THREE weeks after Royal Dutch Shell announced it was walking away from exploratory drilling in U.S. Arctic waters, the Obama administration has taken steps to keep drill rigs out of Alaska’s northern ocean for a decade or more.

    Interior Secretary Sally Jewell announced over the weekend that the U.S. Government is cancelling federal petroleum lease sales in U.S. Arctic waters that were scheduled for 2016 and 2017.

    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 Beaufort Sea leases are set to expire in 2017, and the Chukchi Sea leases in 2020.

    The decision reflects current market conditions and low industry interest, Jewell said in a news release.

    “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,” she said.

    Shell was the only company actively exploring in U.S. Arctic waters, and it was in with both feet. The company estimates it has spent upward of US$7 billion on Arctic offshore development, including US$2.1 billion in one day for leases at a 2008 Chukchi Sea sale.

    Shell hoped to tap into a resource the U.S. Geological survey estimates at more than 26 billion barrels of conventionally recoverable oil under Arctic waters.

    However, the company announced Sept. 28 that an exploratory well drilled this summer had been a bust. Shell found oil and gas but not in commercial quantities. Shell said it was stopping exploration “for the foreseeable future” because of the disappointing results and the uncertain federal regulatory environment.

    Shell, however, had applied to extend leases in both the Chukchi and the Beaufort. Statoil, an oil and gas company based in Norway, requested an extension for Chukchi leases.

    Shell spokesman Curtis Smith said the company disagrees with the agency’s decision not to extend current leases.

    “When it comes to frontier exploration in Alaska, one size does not fit all,” Smith said by email. “We continue to believe the 10-year primary lease term needs to be extended.”

    In denying the extension, the Bureau of Safety and Environmental Enforcement’s regional supervisor for field operations. Kevin Pendergast said Shell had not met the criteria to extend its leases, including providing the agency with a work schedule on them. Shell could apply again, he said.(SD-Agencies)