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Quest for oil reaches Earth’s final frontier

Environment campaigners have vowed to defend the unspoilt Arctic wilderness from potentially damaging development after a Scottish energy firm confirmed it had discovered signs of oil off Greenland.

Edinburgh-based Cairn Energy confirmed it had found gas during exploratory drilling in Baffin Bay, a signal that oil may be found in one of the world’s last untapped fields.

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While the ocean floor between Greenland and Canada could yield billions of pounds of profit at a time when other oilfields are drying up, experts warn that it is among the most treacherous places on Earth in which to drill.

Last night, environment groups said any spill in the remote region on the scale of the Gulf of Mexico disaster would be catastrophic due to the abundance and vulnerability of its wildlife.

Cairn’s Leith headquarters have already been targeted by activists from the protest camp that sprung up at RBS’s Gogarburn campus last week.

Greenpeace campaigner Leila Deen said: “If a spill happened here, this pristine area would face an environmental catastrophe. The BP disaster in the Gulf of Mexico showed what can happen when they drill in deep and remote places.”

According to WWF Scotland’s analysis, the distance from population centres of the two wells sunk by Cairn would make it difficult to provide manpower for any clean-up, and the harsh climate would further hamper operations.

Dr Richard Dixon, director of the campaign group’s Scottish arm, said the discovery heralded a black day for the Arctic.

“Cairn are the first to get a licence and explore, but the fact there’s clearly some fossil fuel there suggests everyone will grow more interested,” he added.

International campaigners have already raised fears that an accident on the scale of the Gulf of Mexico disaster could leave Cairn Energy dangerously out of pocket, leaving the fledgling Greenland Government or even the UK taxpayer to foot the bill in the event of a spill.

Cairn is breaching the ocean floor at almost three times the 152m depth declared unsafe by US President Barack Obama, who backed a moratorium on all new deepwater drilling in the wake of the BP disaster in the Gulf of Mexico.

However, the energy company last night moved quickly to quash speculation about dangers linked to its Arctic project.

Cairn said it had a second rig available to drill a relief well should something go wrong and emphasised that its drilling in Greenland was not nearly as technically challenging as BP’s activities in the Gulf of Mexico.

Underlining its efforts to ensure safe drilling off Greenland, Cairn Energy said: “Cairn has always recognised that drilling offshore Greenland would present significant logistical challenges and has approached the design of its drilling programme with the aim of reducing all of the associated risks in accordance with the ‘as low as reasonably practicable’ principle. This is a practical approach to risk mitigation that is common across many industries.”

It added: “In recognition that offshore Greenland is a logistically remote area, one of the key features of Cairn’s risk mitigation programme was its decision to contract two drilling rigs, which in the event of a well control incident allows a second rig with its associated services to be immediately available to drill a relief well, if required.

“In addition, the drilling schedule has been designed in such a way that, at critical junctures, only one rig will enter a hydrocarbon-bearing section at any given time.”

One of the hazards facing exploration in Baffin Bay is the threat of icebergs.

The firm, run by former rugby player Sir Bill Gammell, stressed that its crew were so far managing icebergs “successfully”, with only two or three per day coming within a 15.5 mile radius of the two drills.

However, critics decried the operation as reckless and dangerous. Speaking by satellite phone from the protest ship Esperanza, members of Greenpeace said they would continue attempts to disrupt work.

“Cairn Energy are drilling for oil here but they haven’t published their contingency plan for if something goes wrong,” said spokesman Ben Stewart. “The man who can put a halt to this is Sir Bill Gammell, the owner of Cairn. One wonders whether he relishes the prospect of becoming a new Tony Hayward.”

Other groups have also linked the drilling to recent protests against RBS and other firms’ investment in fossil fuel industries.

Juliet Swann, Scottish head of projects for Friends of the Earth, said the involvement of RBS -- now 84% state-owned -- added insult to injury.

“Taxpayers’ money is essentially being used to destroy a pristine environment for private economic gain,” she said.

Given the scale of the new venture, City analysts Numis Securities said the Greenland operation would dramatically change Cairn’s risk profile, pushing into a volatile market.

Only natural gas has been found so far, but Cairn told investors yesterday that new geological signs clearly pointed to the existence of oil at the site.

Five wells were drilled off Greenland in the 1970s after rises in oil prices but all exploration stopped when the firms found them to be dry.

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