Spanish oil company Repsol has relinquished its federal leases in the Chukchi Sea, joining other companies that have exited the Arctic Ocean region in the wake of Shell’s high-profile pullout last fall.
Repsol, which in October had also reduced its stake in a promising onshore development with another explorer, is closing its offices in midtown Anchorage, an official said on Tuesday.
The Bureau of Ocean Energy Management in recent days completed the relinquishment of all the company’s 93 federal leases in the Chukchi Sea, said John Callahan, a spokesman with the agency.
The leases were part of nearly 500 Chukchi Sea blocks covering more than 2.5 million acres that were originally sold in the federal government’s record-breaking 2008 lease sale, when companies such as Shell, ConocoPhillips, Statoil and others snatched up little-explored prospects that offered the promise of a big discovery.
Last man standing
But following the collapse of oil prices and Shell’s failed multibillion-dollar drilling effort last summer, only a single company — Shell itself — is left holding a lease.
Shell’s lease, a block encompassing the single, unsuccessful well it drilled to petroleum-bearing depths in 2015, following several years of exploration. Holding the lease — set to expire in 2020 — allows Shell to protect data it gathered from the well.
The pullout of other energy companies left Repsol without potential partners in the hard-to-develop region. That factored into Repsol’s decision to relinquish the leases, said Jan Sieving, Repsol’s North America vice president for public affairs.
“Successful development in the Chukchi Sea will require sufficient synergies and partnerships with other energy companies,” she said Tuesday.
Beaufort Sea leases
Repsol continues to hold 29 federal leases in the Beaufort Sea in the eastern U.S. Arctic Ocean, in partnerships involving ENI and Shell, Sieving said. Those leases in the Beaufort are set to expire in 2017.
“Some blocks may be relinquished periodically as the portfolio is high-graded,” Sieving said of Repsol’s Beaufort Sea leases.
Michael LeVine, with environmental group Oceana in Juneau, said the departure of companies from the Chukchi Sea shows there is no compelling reason for the federal government to schedule new lease sales in the Arctic Ocean as part of BOEM’s proposed 2017 to 2022 lease plan for the U.S. outer continental shelf.
The agency has proposed a sale for the Beaufort Sea in 2020, the Cook Inlet in 2021 and the Chukchi Sea in 2022, but the sales could be canceled by the Interior Secretary.
Kara Moriarty, president of the Alaska Oil and Gas Association, said those proposed lease sales are so far off that if they’re held, oil production in the Chukchi won’t happen for another 15 years.
“Removing lease sales from the next five-year plan is incredibly shortsighted, and could hurt America’s potential to remain a world leader in fossil fuel development,” she said.
Promising onshore site
Repsol continues to hold other onshore and nearshore acreage on state land in Alaska, in partnership with Denver-based Armstrong Oil and Gas.
It supports the promising Pikka Unit development, a project in the Colville River delta, Sieving said. Repsol and Armstrong agreed to a deal last October allowing Armstrong to take a majority interest in the project, a move that reduced Repsol’s stake.
That transition affected Repsol’s Anchorage office where about 20 employees and 20 contractors had worked.
The office has “essentially closed,” said Bill Hardham, Repsol’s Alaska asset manager. Sieving said she didn’t have information about what happened to all the workers there.
Hardham moved to Anchorage to open the office in 2011. He’s now based in Houston.
Related stories from around the North:
Canada: Trudeau and Obama’s Arctic endeavours, Deutsche Welle Ice-Blog
Finland: Experts question Finland’s energy decisions, data, Yle News
Norway: How new Barents oil licenses can help build Russia-Norway ties, The Independent Barents Observer
Russia: Gazprom withdraws from Barents Sea, The Independent Barents Observer
Sweden: Will Sweden be able to produce enough energy in the future?, Radio Sweden
United States: Shell isn’t the only oil company leaving Alaska’s Arctic, Alaska Dispatch News