US Cancels Sale of 2 Arctic Oil & Gas Leases
5:14 ET
WASHINGTON--Citing low oil prices and lack of company interest, the U.S. Interior Department on Friday said it is canceling the sale of a pair of offshore oil and natural gas leases.
The announcement comes a few weeks after Royal Dutch Shell said it was quitting its $7 billion Arctic campaign. Shell said in 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.
The lease sales were scheduled for 2016 and 2017 in the Chukchi and Beaufort Seas, respectively.
The Department also said it was denying requests from Shell and Statoil ASA to extend their leases, which would have allowed the companies to retain their drilling rights beyond 10 years. "Among other things, the companies did not demonstrate a reasonable schedule of work for exploration and development under leases," the Interior Department said.
No energy company currently is drilling in the U.S. portion of the Arctic Ocean . ConocoPhillips and Statoil ASA 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 .
Write to Amy Harder at amy.harder@wsj.com
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