Friday, November 12, 2010

Greenland Prepared to Demand $2 Bil Bond from Offshore Drilling Oil Cos

News today that Greenland is going to demand that any companies wanting to participate in offshore drilling in Greenland waters pay a $2 Bil bond upfront that would be used to pay initial costs of any clean-up in the event of an accident.

Although overall this has to be considered a landmark piece of great news, in the wake of the BP Gulf disaster, there are many aspects of the situation to consider here, 

Among a number of concerns and issues:

1. The evolving relationship between Greenland and Denmark
2. This type of requirement squeezes out smaller companies
3. Will be interesting to observe how other countries follow suit 
3. This type of requirement may just divert offshore drilling to places that have the lowest upfront bond
4. Should similar bonds be required from companies involved in "fracking" for natural gas (a major issue in B.C., Quebec and elsewhere), in case of contamination of water supplies or other unforeseen event?
5. What will be the other impacts on the marketplace of this type of additional cost?
    - makes sustainable energy more feasible
    - makes tar sands more feasible
    - increased profit from conventional oil
6. How does this play out in the Arctic context? Direct impact on Canada.
7. Relationship with current trends - such as impending glut of natural gas
8. Could industry-wide bonds be a more balanced and equitable solution that would safeguard the entire planet rather than just have jurisdiction by jurisdiction regulations?

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