Cairn shares drop as second Arctic well comes up dry

Shares in Cairn Energy dropped 9% today as the oil explorer again failed to strike crude in its controversial drilling campaign off the coast of Greenland.

The company said it would plug and abandon the Gamma-1 well in the remote region, the second of its wells that has come up dry this summer.

Edinburgh-based Cairn's disappointment will be another source of cheer for environmental campaigners who have protested about its exploration plans in the Arctic, arguing that a spill would wreck the fragile environment and be "all but impossible" to clean-up due to the ice and extreme operating conditions.

Ben Stewart, Greenpeace's head of media, joked on Twitter: "At this rate, we'll clear out London's organic champagne and be pissed till Christmas."

Earlier this year, Greenpeace campaigners blocked the entrance to Cairn's Edinburgh headquarters with a giant polar bear, and supporters later stormed Cairn's offices dressed as polar bears in search of a spill response plan. Activists also occupied a rig, prompting Cairn to seek an injunction preventing Greenpeace from approaching the drilling vessel again.

In August, the Greenland government published Cairn's spill response plan in a bid to allay fears over the possible impact of a spill.

Cairn, which is run by former rugby international Sir Bill Gammell, added that it would continue to drill another well - Delta-1 - but so far that had shown only minor signs of hydrocarbons. A further update on Delta-1 will be given later this month.

Meanwhile, the company has added a fifth well to its 2011 campaign, with the rig from Gamma-1 now moving south to drill in the additional area.

Cairn hopes to discover a new oil basin in Greenland, with reserves potentially worth many billions. Its shares, down 28.8p at 283½p today, have fallen more than a quarter in the past three months.