“I think this administration is adamantly opposed against fossil fuels, period. They’ll do anything to stop it. I don’t think they have a legal leg to stand on.”
Rep. Don Young, R-Alaska
Secretary of the Interior Department Sally Jewell announced Friday that the department is canceling future lease sales and will not extend current leases in Arctic waters off Alaska’s northern coast, essentially extinguishing such permits.
Jewell said the federal government is canceling federal petroleum lease sales in U.S. Arctic waters that had been scheduled through 2017.
This news follows the Sept. 28 announcement made by the Royal Dutch Shell, commonly known as Shell, that it would cease exploration in the Chukchi and Beaufort seas after spending nearly $7 billion on Arctic exploration. The company cited disappointing results from their Chukchi well as well as unpredictable federal regulations.
Shell’s withdrawal from Arctic drilling may be an indicator of a declining oil industry, shaving expectations in the wake of collapsing oil prices.
Jewell said: “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.”
Beaufort Sea leases are set to expire in 2017, and Chukchi Sea leases in 2020.
The cancellation of future lease permits follows the Democratic debate on Tuesday, Oct. 13, where Democratic candidates frequently spoke about environmental issues like climate change and the need to find alternative energy sources, arguing these may be two of the most important issues the nation faces over the next decade.
Advanced oil drilling techniques have saturated the oil global market. This year, industry executives held out hope that the oil price, which has fallen more than 50 percent to under $50 a barrel since last summer, would recover quickly. But in recent weeks, a growing number of executives have warned that the downturn could last well into 2016 and even beyond.
Jewell asserts that current market conditions and low industry interest made the leasing decision easier.
Shell spokesman Curtis Smith said the company disagrees with the agency’s decision to cease lease extensions.
“When it comes to frontier exploration in Alaska, one size does not fit all,” Smith says in an email. “We continue to believe the 10-year primary lease term needs to be extended.”
Kevin Pendergast of the Bureau of Safety and Environmental Enforcement stated Shell had not met the criteria to extend its leases, including providing the agency with a work schedule. Regional supervisor for field operations Pendergast says, however, Shell could apply again.
This decision to terminate future leases will significantly reduce the role Arctic offshore drilling will play in the search for alternative energy sources, and is seen as a major victory by environmentalists.
Miyoto Sakashita of the Center for Biological Diversity praised the Interior Department’s announcement.
“This is great for the Arctic and its polar bears,” Sakashita said. “We need to keep all the Arctic oil in the ground.”
Rep. Don Young, R-Alaska, thinks this battle will likely wind up in court.
“I think this administration is adamantly opposed against fossil fuels, period,” said Young, sole House member from Alaska. “They’ll do anything to stop it. I don’t think they have a legal leg to stand on.”
Could the Obama administration be paving the way for presidential hopefuls?
Two of the six participants at last week’s Democratic debate, Martin O’Malley and Bernie Sanders, answered “climate change” when asked “who or what is the greatest national security threat to the United States.”
With the move to cease drilling permits in Alaska, the U.S. will be forced to seek alternative energy sources and let other countries continue to dominate the oil economy.
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