Department of Interior Cancels Two Chukchi, Beaufort Sea, Lease Sales

The Chukchi and Beaufort Seas off northern Alaska. Image-BOEM

The Chukchi and Beaufort Seas off northern Alaska. Image-BOEM

In announcement on Friday, the Department of the Interior cited current market conditions and low industry interest as reasons for the cancellation of two potential Arctic offshore lease sales that were scheduled under the current five-year offshore oil and gas leasing program for 2012-2017.

This news comes after Shell’s announcement that it would cease further exploration activity in offshore Alaska for the foreseeable future.

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

The Chukchi Sea Lease Sale 237 was scheduled for 2016, and nominations were called for in September 2013. The industry submitted no specific nominations. The Beaufort Sea Lease Sale 242 was scheduled for the first half of 2017. Nominations for that sale was published in July 2014. There was only one nomination for that sale.

In addition, the Department of Interior also announced that they had denied requests from Shell and Statoil for lease suspensions that would have allowed for retention of their leases beyond their primary terms of ten years. DOI stated that ” 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.”

Alaska’s Governor Walker responded to the DOI announcement via press release saying, “I am disappointed by this announcement. Alaska must be able to responsibly explore and develop our rich natural resources both onshore and offshore. 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.”