Sorry, Wrong Hydrocarbon

Investors appear to prefer oil as opposed to gas.  At least that appears to be the case in respect of the announcement by Cairn Energy Plc.

The company’s shares sold off on Tuesday after it reported that it had found natural gas, rather than crude oil, after its first well off Greenland.

Cairn said that an exploration well encountered gas in thin sands in the Baffin Bay basin. The find is “indicative of an active hydrocarbon system” and the well hasn’t yet reached target depth, it said.

“The sands we’re talking about aren’t thick enough to be commercial,” Deputy Chief Executive Officer Mike Watts said on a conference call. “But it can be associated with oil. We just need further work and further evaluation.”

Cairn is spending $400 million this year on drilling the four wells off Greenland. The group is operating two rigs in the Baffin Bay Basin, off the west coast of Greenland about 400km north of the Arctic Circle.

The territory’s waters may hold 50 billion barrels of crude and gas, the U.S. Geological Survey estimates, enough to meet Europe’s energy demand for almost two years.

Reuters reports that Britain’s Times newspaper said on Wednesday that 12 companies, were bidding to develop offshore exploration blocks off Greenland's coast. Bidders are thought to include BP, Royal Dutch Shell and Statoil.

Jorn Skon Neilsen, deputy head of Greenland's Bureau of Minerals and Petroleum, told The Times a decision will be announced soon, but did not reveal which companies had applied.

Exxon Mobil Corp. and Chevron Corp. presently hold rights in Greenland, which is part of Danish territory.