Environmentalists warn that Ottawa must be vigilant as Greenland welcomes offshore oil drilling in the Eastern Arctic immediately adjacent to Canada's territorial waters.

Earlier this week, Greenland accepted bids to drill in Baffin Bay near the mouth of Lancaster Sound, where Canada hopes to establish a marine conservation area. The vast, thinly populated territory - which controls its own resources as part of a deal with Denmark - hopes to drill along thousands of kilometres of the maritime border it shares with Canada. That work is expected to begin this summer.

Canada has accepted an invitation to meet with Denmark and the other six members of the Arctic Council this June in Ilullissat, Greenland. The meeting, which is to focus on protecting the Arctic environment, will include discussions on offshore oil drilling.

“It will be part of it,” said Danish embassy spokesman Jakob Henningsen. “They will be discussing offshore oil and gas.”

A spokeswoman from Canada's Foreign Affairs Department confirmed Canada's participation. “Canada will participate at a meeting on the Arctic environment,” said Ambra Dickie in an email. She would reveal no other details.

In addition to the eight Arctic Council members, representatives from northern aboriginal groups will also be present, Henningsen said

The icy waters between Greenland and Canada are considered to hold one of the great prizes of Arctic resource development. The U.S. Geological Survey ranks the West Greenland-East Canada Basin seventh out of 25 Arctic regions with energy potential. It is estimated to hold the equivalent of more than 17 billion barrels of oil, with the chance of finding oil or gas in the area anywhere from one in three to virtually 100 per cent.

Energy companies have taken notice.

In 2008, exploration leases for Greenland's side of the Davis Strait were snapped up by majors worldwide, including Canadian firms such as Encana and Husky. It's in those waters, immediately over the Canadian boundary, where Scottish-based Cairn Energy plans four exploration wells this summer.

The area grew even more heavily staked on Monday when Greenland's Bureau of Minerals and Petroleum announced that 17 applications from 12 companies were received for 14 leases in Baffin Bay.

“Never before have so many applications been received from the oil industry,” said the bureau's website.

The environmental stakes for the Davis Strait and Baffin Bay are high.

Canadian and Greenlandic fishers hauled 12,000 tonnes of turbot out of those waters last year, a quota that was increased to 14,000 tonnes this year. The shrimp quota is nearly 31,000 tonnes, although the 2009 catch was considerably lower.

As well, the region is home to a newly recovered population of bowhead whales. Such abundant Arctic wildlife is one of the reasons Canada wants to turn nearby Lancaster Sound into a marine conservation area.

Although the area isn't subject to the same kind of concerns over pack ice that occur in Arctic waters such as the Beaufort Sea, the Canadian Ice Service reports the Davis Strait sees between 10,000 and 15,000 icebergs every summer. That total is expected to increase as climate change speeds the melting of the Greenland Ice Sheet.

“Of course we're concerned about it,” said John Amagoalik, director of lands for the Qikiqtani Inuit Association.

“You can just see what's going on in the Gulf of Mexico. We're always expressing concerns about oil drilling in the Arctic.

“It would be next to impossible to clean up any spill.”

Cairn emphasizes its plans include the capability to drill relief wells and move threatening icebergs.

But it remains unclear how Canada will protect its interests in the region. Dickie said Canada is seeking clarification on how a 1983 Canada-Denmark agreement on the marine environment will apply under Greenland's home rule government. Dickie also said all governments have agreed to implement the Arctic Council's 1997 guidelines on energy development.

Canada needs to be vigilant, said Craig Stewart of the World Wildlife Fund's Arctic program.

“The dynamic in Greenland has been the fight for home rule,” he said. “They're desperate to get an economic footing for that.

“It's clear that oversight of oil and gas management varies greatly from country to country. For neighbouring countries, this is cause for concern.”

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