Obama Slams The Door On Future U.S. Arctic Drilling
The Obama administration officially shut the door on Arctic drilling, a move that could prevent any new drilling for years to come.
The U.S. Department of Interior announced on October 16 that it would cancel two lease sales for offshore acreage, which had been scheduled to take place in 2016 and 2017. Environmental groups have been doggedly criticizing the Obama administration for allowing Royal Dutch Shell to drill in the Arctic to begin with, citing the potential catastrophe if an oil spilled occurred. They had called upon the President to deny any permits to Shell.
But it wasn’t environmental protest that killed off Shell’s drilling campaign. What really forced the Anglo-Dutch company to retreat was low oil prices and disappointing drilling results.
Similarly, the Obama administration is now shutting the door on future lease sales not because of concerns over the environment, but “In light of current market conditions and low industry interest,” as Interior put it in a statement.
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On its face, the move is a logical one. Few other companies were interested in drilling in the Chukchi or Beaufort Seas, despite several having purchased leases years ago. Statoil and ConocoPhillips, two other large oil companies interested in the Arctic, had previously put their Arctic ambitions on ice because of the difficulty and high costs associated with drilling in the region. With Shell announcing that it would suspend U.S. Arctic exploration for the “foreseeable future” there are now zero companies that are viably interested in drilling anytime soon.
Remarkably, however, the interest in new leases had dried up even before the downturn in oil prices. Interior said that it put a “Call for Information and Nominations” in September 2013, which is essentially a way for the government to solicit interest from the industry on which areas to auction off based on their interest.
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