DOI cancels Arctic offshore lease sales

The US Department of the Interior said on Oct. 16 that it will cancel the two potential Arctic offshore lease sales scheduled under the current 5-year offshore oil and gas leasing program for 2012-2017. The agency cited "current market conditions and low industry interest" as reasons for the move.

The decision follows Shell’s announcement that it will cease further exploration activity offshore Alaska for the foreseeable future, citing a “disappointing exploration outcome” with its Burger J exploration well (OGJ Online, Sept. 28, 2015).

“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 Sec. of the Interior Sally Jewell.

“I am proud of the performance of Interior’s Bureau of Ocean Energy Management [BOEM] and Bureau of Safety and Environmental Enforcement [BSEE], the US Coast Guard and others in ensuring that Shell’s program this past season was conducted in accordance with the highest safety and environmental standards,” she said.

Under the current program, Chukchi Sea Lease Sale 237 was scheduled potentially for 2016. BOEM issued a call for information and nominations in September 2013, in response to which industry submitted no specific nominations.

Beaufort Sea Lease Sale 242 had been scheduled potentially for first-half 2017. BOEM published a call for information and nominations in July 2014, but only received one nomination, thereby raising concerns about the competitiveness of any such lease sale at this time. 

BSEE on Oct. 16 also separately denied requests from Shell and Statoil for lease suspensions that would have allowed the companies to retain the leases beyond their primary terms of 10 years. The Beaufort lease will expire in 2017, and the Chukchi lease in 2020.

“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,” DOI explained in a news release.  

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