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The Interior Department announced it was canceling government auctions of drilling rights in the Chukchi and Beaufort seas, previously scheduled for 2016 and 2017 respectively. At the same time, it formally rejected bids by Statoil and Shell for more time to search for crude under their existing Arctic leases.
After failing to find commercially viable quantities of oil and gas at its Chukchi Sea well, Shell said it will halt exploring U.S. Arctic waters and could take a $4.1 billion write down.
The move by the Interior Department’s Bureau of Ocean Energy Management is designed to ensure that the companies have set aside enough money to dismantle offshore facilities once oil and gas stops flowing.
Although other gravel islands have been built in the Beaufort Sea, Hilcorp’s proposed Liberty project would be the first oil production facility located entirely in federal waters off the Alaska coast.
Details about a chronic oil leak in the Gulf of Mexico will be disclosed as part of the settlement agreement between Taylor Energy and environmental groups.
With just five companies participating and only 33 leases sold, the turnout was the lowest western Gulf auction since area-wide leasing began in 1983, according to the Bureau of Ocean Energy Management.
Just five oil and gas companies submitted sealed bids for western Gulf of Mexico acreage, ahead of Wednesday’s auction in New Orleans.
For now, Shell is restricted to drilling the top 3,000 feet of its Burger J well in the Chukchi Sea.
Shell’s work in the Arctic is far from guaranteed. The company is still seeking required drilling permits and repairs for a contracted icebreaker that is supposed to help safeguard operations this summer.