Greenland OKs firm for offshore drilling

Greenland has given a Scottish firm permission to drill for oil under the icy waters off its western coast known as "iceberg alley."

Drilling to take place between Nunavut and Greenland

Greenland gave a small Scottish firm permission to drill for oil under the icy waters off its western coast Wednesday, one of the first times drills will be in use on the seafloor beneath the area they call "iceberg alley." 

On Wednesday, Cairn Energy PLC was given formal approval by Greenland's cabinet to drill the first two of four planned drill sites along the Disko West portion of Davis Strait, the iceberg-filled stretch of water between Greenland and Nunavut.

David Nisbet, Cairn Energy's head of group corporate affairs, said his company will take every precaution in the event it strikes oil in Davis Strait.

"We are very conscious operating offshore [from] Greenland [of] how we have to behave, and that we have the best of systems in place," Nisbet said.

In 2008, the U.S. Geological Survey estimated as many as 50 billion barrels of recoverable oil may be buried under Arctic waters, far and away the largest undiscovered area remaining in the world.

Although there are currently more than 400 discovered oil and gas fields north of the Arctic Circle, many governments have been reluctant to allow drilling offshore.

Fears surrounding developing the space have heightened in the wake of the catastrophe that followed the April 22 sinking of BP's Deepwater Horizon oil rig in the Gulf of Mexico, causing a massive underwater oil spill that has yet to be stopped.

But the government of Greenland has been more bullish on allowing offshore expansion, hoping that energy finds might be an economic boon for the sparsely populated area. The government has already auctioned off rights to 14 more exploration blocks in addition to Cairn's activities.

International oil titans Exxon Mobil, Royal Dutch Shell and Chevron have all bid to probe the area.

Canada has banned new deepwater drilling in the Arctic until 2014 at the earliest and the National Energy Board is reviewing the standards under which any licences would be granted.

"If oil leaked into the water, there would be nothing to do about it, and the wildlife there would be hurt very badly," Inuit elder Rita Nashook of Inuktitut told CBC News recently.

But Nisbet is eager to assuage those fears, noting there is no guarantee oil will even be found in the area.

"We will have a support fleet of vessels, about a dozen vessels, working alongside the two rigs," Nisbet said. "We have a relief well capability."

Critics say Arctic drilling poses distinct difficulties, both because of the presence of potentially dangerous icebergs on the surface and the relative difficulty of cleaning up below kilometres of solid ice. Cairn's only previous drilling experience is in the warm waters of the Indian Ocean.