Statoil has announced it’s abandoning its Arctic drilling plans, and Republicans are blaming President Barack Obama’s overreaching regulatory regime for driving another major oil company out of the region.
“Statoil follows Shell to flee the Arctic thanks to Obama’s regulatory onslaught in the region, which has made a tough economic outlook impossible for companies to overcome,” Julia Slingsby, spokeswoman for the GOP in the House natural resources committee, told The Daily Caller News Foundation.
Norwegian state-owned oil company announced it was abandoning 16 leases it held in the Chukchi Sea off Alaska’s coast. The company said its Arctic leases were “no longer considered competitive” given low oil prices and the disappointing results of neighboring exploration efforts.
Statoil is the second major oil company in the last three months to leave the Arctic amid low oil prices and government regulations that make it much harder and costlier to explore for oil. While low oil prices definitely played a role in these companies’ decision to leave the Arctic, Republicans say Obama administration regulations have also pushed them out of the region.
“I am very concerned that, for the second time in as many months, a major company has decided to walk away from Alaska because of the uncertainty surrounding our federal government’s support for Arctic development,” Alaska Republican Sen. Lisa Murkowski said in a statement.
Murkowski said “this administration’s refusal to grant lease extensions; its imposition of a complicated, drawn-out, and ever-changing regulatory process; and its cancellation of future lease sales” have discouraged companies from continuing operations in Alaska. Local communities are reeling from such decisions and state finances are being driven further into the red as companies pull out.
Statoil pulled out of its Chukchi Sea leases without drilling a single exploratory well. Shell did drill a well, but it only did so after jumping through numerous regulatory hoops put in place by the Obama administration.
The Interior Department also canceled future Arctic lease sales due to “current market conditions and low industry interest,” meaning there was little prospect of companies getting to hold onto Arctic leases after 2020. With oil prices predicted to remain low for some time, this likely helped drive companies to look elsewhere for oil.
“This is a shame,” Slingsby said. “Government policies should encourage development in a region so strategic to national and economic interests.”
Arctic waters off Alaska’s coast are estimated to hold 24 billion barrels of oil and 104 trillion cubic feet of natural gas, but so far companies have been unable to unlock this vast hydrocarbon resource — a problem federal regulations have only made harder.
Environmentalists have urged the Obama administration to ban Arctic drilling, saying the region’s fragile ecosystems will be harmed and that extracting more oil would exacerbate global warming.
Earlier this year, activists tried to block Shell’s drilling rig from reaching the Arctic by barricading it in Portland, Oregon while it was being repaired. Shell’s rig eventually got out of Portland, but environmentalists have not backed down in their opposition to oil drilling.
Environmentalist concerns over Arctic drilling have likely played into Obama’s regulations. The Interior Department forced Shell to make modifications to its drilling rig and were strict about how the company drilled its exploratory wells.
“It is absurd that Interior has created a regulatory environment where operators cannot have commercially viable exploration programs, because so many requirements and hurdles have been put in place,” Murkowski said.
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