Shell Canada is handing over its 30 offshore exploration permits in the Eastern Arctic to the Nature Conservancy of Canada, which in turn will give them to the federal government, in a move to help marine conservation efforts in the Arctic.

Relinquishing the more than 860,000 hectares' worth of permits — roughly 1½ times the size of Prince Edward Island — now clears the way to establish a national marine protected area in Lancaster Sound, most of which is already under consideration for conservation.

The move by Shell opens the door for more of the area to be protected, beyond the 4.45 million hectares already being considered, since the law prevents oil and gas exploration permits in national marine protected areas.

It also makes it easier for the Liberal government to follow through on its election promise to protect five per cent of Canada's marine and coastal areas by 2017. The Liberals also committed to protecting 10 per cent of coastal and marine areas by 2020, under the International Convention on Biodiversity.

The red squares on this map indicate where Shell Canada had oil and gas exploration permits. The company has agreed to hand those permits over to the Nature Conservancy of Canada in a move to help marine conservation efforts in the Arctic. (Nature Conservancy of Canada)

"This really paves the way for an open dialogue for how big to make the national marine protected area, and the establishment of it," said John Lounds, president of the Nature Conservancy of Canada.

"What this does is allow for the expansion of the area without any kind of worry about whether the permits would continue to exist, and going through all of that."

Permits' validity questioned

Shell's permits recently came under scrutiny when the World Wildlife Fund filed a lawsuit in Federal Court in April, demanding the permits be declared invalid. The organization argued the permits expired in 1979 and were never renewed.

Shell Canada's president and country chair Michael Crothers said his company was in talks with the federal government about handing over the permits well before the lawsuit was filed, and reached out to WWF-Canada after the lawsuit made headlines.

"In speaking with [WWF-Canada president] David Miller, we were able to align in a common goal here," Crothers said.

"He wasn't aware we were speaking with the government and with [the Nature Conservancy of Canada] about these permits and contributing them."

He said the lawsuit didn't affect Shell's timeline for relinquishing the permits.

"I think our announcement [today] on Oceans Day, hosted by WWF, shows great alignment. It's about collaboration and working together across different sectors."

Greenpeace said in March that minutes from a 2014 Shell meeting in Calgary showed the company would "need to get something back in return" for the permits.

Crothers told CBC News that Shell isn't receiving any compensation for donating its permits.

"This area has really special value in terms of its ecological nature, so we think it's terrific we can work with NCC and the government to make this happen," Crothers said.

"We're really hopeful that in a short few months, this will be part of an expanded Baffin Bay and Lancaster Sound marine conservancy."

Narwhal, whales and seals

Located at the east entrance to the Northwest Passage, Lancaster Sound is one of the richest marine mammal areas in the world, according to Parks Canada.

Last month, WWF-Canada created an interactive map of the area to highlight its need for protection.

It's estimated that 75 per cent of the world's narwhals spend summer in Lancaster Sound, as well as large numbers of seals, beluga and bowhead whales.

A national marine conservation area proposal for Lancaster Sound was first prepared in 1987. In 2009, the federal government launched a $5-million feasibility study for a national marine conservation area. Today, there's no formal marine protection in the area.

Officials say the next steps will be to consult with Inuit groups, local communities in the area and the government of Nunavut to work out agreements on exactly how much of the area to protect.