Greenland's government has warned a licensee after a Texas-based oil company with ties to U.S. President Donald Trump began moving drilling equipment without proper authorization, raising questions about the future of oil exploration in the autonomous Danish territory. The episode comes against the backdrop of heightened U.S. strategic interest in Greenland, which drew global attention in 2019 when Trump, during his first term, proposed purchasing the island from Denmark—a notion swiftly dismissed by both Copenhagen and Nuuk.

The licensee, London-listed 80 Mile Plc, has been preparing for an oil drilling campaign in the Jameson Land Basin. Its operational partner, U.S.-based Greenland Energy Company, has committed to funding 100% of the costs associated with up to two exploration wells designed to assess the area's hydrocarbon potential.

However, Greenlandic authorities stated that no approval had been granted at the time the equipment was moved. While an earlier approval to move drilling equipment had been issued, it has since expired and has not been renewed, though it remains under consideration.

Greenland's government announced it would issue a formal warning to the licensee, stating that "all future logistical matters must be advised and approved by the mineral resources authority – before they are carried out."

Larry Swets, Jr., who is believed to be close to President Trump, serves as chairman of the board at Greenland Energy. Over the weekend, Swets reposted on X, commenting "well said" on a post claiming that an article in The Guardian was "seemingly determined to manufacture a Trump controversy while burying the facts" about 80 Mile and Greenland Energy.

In a shareholder letter issued last week, Greenland Energy stated it "has continued advancing preparations for what we believe will be one of the most significant onshore exploration programs undertaken in Greenland in decades."

The company outlined the respective roles of the two partners: 80 Mile Plc, as licensee of the Jameson Land joint venture, continues to lead the permitting process and stakeholder engagement, while Greenland Energy "remains actively engaged in supporting technical planning, operational readiness, logistics, and overall project coordination."

"Together, our objective is to ensure that once all required approvals are received, the project is positioned to commence drilling safely, efficiently, and in accordance with Greenland's rigorous regulatory standards," Greenland Energy said.

The company also described recent engagement with regulators. "Recent high-level meetings between project leadership and Greenlandic regulatory and oversight authorities have been constructive, and we continue to be encouraged by the progress being made toward the remaining approvals required for drilling," Greenland Energy told shareholders.

Following discussions with government officials, the parties agreed that focusing the 2026–2027 winter program on a single exploration well, rather than pursuing two wells during the current field season, represents the most responsible course of action.

A History of Unsuccessful Exploration

Greenland has a long history of oil exploration dating back to the 1970s, involving major companies such as ExxonMobil, Shell, and Eni. None of these efforts resulted in a commercially significant discovery. Over the course of decades, only 25 exploration wells have been drilled in Greenland, predominantly in the Southwest basin—all unsuccessful, according to Wood Mackenzie.

If Greenland Energy's project advances to drilling, it would mark the first such operation in Greenland in many years and could signal a potential restart of oil exploration in the territory, which is roughly one-quarter the size of the continental United States.

Greenland is believed to hold substantial oil and gas resources, as well as critical minerals and rare earth elements. Resource development carries particular political weight in Greenland, where the 2009 Self-Rule Act grants the territory the right to pursue independence from Denmark, and successive governments in Nuuk have viewed revenue from mining and energy as a potential pathway to economic self-sufficiency. However, analysts caution that these resources remain extremely expensive and technically challenging to extract. The absence of energy infrastructure and processing capabilities further complicates the feasibility and economic rationale of mining rare earths and critical minerals.

In 2021, after 50 years of sporadic and unsuccessful exploration in the harsh Arctic climate, Greenland officially abandoned its pursuit of oil. At the time, the government concluded that environmental concerns outweighed the potential benefits of becoming an oil producer. That same year, Greenland's parliament also voted to ban uranium mining and exploration, reflecting a cautious approach to resource development despite the territory's long-term economic ambitions.

"Despite its hydrocarbon and critical mineral potential, Greenland is not Venezuela 2.0," Wood Mackenzie's top analysts wrote, emphasizing that the island is remote, inhospitable, underexplored, difficult to access, and very high cost.

WoodMac's Simon Flowers and Gavin Thompson noted that while major oil companies have experience operating in harsh environments, Greenland presents challenges on an entirely different level. Short summers, thick ice requiring icebreakers and specialized offshore equipment, and fewer than 100 miles of paved roads across a territory roughly 25% of the size of the continental U.S. all serve to discourage resource development. Meanwhile, retreating Arctic sea ice linked to climate change has drawn growing international attention to the region's untapped hydrocarbons and emerging shipping routes, even as Greenland itself has moved cautiously on approving new extractive projects.

By Tsvetana Paraskova for OilPrice.com