U.S. cancels Arctic offshore lease sale
The U.S. Interior Department cancels two future offshore leases in Chukchi and Beaufort seas and will refuse requests from oil companies to renew existing leases.
Following Shell’s decision a few weeks back to cease further exploration activity in offshore Alaska for the foreseeable future, President Obama’s administration on Friday announced that it was cancelling government auctions of drilling rights in the Chukchi and Beaufort seas, previously scheduled for 2016 and 2017.
“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 in a statement.
At the same time, the announcement formally rejected bids by Statoil and Shell for more time to search for crude under their existing Arctic leases. The two companies had requested 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).
Offshore drilling advocates have argued that existing coastal oil and gas leases - with initial terms capped at 10 years - are not well suited for the Arctic, where exploration is confined to about three ice-free months each year.
