The U.S. Department of Interior canceled two Arctic offshore lease sales on Friday and has denied Shell and Norway’s Statoil extensions for their current offshore Alaska leases.
The department has canceled the Chukchi Sea Lease Sale 237 and the Beaufort Sea Lease Sale 242, both part of the its current five-year offshore oil and gas leasing program for 2012 to 2017.
The DOI said the decision was prompted by Shell’s recent disappointing find at the Burger Prospect and the company’s decision to pull out of the Arctic 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,” Secretary of the Interior Sally Jewell said.
Upstreams demonstrated little interest in the two lease sales.
According to the DOI, a call for information and nominations for the Chukchi Sea Lease Sale 237 issued in September 2013 failed to turn up any “specific nominations” while a similar call for the Beaufort Sea Lease Sale 242 only resulted in one nomination.
The lack of interest raised “concerns about the competitiveness of any such lease sale at this time,” the agency said.
The Bureau of Safety and Environmental Enforcement (BSEE) also denied requests on Friday from Shell and Norway’s Statoil for lease extensions that would have allowed the companies to retain their Arctic leases beyond the primary ten year term.
Leases held by Shell in in the Beaufort Sea will now expire in 2017 and leases held by Statoil and Shell in the Chukchi Sea will expire in 2020.
The BSEE said it denied the extensions because “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.”
Late last month, Shell announced that while its Burger J well in the Chukchi Sea found indications of oil and gas those indications were not sufficient to warrant further exploration in the Burger prospect.