Oil companies relinquished leases for 2.2 million acres of Arctic Sea for drilling earlier this month, giving up about 80 percent of the acreage leased in a 2008 sale.
Shell, ConocoPhillips and other oil companies gave up their rights on May 1 rather than pay rent to the U.S. government, Bloomberg reported Tuesday. Shell relinquished 274 leases while ConocoPhillips relinquished 61.
Statoil, Iona Energy and Eni SpA also have given up their leases in recent months, Bloomberg reported.
The decision to relinquish leases means the companies are writing off all the money they spent on the leases in 2008 and the millions of dollars paid to the government since then.
The Arctic is an expensive, but possibly lucrative, place to drill. The Interior Department estimates the Chukchi Sea holds 15 billion barrels of recoverable oil and 78 trillion cubic feet of recoverable natural gas. The Beaufort Sea could hold 8 billion barrels of oil and nearly 28 trillion cubic feet of natural gas.
The Chukchi Sea was targeted by Shell for drilling last year, but the Dutch company pulled out after disappointing initial returns from wells drilled in the area.
The falling price of oil is generally cited as the main reason for oil companies deciding to step away from drilling in the Arctic, but regulatory hoops set out by the Obama administration also have been cited as a possible cause.
Sixty-eight lawmakers sent a letter to the Interior Department last week asking them to end oil and gas leasing in the Arctic permanently.
The decision by the oil groups to pull out of the Arctic was cheered by environmental groups.
Cindy Shogan, executive director of the Alaska Wilderness League, said companies should stop trying to drill in the Arctic.
“Today’s news is further proof that no oil company should drill in America’s Arctic Ocean. With a high risk of a large oil spill, drilling in the Arctic is risky and irresponsible,” Shogan said.
“Shell and ConocoPhillips decision to give up Arctic leases provides yet another reason for the Obama administration to take the lease sales out of the next five-year program in the Chukchi and Beaufort seas.”
