This is a small island in the Frozen North of Serpent Isle in Ultima VII Part Two. The island contains penguin colonies made up of many of their nests. During the teleport storm at the arrival of the Avatar and his companions to the Serpent Isle, Dupre's Magebane sword switched places with a penguin egg from one of the island's nests.
In the Library within Skullcrusher, a ghost drops a book entitled "Penguins of the North" by Ssashartha that hints at this: " ... penguins live in a sociable manner and breed in seemingly peaceful colonies. The female penguins take much pride in building the nests. Because of their size, penguin nests can easily contain more than mere eggs..."
The Avatar and his companions journeyed to the island to retrieve the sword. Despite returning the egg to the nest, some of the penguins attacked the party in defense of their nests.
The center of the island is located at 53 North 33 West.