Arctic Oil Drilling: Why Does U.S. End It?

Maritime Activity Reports, Inc.

October 20, 2015

Image: An oil drilling rig operated by Royal Dutch Shell ran aground on a pristine wildlife-rich island in Alaska in 2013. Credit: Panda.Org

Image: An oil drilling rig operated by Royal Dutch Shell ran aground on a pristine wildlife-rich island in Alaska in 2013. Credit: Panda.Org

The Obama administration has taken steps to keep drill rigs out of Alaska's northern ocean for a decade or more. The sudden of turnabouts is attributed to slowing down of economy.

The U.S. Department of Interior announced that it is canceling two lease sales and will not extend current leases for companies interested in drilling in the Arctic waters off the Alaska coat.
 
"The federal government is cancelling federal petroleum lease sales in US Arctic waters that were scheduled for 2016 and 2017," said Interior Secretary Sally Jewell. This happened three weeks after Royal Dutch Shell announced it was walking away from exploratory drilling in US Arctic waters.
 
Jewell said the Chukchi Sea off Alaska's northwest coast and the Beaufort Sea off the state's north coast will not be included in the agency's next five-year lease sale plan. Current leases held by Shell and other companies in Arctic waters will not be extended, she added.
 
The Interior Department’s decision does not appear to be strictly motivated by environmental concerns.  It wasn’t environmental protest that killed off Shell’s drilling either. What really forced the Anglo-Dutch company to retreat was low oil prices and disappointing drilling results.
 
The Department cited a number of reasons to cancel the sales, including low industry interest and market conditions. 
 
As oil prices remain low, interesting in risky and remote drilling may seem like a less profitable option to oil companies. 
 
According to a press release from the Department of the Interior, the fact that Shell’s exploratory well found less oil than predicted was also a factor.
 
The move is somewhat surprising coming from Obama. Just six months ago, the president gave permission to Shell to more seriously explore drilling off the Alaskan coast, a move that upset his eco-conscious supporters. 
 
The news is welcomed by climate hawks and environmental activists, who say that continuing to search for new sources of fossil fuels will contribute to climate change while also putting ecosystems at risk in the face of oil spills.
 
For the next few years anyway, Arctic drilling will effectively be off the table. However, should oil price recover, interest in offshore drilling in the Arctic in the future may be renewed.
 
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