Obama administration cancels Arctic oil leases due to low interest

In a written statement, Interior Secretary Sally Jewell cited Shell’s decision, the amount of acreage already leased, and “current market conditions” as reasons to hold off on sales for at least the next year and a half. The moves by the Obama administration Friday basically block drilling in the Alaskan Arctic for two years.

“It made so much sense to take this step, to cancel those leases, and to say they aren’t going to hold further leases”.

The Interior Department cancelled auctions for drilling rights in the Chukchi and Beaufort seas while declining to extend the Arctic leases of Shell (expires in 2017) and Statoil (expires in 2020), according to NPR.

The cancellation marked a reversal for those who had hoped oil companies would be able to discover large oil reserves that would help make the country less dependent on imported crude oil.

The administration did not rule out future lease sales.

The decisions ensure a long chill on oil development in U.S. Arctic waters and deal another blow to Alaska, which heavily depends on energy revenue and is still reeling from Shell’s September decision to abandon the region after “disappointing” results at a critical exploratory well.

Shell is also concerned with the decision, in particular the impact it will have on their ability to make new explorations in Arctic waters, should they choose to do so.

The decisions to nix the lease sales, which the statement attributed to “current market conditions and low industry interest”, follows Shell’s announcement that it will stop exploration in the Chukchi Sea for “the foreseeable future”. “While it is encouraging to see the Obama administration take bold actions like cancelling and refusing to extend existing Arctic oil and gas leases, true climate leadership will keep all future leases off the table and Arctic oil and gas in the ground”.

“After Shell pulled out, it’s not like a lot of companies were clamoring to go up there anyway”, Herrlin said in an interview.

Moving on may be what at least a few of those companies choose to do. We continue to believe the 10-year primary lease term needs to be extended, ‘ the company told KTVA Alaska in an email.

Independent Gov. Bill Walker met with Jewell in Washington, D.C., earlier this month about extending Shell’s leases and opening up a small part of the Arctic National Wildlife Refuge to drilling.

House Natural Resources Committee Chairman Rob Bishop, a Utah Republican, described the Interior Department’s decision as a win for Russian Federation, which aims to develop the Arctic region.

“The simple fact is that drilling in the Arctic is the height of irresponsibility”, he said.