The Interior Department's five-year plan laid out all of the proposed auctions for drilling rights on the outer continental shelf of the United States. It allowed for no leases between 2017 and 2022 in the Beaufort or Chukchi seas, Arctic waters north and west of Alaska.
A prior draft of the plan included the potential for offshore drilling in both the Beaufort and Chukchi Seas when it was released in March. The current plan limits potential leases in the next five years to the Gulf of Mexico and the Cook Inlet off south-central Alaska.
"The plan focuses lease sales in the best places—those with the highest resource potential, lowest conflict, and established infrastructure—and removes regions that are simply not right to lease," Interior Secretary Sally Jewell said. "Given the unique and challenging Arctic environment and industry's declining interest in the area, foregoing lease sales in the Arctic is the right path forward."
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"Shell pulled out in 2015 not because of some regulatory problem, but simply because the economics of this drilling are not viable under current oil price conditions," said Pavel Molchanov, an equity research analyst at Raymond James & Associates in Houston. "At current price levels near $50 [a barrel] this type of very high risk drilling is not something the industry is interested in."
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"Right now it's a moot point," Molchanov said. "Five years is a long time, if oil prices stage a strong recovery in the medium term, then perhaps there will be some desire on the part of oil and gas producers to pursue Arctic drilling, but definitely not now. There is no such desire now."
Read more at Obama Halts Arctic Oil Leases and Undoing It Won't Be Simple for Trump
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