Fed move on offshore drilling angers Alaskan officials

Obama administration reduced prospects for oil drilling activities in Arctic yesterday.

In bad news for the Alaskan economy but good news for polar bears, the U.S. government blocked new offshore drilling in Alaska’s Arctic Ocean and refused to extend two existing leases for Arctic drilling on Friday, the New York Times reports.

The decision came after Shell Oil failed to find significant amounts of oil and chose to walk away from its exploration in the area less than a month ago. Alaska Rep. Don Young suggested the decision was illegal and that the state would fight the federal government over it in court.

Jewell says that in light of Shell’s announcement, it doesn’t make sense to prepare for lease sales in the Arctic in the next year and a half. The U.S. inside section wouldn’t expand present leases and said it was deleting two possible Arctic offshore lease sales.

Shell holds around 350 leases in the Arctic.

The Obama administration is canceling its plans to sell oil drilling rights in the Arctic Sea through 2017, a remarkable turnaround since expanding drilling by approving new drilling permits for Shell Oil earlier this year.

The announcement comes in the wake of an announcement by Royal Dutch Shell that it was stopping exploration in the Chukchi and Beaufort seas after an initial investment of $7 billion. That means 55 million acres in the Chukchi Sea and 65 million acres in the Beaufort Sea are closed for business. Statoil, an oil and gas company based in Norway, requested an extension for Chukchi leases.

The decision reflects current market conditions and low industry interest, Jewell said in a news release.

In denying the extension, the Bureau of Safety and Environmental Enforcement’s regional supervisor for field operations, Kevin Pendergast, said Shell had not met the criteria to extend its leases, including providing the agency with a work schedule on them. And Republicans in Congress, such as Alaska’s Lisa Murkowski, want to extend the leases as well. “To avoid climate catastrophe, Arctic oil and gas are unburnable and must remain in the ground”.

“As we struggle with funding on education and costs of energy, I can’t tell you how disappointed I am in this decision”, he said. His goal is to get more oil in the trans-Alaska pipeline, which is running at about a quarter of its capacity.

Sen. Dan Sullivan, R-Alaska, said President Barack Obama’s administration is correct in wanting to help Alaska Natives and all Alaskans battle the state’s high rates of suicide, domestic violence and addiction.