. As the Bureau of Minerals and Petroleum begins negotiations with oil companies interested in drilling off the Northeast cost of Greenland, Cairn’s travails should send a clear warning that the incredible technical, economic and environmental risks of operating in the Arctic simply aren't worth it.
Meanwhile, Shell plans to start drilling in the Beaufort and Chukchi Seas off Alaska next year, Gazprom in the Pechora Sea north of Siberia, while Shell, ExxonMobil, Chevron and Statoil all hold licenses to potentially exploit off Greenland.
We should be using less oil, not sucking the last drops of it out from ever remoter, riskier and more fragile environments. And, while we get there, we need to do everything we can to protect the last great natural frontier from the companies and governments who want to carve it up and grab its resources.