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Page added on October 17, 2015
US Cancels Sale of Two Arctic Oil and Gas Leases
Citing low oil prices and lack of company interest, the Obama administration moved Friday to prevent oil and natural-gas drilling in the Arctic Ocean.
The Interior Department announced Friday it was canceling a pair of offshore oil and natural-gas lease sales it had scheduled to hold next year and in 2017, and said it was denying requests from two oil companies— Royal Dutch Shell PLC and Statoil AS A—to retain drilling rights set to expire soon.
The moves come a few weeks after Royal Dutch Shell said it was quitting its $7 billion Arctic campaign. Shell said in late September its exploratory drilling in the Chukchi Sea off Alaska’s Northwest coast this summer showed only traces of oil and natural gas.
“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,” Interior Secretary Sally Jewell said Friday in a statement.
“When it comes to frontier exploration in Alaska, one size does not fit all,” said Curtis Smith, a spokesman for Shell. Statoil didn’t immediately respond to a request for comment.
No energy company is drilling in the U.S. portion of the Arctic Ocean. The steps taken by the Obama administration Friday mean there won’t be any for at least several years, unless a new president quickly reverses policy and oil prices rebound.
“This is a stunning, short-sighted move that betrays the Interior Department’s commitments to Alaska and the best interests of our nation’s long-term energy security,” said Sen. Lisa Murkowski (R., Alaska), calling the move “the latest in a destructive pattern of hostility toward energy production in our state that began the first day this administration took office.”
All Republican candidates in the 2016 presidential campaign support Arctic drilling. Democratic candidates, including frontrunner Hillary Clinton, have come out in opposition to it. Environmentalists mounted a campaign opposing Shell’s plans and portraying the Interior Department’s earlier approval of Shell’s drilling as contradictory to President Barack Obama’s commitment to address climate change.
The department’s announcement reflects a gradual shift within the Obama administration to be less supportive of oil and natural gas than earlier in Mr. Obama’s presidency. But when Mr. Obama visited Alaska this summer to underscore the urgency of addressing climate change, he didn’t focus much on the oil and natural-gas industry in the state. However, his administration has issued more regulations on the oil and gas industry and moved to block drilling in certain parts of Alaska over the past year.
Cheap oil prices, meanwhile, are dampening the oil industry’s interest in expensive offshore-drilling operations such and allaying drivers’ concerns over high gasoline prices, lessening the political and economic impact of the administration’s shift away from oil and natural gas.
In part because of an 81% increase in U.S. oil production since 2008, the September average price for gasoline was $2.46 a gallon, the lowest since 2004, according to government data.
The lease sales were scheduled for 2016 and 2017 in the Chukchi and Beaufort Seas, respectively, as part of the Interior Department’s current five-year leasing plan that ends in 2017. The department’s next such plan, proposed in January, includes three potential lease sales in the Arctic Ocean in 2020 and beyond, several lease sales in the Gulf of Mexico and one lease sale along the Eastern Seaboard in the Atlantic Ocean, where no drilling currently takes place.
The next leasing blueprint won’t be final until at least the middle part of next year, and the department may opt to take out any of the lease sales it had conditionally included in its proposal earlier this year.
ConocoPhillips and Statoil also own leases in the Arctic, though neither company has immediate plans to drill there. Shell also owns leases in the Beaufort Sea, east of the Chukchi, though it doesn’t have immediate plans to drill there.
According to 2011 Interior Department data, federal waters in these two seas hold 22 billion barrels of technically recoverable oil and 93 trillion cubic feet of natural gas. The U.S. is currently producing about 9.5 million barrels of oil a day and about 90 billion cubic feet of gas a day, increasingly from tight shale-rock formations in places such as North Dakota and Texas.
15 Comments on "US Cancels Sale of Two Arctic Oil and Gas Leases"
makati1 on Sat, 17th Oct 2015 9:44 am
I’m waiting for the comments on this one. My take is that he was afraid there would be no bidders, like Brazil’s recent offers.
http://oilprice.com/Energy/Crude-Oil/Historic-Failure-For-Brazilian-Oil-Auction.html
Little interest in new sources in problem areas.
BobInget on Sat, 17th Oct 2015 10:35 am
This victory for environmentalists reminds me of Hillary Clinton pulling support for XL portion
of Keystone. (‘Energy-East’ makes it redundant)
One needs to ask, what if Shell had found another elephant? What then?
“You can’t fire me, I quit.”
penury on Sat, 17th Oct 2015 11:21 am
As it began so will it continue, Gradually the cost of obtaining the energy will exceed the value of the energy. It is happening in Africa, the Arctic, Brazil and the ME. The down slope is not as much fun as the up.
Tom on Sat, 17th Oct 2015 12:19 pm
It matters little what political group supports or doesn’t support drilling in the Arctic. The geology, low oil prices, and the ENERGY COST of finding and producing oil in harsh, remote areas have spoken. The Second Law of Thermodynamics can only be violated (?) if energy is stolen from some other productive use.
Mike616 on Sat, 17th Oct 2015 12:52 pm
If it takes 15 YEARS to make it to market, then it’s not needed.
Geometric Growth grows Geometrically.
Solar Already Cheaper in ALL 50 States than Natural Gas.
Mike616 on Sat, 17th Oct 2015 12:54 pm
I’m assuming everyone knows natural gas is cheaper than oil.
So, Solar is already cheaper then ALL carbon solutions.
Especially now with battery backup taking off.
Additionally, there will be no carbon peaker plants ever built after 2020.
Davy on Sat, 17th Oct 2015 1:02 pm
Mike, get real, you assume natural gas is cheaper than oil? In what respect? They are different energy resources that should not be compared only on the basis of price.
apneaman on Sat, 17th Oct 2015 1:29 pm
“So, Solar is already cheaper then ALL carbon solutions.”
Solar is at a whopping 1% of global electricity generation after 40 years or so. Is there any mining for the needed raw materials that is done with non carbon solutions? No, all diesel. How much heavy transport is solar? Every manufactured piece of hardware and/or all raw materials from overseas are delivered via bunker fuel – the dirtiest on the planet, then diesel powered trains and tractors. How much manufacturing is solar? Do solar panels, the accompanying hardware and the workers get transported to the site in electric vehicles?
How can something that cannot be produced without fossil fuels be called a solution to fossil fuels? Maybe for a shrinking portion of privileged westerners and only for some of their residential electricity demands. Certainly not for any of the electrical energy embedded in their never ending piles of consumer crap. Then there is the fact that all this tech generates a waste stream that is an environmental holocaust all of it’s own.
No solution.
BC on Sat, 17th Oct 2015 2:53 pm
apnea nails it again about the solar fantasy (which I so wish were true).
rockman on Sat, 17th Oct 2015 3:08 pm
“The department’s announcement reflects a gradual shift within the Obama administration to be less supportive of oil and natural gas than earlier in Mr. Obama’s presidency.” Maybe I missed it: can anyone point out any other shifts (other then rhetoric) that has occurred? Just consider coal: records amounts of those exports from the leases President Obama administers. Nor has he cancelled the permits he expedited for the expansion of Texas coal exports terminals or his orders to the Corps of Engineers to go forward with 3 west coal export facilities despite strong local opposition.
And be sure you caught the subtle point: “No energy company is drilling in the U.S. portion of the Arctic Ocean. The steps taken by the Obama administration Friday mean there won’t be any for at least several years, unless a new president quickly reverses policy and oil prices rebound.” Utter bullsh*t. It means new leases won’t be issued. But there are active leases in the US section of the Arctic that can be drilled anytime those companies obtain permits. And despite more strict requirements drill permits can be acquired as just proven by the Shell well. A rather transparent political ploy IMHO.
bug on Sat, 17th Oct 2015 3:40 pm
Transparent political ploy?
WSJ?
No way
Boat on Sat, 17th Oct 2015 7:06 pm
apneaman,
More idiocy from the doomer crowd with the solar is made from oil argument often repeated.
Every widget has a tipping point where it becomes viable. When oil becomes to expensive it will also be replaced.
ape says-How can something that cannot be produced without fossil fuels be called a solution to fossil fuels?
Who is calling it a solution. Your imaginary friend? Solar is but one solution to electricity that is increasing in viability. You are like MSM with your anti any solution one sided spin.
Davy on Sat, 17th Oct 2015 7:51 pm
Boater, you been indulging in the hot toddy? You sound goofier than normal? You are not making sense with your widgets and tipping points and Oil being replaced? Ape Man was spot on with solar. Boater bow your head and breath deep then try it again.
apneaman on Sat, 17th Oct 2015 8:10 pm
Boat, Mike616 suggested it was a solution in his comment, which is who I was responding to. Try and keep up retard.
peakyeast on Sat, 17th Oct 2015 9:51 pm
@apneaman: Hey friend, I found something that could be of great benefit to you:
http://www.pakin.org/complaint/
I will give you an example.. Lets take one of your favorites. – Mak for example (no pun intended, mak)
Quote:
My complaint about Mak
I indeed can’t let Mak’s misinformation and misguided arguments about misoneism go by without comment. First, the misinformation: Mak suggests that our only chance of saving the planet is to accept unending regulations and straightjacket “reforms” from his legatees. Where the heck did he come up with that? To turn that question around, when he looks in the mirror in the morning, does Mak see more than the grungy face of a pathetic lout? To answer that rhetorical question let me just say that if Fate desired that Mak make a correct application of what he had read about negativism it would have to indicate title and page number since the incomprehensible, macabre fainéant would otherwise never in all his life find the correct place. But since Fate does not do this, we must always remember that I recently heard Mak tell a bunch of people that he knows the “right” way to read Plato, Maimonides, and Machiavelli. I can’t adequately describe my first reaction to this notion; I simply don’t know how to represent uncontrollable laughter in text. Anyhow, I guess I’ve run out of things to say, so let me just leave you with one parting wish: Together, may we hit hard, with accuracy, and not pull any punches.
end quote…
I have no clue how it comes up with this stuff, but its hilarious and about as right as horoscopes.
🙂 lol