Obama cancels Arctic drilling lease sales

The Obama administration took a number of actions Friday to restrict future offshore drilling in the Arctic Ocean.

The Interior Department is canceling two lease sales it had planned over the next year and a half for Arctic drilling rights and denying two oil companies’ requests to extend the time on leases that they currently hold.

ADVERTISEMENT
The decision comes weeks after Royal Dutch Shell pulled out of the Arctic for the foreseeable future, saying the little oil it found in this summer’s drilling is not worth the cost.

The administration said its decisions are based on the current oil markets and low interest in Arctic drilling.

But it’s also a significant action to crack down on one of the most controversial types of offshore oil and gas drilling that has environmentalists fired up in opposition.

“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,” Interior Secretary Sally JewellSally JewellOvernight Energy: Flint deal clears way for funding bill Climate change is a refugee issue too Feds roll out conservation, energy plan for Calif. desert MORE said in a statement, complimenting her staff’s work overseeing the safety and environmental standards of Shell’s drilling in the Chukchi Sea, about 70 miles northwest of Alaska’s coast.

Shell’s Chukchi lease is due to expire in 2020. Norway’s Statoil had also requested an extension of a lease expiring in 2017 in the nearby Beaufort Sea, which was also rejected.

In letters to each company, the department said they failed to show sufficient plans to take advantage of the leases if their terms were extended.

The decisions were praised by environmentalists who have long called for Obama to block drilling in the Arctic due to its potential environmental and climate impacts.

“Today’s announcement moves us away from old arguments about companies’ unwise investments and toward better choices for the Arctic Ocean,” Susan Murray, vice president of the Pacific for Oceana, said in a statement.

“As Shell found out, the Arctic Ocean is unique and unforgiving,” she said. “Especially in light of economic, technological, and environmental realities, there is no reason to extend leases or hold new sales.”

The announcements are certain to bother the oil industry and Republicans, who have blamed Obama for a strict and unpredictable regulatory environment in the Arctic that makes exploration difficult in one of the most promising untapped regions for oil and gas.

Hilcorp, Eni, BP, Repsol, ConocoPhillips Co. and Iona Energy Co. also currently own drilling rights in the United States’ portion of the Arctic.

The Interior Department has proposed one Beaufort sale in 2020 and a Chukchi sale in 2022 as part of its 2017–2022 leasing program, but it has yet to make the plan final.