Obama: Arctic 'off limits to oil and gas leasing'

December 20, 2016

In his final month as US president, Barack Obama announced today (20 December) that he will ban offshore areas in the Atlantic and Arctic Oceans from future mineral extraction. The decision comes one month after the Department of the Interior (DOI) cut the Arctic out of its Outer Continental Shelf lease sales program for 2017-2022.

Obama's ban on the Arctic is unsurprising and follows years of combativeness with the oil and gas industry - particularly former Arctic lease holders Shell, ConocoPhillips, Eni, and Statoil, which all withdrew from their leases in late 2015 and into 2016. Shell and Statoil in particular had a famously difficult time with US regulators. Both had applied for a suspension (of work) on their leases shortly before deciding to withdraw completely. Those requests were rejected by the Bureau of Safety and Environmental Enforcement at the time, in the summer of 2015.

Obama's memorandum states that the decision does not affect rights under existing leases in the withdrawn areas, which encompasses some 3.8 million acres in the north and mid-Atlantic off the east coast of the US and some 115 million acres in the US Arctic Ocean. DOI said that the Arctic withdrawal includes the entire US Chukchi Sea and "significant" portions of the US Beaufort Sea. 

According to a White House press statement that Obama made with Canadian Prime Minister Justin Trudeau: "Today – due to the important, irreplaceable values of its Arctic waters for Indigenous, Alaska Native and local communities’ subsistence and cultures, wildlife and wildlife habitat, and scientific research; the vulnerability of these ecosystems to an oil spill; and the unique logistical, operational, safety, and scientific challenges and risks of oil extraction and spill response in Arctic waters – the US is designating the vast majority of US waters in the Chukchi and Beaufort Seas as indefinitely off limits to offshore oil and gas leasing, and Canada will designate all Arctic Canadian waters as indefinitely off limits to future offshore Arctic oil and gas licensing, to be reviewed every five years through a climate and marine science-based life-cycle assessment."

Obama's ban drew praise from environmentalist groups and Obama's own Interior Secretary, Sally Jewel. However, the decision also drew ire from oil industry groups, which have been long-furious with the Obama administration's policies related to oil and gas leasing and extraction.

Jewel applauded Obama's decision, saying: “The President’s bold action recognizes the vulnerable marine environments in the Arctic and Atlantic oceans, their critical and irreplaceable ecological value, as well as the unique role that commercial fishing and subsistence use plays in the regions’ economies and cultures. The withdrawal will help build the resilience of these vital ecosystems, provide refuges for at-risk species, sustain commercial fisheries and subsistence traditions, and create natural laboratories for scientists to monitor and explore the impacts of climate change.”

Abigail Ross Hopper, who heads DOI's Bureau of Ocean Energy Management agreed, saying: "Risks associated with oil and gas activity in the remote, harsh and undeveloped Arctic are not worth taking when the nation has ample energy sources near existing infrastructure. Oil spill response and clean-up raises unique challenges in the Arctic and a spill could have substantial impacts on the region, particularly given the ecosystem fragility and limited available resources to respond to a spill."

Obama's decision to ban Arctic exploration and limit Atlantic exploration has angered industry advocates such as the American Petroleum Institute (API), National Oceans Industries Association (NOIA), and the Independent Petroleum Association of America (IPAA).

“Our national security depends on our ability to produce oil and natural gas here in the US,” said API Upstream Director Erik Milito. “This proposal would take us in the wrong direction," Milito said. "Blocking offshore exploration weakens our national security, destroys good-paying jobs, and could make energy less affordable for consumers. Fortunately, there is no such thing as a permanent ban, and we look forward to working with the new administration on fulfilling the will of American voters on energy production.”

Milito continued: "We are hopeful the incoming administration will reverse this decision as the nation continues to need a robust strategy for developing offshore and onshore energy,” said Milito. “The US offshore industry has a long history of safe operations that have advanced the energy security of our nation and contributed significantly to our nation’s economy.”

NOIA President Randall Luthi issued a statement calling Obama's decision "short-sighted" and further stated that it violated the letter and spirit of the law (the Outer Continental Shelf Land Act). “[The decision] risks the long-term energy security and energy leadership position of the US," he said. "Such an expansive withdrawal, particularly when argued as being ’permanent’, is clearly inconsistent with the Outer Continental Shelf Land Act’s steadfast declaration that ‘... the Outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other national needs...’

Luthi continued: "While other countries are ramping up offshore oil and natural gas exploration in the Arctic and in the Atlantic basin, President Obama has benched the US, dismissing his own advisors who have argued that energy development, particularly in the Arctic, is imperative to our national security."

The IPAA's Senior Vice President of Government Relations and Political Affairs Dan Naatz expressed his disappointment with Obama's plan to ban offshore Arctic drilling, calling the decision "puzzling." 

"We [IPAA] disagree with this last-minute political rhetoric coming from the Obama Administration and contest this decision by the outgoing administration as disingenuous," Naatz said. "With exactly one month left in office, President Obama chose to succumb to environmental extremists demands to keep our nation’s affordable and abundant energy supplies away from those who need it the most by keeping them in the ground."

Politicians from the state of Alaska slammed the ban, calling it "reckless," and saying that the decision "is not based on sound science and contradicts the administration's own conclusions about Arctic development."

The statement from Senator Lisa Murkowski, Senator Dan Sullivan, and Congressman Don Young continued, commenting on the pact with Canada: "Making matters worse, the joint announcement with Canada amounts to an incredibly lopsided trade for the US. While President Obama’s Arctic withdrawal is indefinite, Canada will review the status of its Arctic waters every five years. With Russian development already underway in the Arctic, it may be just a few short years before our nation is bracketed by activity on both sides and importing the oil resulting from it.

“The only thing more shocking than this reckless, short-sighted, last-minute gift to the extreme environmental agenda is that President Obama had the nerve to claim he is doing Alaska a favor,” Murkowski said. “For him to suggest to the people of the Arctic that they must rely on a nonexistent government working group and $9 million a year in charity as a substitute for real economic opportunity is a slap in the face to countless Alaskans. President Obama has once again treated the Arctic like a snow globe, ignoring the desires of the people who live, work, and raise a family there. I cannot wait to work with the next administration to reverse this decision.”

The International Association of Geophysical Contractors President Nikki Martin also issued a statement regarding the matter.

“The President’s attempt to permanently withdraw offshore areas in the Atlantic and Arctic Oceans from future oil and gas exploration and development demonstrates a lack of long-term protection of the nation’s security and energy independence and lack of consideration for the rule of law. The Administration has consistently disregarded the merits of a rational, scientifically-based approach to energy policy as well as disregarded the sentiments of the majority of American citizens who support oil and gas exploration and development.  Instead, it has based such an important decision on input from oil and gas opponents and the ideology of a vocal few,” Martin said.

“There is no doubt that the US will continue to require a comprehensive strategy for developing its offshore and onshore resources.  Both are critical for the nation’s continued economic wellbeing, and national and energy security for decades to come,” Martin said. “The IAGC looks forward to working with the in-coming Trump Administration and Congress to reverse this shortsighted action.”

Read more

Obama leaves Arctic off the table

Supermajors drop Arctic leases

Statoil pulls plug on Alaska

Shell abandons Alaskan exploration

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