Obama Cancels Arctic Oil Leases After Shell Pull-out

Shell's drilling platform Pacific Pioneer in the Chukchi Sea (Photo courtesy Shell Oil)


WASHINGTON, DC, October 18, 2015 (ENS) – “In light of current market conditions and low industry interest,” the U.S. Department of the Interior says it will cancel the two potential Arctic offshore lease sales scheduled under the current five-year offshore oil and gas leasing program that ends in 2017.

In response to calls for interest in two lease offerings, one in Chukchi Sea and one in the Beaufort Sea, the Bureau of Ocean Energy Management, BOEM, said it received only one application from the oil and gas industry.

Shell's drilling platform Pacific Pioneer in the Chukchi Sea (Photo courtesy Shell Oil)
Shell’s drilling platform Pacific Pioneer in the Chukchi Sea (Photo courtesy Shell Oil)

The decision follows Shell’s announcement that the company will cease further exploration activity in offshore Alaska “for the foreseeable future.”

“In light of Shell’s announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the Arctic in the next year and a half,” said Secretary of the Interior Sally Jewell.

“I am proud of the performance of Interior’s Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement, the U.S. Coast Guard and others in ensuring that Shell’s program this past season was conducted in accordance with the highest safety and environmental standards,” said the secretary.

On September 28 Shell announced that while it had found indications of oil and gas in the Burger J well in Alaska’s Chukchi Sea, when it drilled the well to a depth of 6,800 feet below the ocean floor, these were “not sufficient to warrant further exploration in the Burger prospect.”

Shell said it would seal and abandon the well in accordance with U.S. regulations.

“The Shell Alaska team has operated safely and exceptionally well in every aspect of this year’s exploration program,” said Marvin Odum, director, Shell Upstream Americas. “Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S. However, this is a clearly disappointing exploration outcome for this part of the basin.”

Shell said its decision reflects “the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska.”

The Bureau of Safety and Environmental Enforcement also denied requests from Shell and Statoil for lease suspensions, which would have allowed the companies to retain the leases beyond their primary terms of 10 years.

American Petroleum Institute Director of Upstream Erik Milito blames the Obama Administration for undermining development of “vast offshore oil and natural gas resources in Alaska” with its “regulatory and permitting unpredictability and uncertainty.

“Investment decisions have been directly thwarted by the policy decisions of the administration related to Alaskan Outer Continental Shelf development, and lease extensions are clearly justified under the circumstances. And while it is not surprising that Interior canceled the remaining lease sales because there was an absence of nominations, it is the significant regulatory uncertainty that
has created the reluctance on the part of our industry,” said Milito. “Still, America’s oil and natural gas industry remains firmly committed to the long-term development of offshore Alaska resources.”

“Arctic oil and natural gas represent incredible potential for American energy security, jobs and revenue for the government,” Milito said. “Access to the region’s oil and natural gas resources will remain necessary to provide energy supplies to meet the world’s growing demand and vital to keeping America’s status as a world leader in energy.”

Consumer Energy Alliance President David Holt agrees. “Today’s decisions are unfortunately the latest in a series of recent federal
regulatory actions that have discouraged the exploration and development of a region that is critical to the energy, economic, and national security of Alaska and the United States,” he said. “The Administration has cited a lack of commercial interest in this area for its decision. In fact, the commercial interest in the Arctic is directly related to the lack of regulatory consistency, certainty, and the absence of coordinated oversight.”

But conservationists declared victory after their long-standing and ongoing campaigns to end oil development in the fragile and rapidly warming Arctic.

Friends of the Earth Climate Campaigner Marissa Knodel said, “The Obama administration finally made the right choice for the Arctic and our climate future. To avoid climate catastrophe, Arctic oil and gas are unburnable and must remain in the ground.”

“Today’s announcement marks a significant step in the right direction, but it is disappointing that current market conditions and lack of industry interest, not a safe climate future, moved the administration to action,” Knodel said.

“Arctic Ocean conditions make it one of the worst places to drill, especially at a time when it is warming twice as fast as the rest of the planet,” she said. “…true climate leadership will keep all future leases off the table and Arctic oil and gas in the ground.”

Franz Matzner, director of the Beyond Oil Initiative with the Natural Resources Defense Council, said, “This grants Arctic waters an essential reprieve. The administration recognizes that we can’t expose this vital resource to the risks of a catastrophic blowout and we can’t lock the next generation into the fossil fuel dependence that’s driving global climate change. The next step should be to take Arctic and Atlantic waters off the table to oil and gas drilling for good. That’s one way to help speed our transition to a clean and safe energy future for America.”

Alwx Gray of Oceana said, “Oceana has campaigned for years to protect the Arctic from dangerous offshore drilling, and we’ll continue to fight for this precious ecosystem. The fight isn’t over yet – the Arctic Ocean is still included in the government’s long-term leasing plans.”

Referring to the kayactivists in Seattle who this summer tried to keep Shell oil vessels from heading to the Arctic, Greenpeace spokesperson Travis Nichols said, “Greenpeace collectively waves its kayak paddles in thanks to the President for ensuring this Arctic protection. This is a historic decision to keep Arctic oil in the ground that will be felt for years to come. It’s great news for the Arctic and for everyone fighting against extreme fossil fuel projects.”

“For years, people around the world have been demanding President Obama protect the Alaskan Arctic from catastrophic oil drilling, and today he’s taken a major step,” said Nichols. “This is the right move for President Obama to secure his climate legacy through one of the most vulnerable places on Earth, but he can still do more by using his authority to withdraw the Arctic Ocean from future offshore oil drilling.”

Copyright Environment News Service (ENS) 2015. All rights reserved.


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