By Brian Wingfield and Joe Carroll

(Bloomberg) — The U.S. Interior Department canceled the 2 remaining Arctic oil and fuel lease gross sales scheduled to happen below its present program, successfully halting drilling off Alaska’s coast below President Barack Obama.

The choice comes lower than a month after Royal Dutch Shell Plc stated it might indefinitely stop exploration within the area, after the corporate didn’t discover enough portions of oil or fuel in a Chukchi Sea drilling zone.

“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,” Interior Secretary Sally Jewell stated in a press release.

The cancellations spotlight the altering surroundings for the oil trade after worldwide costs fell greater than 50 % from their 2014 peak as provide overwhelms demand. Drilling in treacherous Arctic waters can be costly, and Shell citied the excessive prices in shuttering its $7 billion seek for oil and fuel within the area.

The federal authorities most likely sensed that curiosity in exploring in dangerous, difficult environments has light as crude costs collapsed, stated John Herrlin, an analyst at Societe Generale in New York.

“After Shell pulled out, it’s not like a lot of companies were clamoring to go up there anyway,” Herrlin stated in an interview. “When cash is constrained, long-cycle projects get deferred, especially those with potentially decade-long lead times.”

No Interest

The potential lease gross sales that had been canceled had been a part of the Interior Department’s 2012-2017 offshore leasing program. The company stated it acquired no trade curiosity in a Chukchi Sea lease sale scheduled for subsequent yr and one response to its name for nominations for a Beaufort Sea lease sale that was to be held in 2017.

The Obama administration in January proposed its offshore plan for 2017-2022, curbing exploration within the Beaufort and Chukchi seas whereas opening a part of the Atlantic area to drilling. The plan hasn’t been finalized.

Separately, the Interior Department stated its Bureau of Safety and Environmental Enforcement has denied requests from Shell and Norway’s Statoil ASA to retain their current Arctic leases after they expire throughout the subsequent 5 years. The corporations didn’t present a “reasonable schedule of work” to probe for oil and fuel below the leases, the Interior Department stated in its assertion.

House Natural Resources Committee Chairman Rob Bishop, a Utah Republican, described the Interior Department’s choice as a win for Russia, which goals to develop the Arctic area.

“This administration has dangerous priorities,” Bishop stated in a press release. “Obama has once again played directly into Russia’s hands as he destroys our nation’s energy potential.”

–With help from Laura Curtis in Washington.

©2015 Bloomberg News

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