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Iceberg Alley, or the Baffin Basin separating northern Canada from Greenland, is an unlikely international flashpoint.

But a belching fuel pipe far to the south in the sweltering Gulf of Mexico has made two drillships in the more northerly seas the focus of a contentious issue.

The company at the heart of the dispute is Cairn Energy, based in Edinburgh.

It was one of those to take another tough-going day on the London Stock Exchange on Tuesday, as BP's nightmare on the bayou spreads it sticky slick of corporate horror onto distant financial shores.

The industry operating closer to home faces a strengthened inspection regime, after the new UK government announced more resource to check on offshore operations.

Cairn has leased two drillships and it's positioning them in the Disko field this summer, where it's to the fore in prospecting for oil.

Precautionary measures include trawlers hired purely to haul icebergs away from the hugely valuable floating kit.

Chief executive Sir Bill Gammell has cited US Geological Survey viewing this as one of the big 10 oilfields in the world, but the only one that's not been exploited.

More than that, it's not even explored.

Uncharted waters

Even the outdated maps and charts are needing updated, with help from the Danish government, meaning the increased amount of shipping around Greenland is navigating barely charted waters.

Cairn Energy has told the stock markets its chances of striking black gold are around 10%.

For Greenland, the world's largest island with a population below 60,000 (lower than that of Inverness), the possibilities are unimaginable.

But for its Canadian neighbours, the possibilities of environmental damage are also epic.

Ironically, it's no stranger to international controversy itself, concerning the environmental impact of its tar sands extraction in Alberta.

In Canada's Arctic waters, drilling has been suspended, as it has around American shores.

True, there are fewer communities could be devastated if there's a big spill in the Arctic.

But there are fewer bases from which ships can try to control it, and a very limited range of equipment is in place.

Iceberg peril

Cairn's view is that it's a bit premature unless and until its drillships actually locate the oil.

Getting it as far as the seabed is some way off.

The company's hugely successful adventure in the Rajasthani desert of India took five years from discovery to the start of production.

A Cairns spokesman stresses: "We've got a robust strategy, and we're conscious of our responsibilities. Greenland is also conscious of its responsibilities."

The corporate line is helped by WWF environmental group arguing standards are more stringent in Greenland than in Canada.

All this comes to a head this week at a meeting of environment ministers on the Arctic Council, meeting in the Greenland township of Ilullisat.

Convened by the Danish, offshore drilling is not formally on the agenda.

It is meant to be more about safety and security in Arctic shipping lanes, not only for freight but for cruise liners in iceberg peril and getting dangerously close to the wash from collapsing glaciers.

But Canadian minister Jim Prentice has made clear he wants to talk about drilling, at least with his north-east neighbour.

He's demanding to know what precautions Greenland is taking. However, he's not demanding the Greenland government (semi-independent of
Denmark) stop the offshore drilling, as Canada and the US have done.

Not yet anyway.

Serious incident

The answer from Greenland is that it's taking its safety manual from Norway, which has a pretty good record.

It has, however, had an unusually long scare since May 20, when the Gullfaks C rig, between Shetland and Bergen, had to be closed down and partially evacuated as drilling mud and then cement were pumped into an unstable well on which one of two safety mechanisms had failed.

Described by Norway's safety supervisor as a "serious" incident, operator Statoil has only just said it may soon re-start production.

The depth of Greenland waters above the Disko field is far less than BP's Deepwater operations, so it's within the technical know-how of those who have had 40 years of practice in the North Sea.

The big difference is what to do with the kit and potential spills when the ice comes.

That's one of the areas where Ottawa is demanding answers.