A Social License to Operate in the Arctic: Exploring the Challenges and Opportunities for Offshore Oil and Gas Activities in Greenland

Smits, C. C. A. (Royal HaskoningDHV) | Huber, E. (Royal HaskoningDHV)



To supply the World's future energy demand, new areas such as the Arctic region are being explored to find oil and gas resources. Offshore Arctic oil and gas operations are to an increasing extent subject to global public opinion and scrutiny. Potential impacts can easily become a topic for discussion, locally and globally. This manuscript will explore the challenges and opportunities of a social license to operate for oil and gas activities in the Arctic. Building or re-building a sustainable, trustful relationship with local communities is crucial, as well as balancing the risks and benefits at a local level. However, the challenges for Arctic oil and gas activities do not only relate to the local level, but are intrinsically linked to the global level including the debate on climate change and the use of fossil fuels. At the same time, if the social license to operate of an Arctic project is under pressure, this can potentially affect the social license of not only a company but the entire oil and gas sector.

The main challenge for oil companies that want to explore the Arctic is the strong link between their project's social license to operate and the political and legal licenses it needs to obtain. Pressure on the social license could alter the conditions or put on hold the political and sometimes even the legal licenses of an activity. Furthermore, the strong link between Arctic projects and the global level could potentially jeopardize the global success of the entire industry. Creating a level playing field in the fragmented governance of Arctic oil and gas activities is a challenge. Collaboration with local, national and international stakeholders, the use of social media, and a thorough understanding of a social license to operate and its influence on a project, company and the oil and gas sector is therefore paramount. This manuscript will use oil and gas development in Greenland as a case study to shed light on the mechanisms that link these licenses and what opportunities oil companies have to positively influence their social license to operate. This includes working on trustful local relationships via human capital development and using industry knowledge to connect to other stakeholders and work on the industry's image via social media.

The Arctic is a pressure cooker, with the potential to quickly mobilise crowds at different levels of scale. The social license to operate of an Arctic project is strongly linked to other geographical scales and the reputation of the company/the sector it belongs to. Any lesson learned here can be applied to other parts of the World.