Forfeit Of Offshore Leases Is Good News For The Arctic Ocean

The Arctic Slope Regional Corporation (ASRC) recently announced that it would be relinquishing its 21 leases in the Beaufort Sea.

Oil prices have plummeted in recent weeks while the industry faces the lowest demand seen in decades. This has had an enormous impact on not only the price of oil and gas, but interest in new leasing and drilling. Oil companies, as well as their financiers, are recognizing a shift in the oil market. Not only is there lower demand, but the high social cost and difficulty of drilling in places such as the Arctic has seen companies retreat from the region in recent years.

The largest company to leave the Arctic Ocean was Shell, which forfeited all but one of its leases in the Chukchi Sea in 2016. Later in 2016, President Obama withdrew 125 million acres of the Arctic Ocean from leasing. The latest company to leave, Arctic Slope Regional Corporation, is the Alaska Native Corporation for Alaska’s North Slope Borough. A multi-billion dollar Fortune 500 company, ASRC has lobbied for decades to increase oil and gas drilling opportunities on Alaska’s North Slope and Outer Continental Shelf.

Via Bureau of Ocean Energy Management

ASRC recently announced that it would be relinquishing its 21 leases in the Beaufort Sea. This is tremendous news, as these were some of the final remaining leases on Alaska’s Outer Continental Shelf. The Beaufort Sea provides essential habitat for seals, walrus and bowhead whales, and is home to the entire population of U.S. polar bears. Drilling here would potentially disrupt the entire Arctic ecosystem. Members of Alaska Native villages on the Arctic coast rely upon those wildlife resources for their way of life. 

“The ocean is connected to our river, so our fish flow through there. Our whales. It’s all connected. It would affect our diet and what we eat. Our way of life, pretty much.” – Martha Itta, Tribal Administrator to the Native Village of Nuiqsut. 

Now, more than ever, there is no justification for seismic exploration or drilling in Arctic waters. The exit of ASRC is the latest episode in a larger exodus of oil companies from the Arctic Ocean, and hopefully another step toward the end of the larger saga of oil companies in the Arctic. 

Between 2003 and 2008, four lease sales were held in the Arctic Ocean. In total, 240 leases were sold in the Beaufort Sea (covering 1.3 million acre) and 487 leases were sold in the Chukchi Sea (covering 2.8 million acres). Of the 727 leases issued during that time, today only 13 remain today after ASRC’s relinquishment, and only about 58,000 acres are currently being leased, down from a peak of more than 4 million acres. 

These leases were originally sold to ASRC by Shell, which five years ago made breaking news by announcing the end of its offshore drilling program in the Arctic Ocean. It is impossible to overstate what a significant moment this was in the fight to protect the Arctic from dangerous drilling. Shell’s exit was a turning point in which oil companies could no longer justify continuing development in the Arctic Ocean. After an abysmal seven year track record in the region that culminated with failed exploratory wells and a drilling rig crashing into Sitkalidak Island, and was marked by intense public opposition from across the nation, Shell realized the risk and difficulty of drilling in the Arctic region was not worth the enormous cost — both financial and reputational. Soon after Shell’s exit, it was followed by nearly every other company holding leases in the region.

Thousands of protestors in Washington, D.C., march in opposition to offshore drilling. (Alaska Wilderness League)

As oil companies continue their exodus, we must avoid the mistake of allowing new leasing from occurring in the Arctic Ocean. Drilling in remote Arctic waters is incredibly risky. In 2015, the Department of the Interior released a report that concluded proposed drilling in the Chukchi Sea posed a 75% chance of an oil spill greater than 1,000 barrels. Such a spill would have long lasting impacts on Arctic wildlife and the Alaska Native communities whose traditional cultures rely upon them for subsistence.

A bowhead whale swims through an open lead in the pack ice during spring migration in the Chukchi Sea off Nuvuk, Alaska. (Steven Kazlowski)

New drilling projects come at the cost of a healthy marine environment, and with the Arctic at the front lines of climate change, it is the last place we should be allowing increased development. Sea ice is melting more than ever before. We could see ice-free summers in the Arctic in the next 15 years, leaving wildlife like polar bears without essential habitat — in order to combat global climate change Arctic oil must stay in the ground. Oil and gas reserves in the Arctic Ocean hold an estimated 23.6 billion barrels of oil, which if exploited and burned would release 15.8 billion tons of carbon into the atmosphere, significantly contributing to our warming climate worldwide.

A curious polar bear cub swims in newly forming pack ice as the mother sits on shore, off Bernard Spit, Alaska. (Steven Kazlowski)

Permanently withdrawing the entirety of these areas from leasing is critical to protect the Arctic from any future development. President Obama’s withdrawal of 125 million acres in the Beaufort and Chukchi seas was an enormous leap forward. But the Trump administration continues to advance the threat of new leasing despite recent court rulings. The “Stop Arctic Ocean Drilling Act” introduced by Representative Jared Huffman (D-CA) and Senator Jeff Merkley (D-OR) would put an end to all new leasing and drilling in the Arctic Planning Area of the Outer Continental Shelf. This legislation would permanently protect the Arctic Ocean from any new oil and gas development.

With the relinquishment of these leases, the exodus of oil companies is nearly complete. It is only fitting that after buying its leases from Shell, ASRC has now followed Shell’s lead in moving on from Arctic offshore development. Over the years, oil development in the Arctic has seen several boom and bust cycles. However, given that oil markets are in shambles and the last of the region’s leases have been relinquished, this should mark the final exit of oil companies from the Arctic Ocean. It is more important than ever that we see permanent protections put in place so that no new leases can be sold, ensuring that the Arctic Ocean remains free from drilling.