Arctic Oil and Gas Lease Sale Moves Forward Despite Waning Interest from Industry Groups - Oceana USA
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August 12, 2014

Arctic Oil and Gas Lease Sale Moves Forward Despite Waning Interest from Industry Groups

There’s no question that drilling for oil in Arctic waters is risky business. Twenty five years after the Exxon Valdez tanker hit a reef in 1989, causing the second largest oil spill in U.S. history, wildlife and economies in Alaska’s Prince William Sound are still recovering. And in 2012, as part of an attempt at offshore oil exploration activity in Alaska’s Beaufort and Chukchi seas, Shell’s Kulluk oil drilling rig ran aground near Kodiak Island. Thankfully the ship’s grounding resulted in no harm to the crew and minimal environmental damage, but its failure to travel safely in the Gulf of Alaska doesn’t inspire confidence in ‘Big Oil’s’ ability to take on the hostile, rough waters of the Arctic. Despite these known risks—and diminishing interest from many oil and gas companies—the federal government is moving forward with a scheduled 2017 oil and gas lease sale in the Beaufort Sea.

“Additional leasing in Alaska’s Beaufort Sea is premature and unnecessary. There is no proven technology that would allow companies to drill safely in Arctic Ocean conditions. The risks of additional leasing in the Beaufort far outweigh any potential benefits, and oil companies have shown that they are not ready to explore on leases they already control,” Oceana’s deputy vice president for the Pacific Susan Murray said in a press release. “Nearly half of the leases purchased in the 2003-07 lease sales have been allowed to expire as company after company decides to forego or delay activities in the U.S. Arctic Ocean.”

Late last month, the Obama administration invited oil companies, environmentalists, and Alaskan residents to comment on which parts of the U.S. Beaufort Sea should be available for lease during a 2017 auction. Even though no oil company has yet to complete a successful exploration well in the Arctic since the early 1990s, the federal government is moving forward with oil drilling in this remote region without having developed proper and adequate oil spill response plans or equipment.  Simply put, there is still no way to clean up spilled oil on ice.

This move comes after several oil companies allowed their leases on roughly 584,000 acres in the Arctic to expire, even though price tags for individual leases ran tens of thousands of dollars or more. Shell Oil is now the only major oil and gas company keeping its leases in the Beaufort Sea, currently holding onto 134 of the total 141 active leases, according to the Houston Chronicle.   

Leasing in the Arctic’s Beaufort and Chukchi seas and attempted offshore exploration have resulted in controversy, litigation, and the risk of significant environmental harm. The U.S. Arctic Ocean is home to iconic wildlife—such as whales, polar bears, ice seals, and walrus—that depend on a healthy ocean ecosystem. One oil spill can have devastating impacts on ocean life. Many species in Prince William Sound, like herring and killer whales, have still not recovered since the 1989 Exxon Valdez spill.

Another issue of offshore drilling in the Arctic is the financial risks, notes Fuel Fix. According to a report released by Oceana and others earlier this year, investors in international oil companies (such as Royal Dutch Shell and ConocoPhillips) should question Arctic offshore investments because of high costs, high risks, and declining returns on equity. In 2014, Shell issued its first profit warning for the first time in 10 years in part to “high exploration costs.”

“Even if oil and gas could be produced from the Beaufort Sea, it would not significantly affect the price of gas at the pump, and it would not reduce our dependence on foreign suppliers for decades into the future,” Murray said. “Rather than pushing forward to open new areas, the Bureau of Ocean Energy Management (BOEM) should focus on fixing the problems that have been made apparent by the controversies and near-disasters that have resulted from its previous decisions. Leasing, exploration, and development should occur only if companies prove they can operate safely and without harming our ocean resources.”

Twenty-three conservation groups, including Oceana, recently wrote to the Secretary of the Interior Sally Jewell and urged her not to include Bristol Bay, as well as the Atlantic, Pacific, and Arctic Oceans and the eastern Gulf of Mexico, in the 2017 to 2022 Outer Continental Shell Oil and Gas Leasing Program. The conservation groups stated that drilling in such sensitive coastal ecosystems threatens billion-dollar local economies, accelerates climate change, and damages these sensitive ecosystems. 

Oceana works internationally to protect the Arctic Ocean from climate change, industrialization, and unsustainable fisheries. Learn more about our efforts here. Click here to join Oceana in asking the Obama Administration to take the Arctic Ocean off the table for the 2017-2022 OCS Lease Sale program.