The US Department of the Interior (DOI) is set to cancel two potential Arctic lease sales scheduled under the existing five-year offshore oil and gas leasing programme, due to existing market conditions and low industry interest.
The department’s latest move follows an announcement made by Shell that it would cease further exploration activity at the Burger prospect in the Chukchi Sea for the foreseeable future.
Last month, Shell drilled the Burger J exploration well in Alaska’s Chukchi Sea to a total depth of 6,800ft and said that the indications of oil and gas found in the well are not sufficient to carry out further exploration in the Burger prospect.
Following disappointing results, the company planned to seal and abandon the well in accordance with US regulations.
Under the programme set for 2012 to 2017, Chukchi Sea Lease Sale 237 was scheduled potentially for 2016.
In September 2013, the offshore industry submitted no specific nominations to the Bureau of Ocean Energy Management’s (BOEM) request for information and nominations.
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Similarly, for Beaufort Sea Lease Sale 242 scheduled potentially for the first half of 2017, BOEM received only one nomination for its call for information and nominations published in July 2014.
The lack of responses is believed to have raised concerns about the competitiveness of such a lease sale.
DOI secretary Sally 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.
"I am proud of the performance of Interior’s Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement, the US Coast Guard and others in ensuring that Shell’s programme this past season was conducted in accordance with the highest safety and environmental standards."
BSEE also denied requests from Shell and Statoil for lease suspensions.
The leases are set to expire in 2017 (Beaufort) and 2020 (Chukchi).
Image: Drilling unit Noble Discoverer. Photo: courtesy of Bureau of Safety and Environmental Enforcement.