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.
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Shell said last month it was giving up its Arctic search for oil after failing to find enough crude oil.
“After Shell pulled out, it’s not like a lot of companies were clamoring to go up there anyway”, Herrlin said in an interview.
The US government is backing away from Arctic offshore oil and gas drilling on two fronts. The department, which sells oil leases in five-year blocks, said it had heard from no potential lessees for a planned 2016 sale in the Chukchi Sea and from just one for a planned sale in the Beaufort Sea in 2017.
With global oil supply outpacing demand, offshore Arctic oil “is not really needed and it is hard for any company to justify spending much on it right now anyway”, Brian Youngberg, an analyst at Edward Jones in St. Louis, said in an e-mail.
Today, the Bureau of Safety and Environmental Enforcement (BSEE) 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 ten years.
Before Shell announced that it would not pursue drilling in the Arctic in the foreseeable future, it had asked the department to extend its leases in the Chukchi beyond their expiration in 2020, and to extend its leases in the Beaufort Sea beyond their 2017 expiration.
Shell is the only company actively exploring off Alaska’s northern coasts.
“Any action that limits our ability to explore for more oil – to increase much-needed oil production through the Trans-Alaska Oil Pipeline – creates unnecessary uncertainty and burden on our economy”, he said in a statement.
“This is great for the Arctic and its polar bears”, Sakashita said. Federal regulators required two drill vessels in Arctic drilling areas so a relief well could be quickly drilled after a well blowout.
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.
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.
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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. “We need to keep all the Arctic oil in the ground”, she says.
