Oil groups Urge US to Leave Door Open for Arctic Drilling

Financial Times-01Financial Times | June 21, 2016 | Ed Crooks

Leading oil companies have written to the US administration urging it to keep open the prospect that they could drill in the Arctic seas north of Alaska in the next decade.

Oil exploration in the US Arctic has ground to halt as a result of the crude price crash and Royal Dutch Shell’s failure to find significant reserves with a well it drilled in the region last year.

Companies have given up all the US Arctic drilling rights that they had acquired, with the exception of one lease that has been retained by Shell.

But companies including Shell, ExxonMobil, Chevron and ConocoPhillips have written to the Bureau of Ocean Energy Management, the agency that controls US offshore drilling rights, calling for it to stick to its plan to sell leases off the coast of Alaska between 2020 and 2022.

The proposed sales have been criticised by environment groups, who say the risks of an oil spill in the region are unacceptable. The companies argue that developing the region’s resources is vital for the US economy.

Their interest in the lease sale programme is an indication that, even though costly Arctic oil does not look commercially viable with crude at today’s prices of less than $50 a barrel, the industry has not given up hopes that it could eventually be developed.

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