Arctic Ocean oil and gas lease auctions canceled

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Arctic Ocean oil and gas drilling is off the table for now.

Feds also deny requests for extension of current leases

Staff Report

Drilling for oil and gas in the U.S. slice of the Arctic Ocean is a no-go for the foreseeable future, federal officials said this week, canceling plans for future lease sales and denying extension requests for existing leases.

Citing market conditions and low industry interest, the U.S. Department of the Interior said it’s canceling two potential Arctic offshore lease sales scheduled under the current five-year offshore oil and gas leasing program. The decision comes on the heals of Shell’s announcement to halt exploration in the Chukchi Sea.

“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.

Conservation groups hailed the announcement as a big step in the right direction for the country’s climate and energy policy.

“We congratulate the Interior Department on taking these two important steps toward protection of the Arctic Ocean from the threats of drilling in this fragile ecosystem which is experiencing the effects of climate change at a faster rate than anywhere else on earth,” said Erik Grafe, an attorney with Earthjustice, which had been sparring with the administration and will Shell over Arctic drilling. “President Obama now has the opportunity to end oil and gas drilling in the Arctic Ocean permanently and invest in a cleaner energy future,” Grafe said.

Under the current Five-Year Program, Chukchi Sea Lease Sale 237 was potentially scheduled potentially for 2016, but a federal call for information and nominations for leases elicited no responses from industry.

Along with canceling the lease sales, 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 ten years.  The leases will expire in 2017 (Beaufort) and 2020 (Chukchi).

Among other things, the companies did not demonstrate a reasonable schedule of work for exploration and development under the leases, a regulatory requirement necessary for BSEE to grant a suspension. To view the letters regarding the suspension requests, click here for Statoil and click here for Shell.

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