Why Greenland Matters Even If Its Resources Don’t Pay
- Despite holding estimated oil, gas, and critical mineral reserves, the resources in Greenland are extremely expensive and challenging to extract due to a lack of infrastructure, harsh climate, and high costs.
- Following 50 years of unsuccessful and sporadic exploration, Greenland abandoned its quest for oil in 2021, and analysts state the island is not comparable to resource-rich Venezuela.
- Greenland’s greatest asset and primary importance is its geostrategic location in the High North, making control of the island a key factor in the global race for Arctic dominance and shorter trade routes.
The renewed U.S. interest in taking control over Greenland – one way or another – has placed the Arctic island back in the spotlight a year after U.S. President Donald Trump first suggested the United States should buy Denmark’s autonomous territory.
The Trump Administration’s reasons and intensified pressure on NATO allies aside, is Greenland really worth it?
The island, which is the size of about a fourth of the continental U.S., is estimated to hold oil and gas resources, as well as critical minerals and rare earth elements—all of which could be great assets to its holders.
But that’s only in theory.
In practice, Greenland’s resources are extremely expensive and hard to extract. The lack of energy infrastructure or any processing capabilities puts in doubt the feasibility and economic rationale of trying to mine rare earths and critical minerals, analysts say.
Oil Resources
According to one estimate from the U.S. Geological Survey (USGS), Greenland’s offshore area, East Greenland Rift Basins Province, likely contains a mean estimate of 31.4 billion barrels equivalent of oil, natural gas, and natural gas liquids. Of the five assessed assessment units (AUs), North Danmarkshavn Salt Basin and the South Danmarkshavn Basin are estimated to contain most of the undiscovered petroleum resources, a 2007 report from the USGS says.
A more recent estimate from 2023 by the USGS on the West Greenland-East Canada Province put the undiscovered, technically recoverable mean conventional resources there at 7.8 billion barrels of oil and 91.9 trillion cubic feet of gas.
Greenland had seen oil exploration since the 1970s involving major oil firms, including ExxonMobil, Shell, and Eni. None has resulted in a major discovery.
Following 50 years of unsuccessful and sporadic exploration in the inhospitable Arctic climate and waters, Greenland abandoned the quest for oil in 2021. Back then, the government of Greenland said that it considered that the environmental concerns were far greater than the potential benefits of becoming an oil producer.
Greenland may have potential undiscovered resources, but it’s nothing like Venezuela, which holds the world’s largest proven crude reserves, has decades of oil exploration and production, and is a founding member of OPEC.
“Despite its hydrocarbon and critical mineral potential, Greenland is not Venezuela 2.0.,” Wood Mackenzie’s top analysts say, noting that the large island is remote, inhospitable, underexplored, difficult to explore, and very high cost.
Major oil companies have seen harsh operating environments, but Greenland is on another level, WoodMac’s Simon Flowers and Gavin Thompson wrote.
Short summers, thick ice requiring ice breakers and specialized offshore equipment for surveys or exploration, and fewer than 100 miles of paved roads, although its territory is about 25% of the size of the continental U.S., discourage resource development offshore and onshore Greenland.
Throughout its decades-long history of exploration, Greenland has seen just 25 exploration wells drilled, predominantly in the Southwest basin. Each was unsuccessful, Wood Mackenzie notes.
The 2021 ban on new exploration is in place, but extensions have been approved for three existing licenses in the Jameson Land Basin, held by London-listed company 80 Mile. The firm last year signed a deal with U.S. investment firm March GL under which March GL will fund 100% of the costs associated with up to two exploration wells, designed to delineate the hydrocarbon potential of the Jameson project.
Critical Minerals and Rare Earths Resource
The National Geological Survey of Denmark and Greenland (GEUS) says that the Greenland Ice Sheet covers about 80% of the island, making it difficult to study the underlying geology and potential mineral resources in detail.
Still, a recent assessment has shown that 24 of the 34 critical raw materials on the list of critical raw materials for the EU are found in Greenland. Rare earth elements (REE), along with lithium, tantalum, niobium, and zirconium, are thought to be present.
In November 2025, Amaroq Ltd, an independent Greenland-focused mining company, announced it had identified conventional rare earth element-bearing mineralization within its Nunarsuit mineral license area in South Greenland.
But as of January 2026, there are two active mines in Greenland—a gold mine in South Greenland, and an anorthosite (feldspar) mine in the fjord of Kangerlussuaq, West Greenland.
Any additional mining operation would need infrastructure (remember, fewer than 100 miles of paved roads), power supply, skilled workforce, and huge investments in the potential processing of any minerals dug out of the areas that are accessible.
“The US goal of opening alternative REE supply chains to China is understandable, but given its harsh conditions and high costs, few miners are likely to put Greenland high on the list of options,” Wood Mackenzie’s analysts say.
The Biggest Prize
Greenland’s greatest asset is its geostrategic location and potential military importance. Winning the race with Russia and China for Arctic dominance and shorter trade routes with the help of Greenland’s strategic position would be the biggest advantage of the country that controls it. Denmark, a NATO member and a U.S. ally for decades, is the one that has control over Greenland, and declines any U.S. advances or offers of purchase of the island as a piece of real estate.
“For all the hype around Greenland’s natural resources, it is its strategic High North location that holds the key to what happens next,” analysts at WoodMac note.
By Tsvetana Paraskova for Oilprice.com
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