Oil or gas found off Greenland

A Scottish energy company's discovery of hydrocarbons off Greenland's west coast could spark a drilling rush that "would threaten the fragile environment," Greenpeace says.

Greenpeace says sensitive environment threatened

Edinburgh-based Cairn Energy PLC reported Tuesday that it had discovered "early indications of a working hydrocarbon system" after drilling on the seabed off western Greenland.  

Cairn CEO Bill Gammell added that the finding confirmed the company's "belief in the exploration potential," but didn't say how much oil or gas had been discovered.

"The thing I would stress is the scale. The basin that we're actually drilling in right now — the Baffin Bay Basin — is the same size as the North Sea," deputy CEO Mike Watts added.

While the news was cheered by Cairn Energy shareholders, not everyone is pleased with the find. The Scottish energy company's discovery of hydrocarbons off Greenland's west coast could spark a drilling rush that "would threaten the fragile environment," Greenpeace warned Tuesday.

Ben Stewart, a spokesman for the environmental group, said Cairn should have followed the example of oil companies that suspended deepwater drilling after the BP spill in the Gulf of Mexico. Canada and the United States both imposed significant curbs on offshore drilling in the spill's immediate aftermath.

A Canadian tugboat tows an iceberg away to avoid a collision with oil drilling platforms in the North Atlantic near the Grand Banks in 2003. ((Gary C. Knapp/Associated Press))

Greenpeace's ship Esperanza arrived in the Arctic area near Cairn's oil rig Monday as part of its campaign to "confront dangerous deepwater oil drilling."

"We're here to highlight and document the reckless push toward an Arctic oil run," Stewart said.

Stewart told CBC News Tuesday that the Cairn drilling rigs are being guarded by a Danish naval warship and several speedboats full of soldiers.

The organization was told by police aboard a Danish navy vessel not to violate a 500-metre security perimeter around the Stena Don rig.

Watts said that the company is doing everything it can to protect the environment. He said it has boats to manage drifting ice, redundant equipment and a comprehensive oil spill response plan.

Canada cautious

Three decades after one exploration effort failed to find oil, drilling in the deep ocean off Greenland's west coast resumed in 2001. Exploration had been unsuccessful until now.

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

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.

But there is a Canadian connection to Cairn's discovery. In addition to the find being only a few kilometres from Canadian waters, as of March the Canadian Pension Plan Investment Board owned 158,000 shares in Cairn and nearly half a million shares in its sister company, Cairn India.

Cairn started drilling 175 kilometres west of Disko Island on July 1 in water depths of 300 to 500 metres. It said its wells have planned target depths of up to 4,200 metres.

Last week, Cairn was granted permission to drill two more deepwater exploration wells off Greenland.

Although seismic data indicate the area could have gas and oil reserves, Cairn's finding doesn't necessarily mean oil has been found, said Erling Halfdan Stenby, a chemistry professor at Denmark's Technical University.

"It could be that there was only gas. It could be that there was oil, too," Stenby said. "On top of that, one cannot even be sure that the finding is profitable."

With files from The Associated Press