Shell Gives Up on Arctic Offshore Lease Extensions

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By Alan Kovski

June 24 — Royal Dutch Shell Plc has given up on its administrative appeal to win Interior Department extensions of leases for oil exploration in Arctic offshore waters north of Alaska.

The Interior Board of Land Appeals dismissed the case June 23 after Shell decided to withdraw its appeal.

Shell suspended all operations in waters off Alaska in 2015 but sought to hold onto some leases for several more years in the Beaufort and Chukchi Seas. The Bureau of Safety and Environmental Enforcement rejected the company's request for “suspension of operations” approvals—jargon for extensions—for leases that were set to expire in 2017 and 2020.

The BSEE said Shell failed to satisfy the necessary legal requirements, codified at 30 C.F.R. Section 250.171(b), because the company failed to submit “a reasonable schedule of work leading to the commencement or restoration of the suspended activity.”

That led Shell to appeal through its subsidiaries Shell Gulf of Mexico Inc. and Shell Offshore Inc. to the administrative law judges of the Interior Board of Land Appeals.

Little Action in Arctic Offshore

No companies currently are operating in U.S. federal Arctic waters, though a few Arctic offshore fields continue to produce oil from gravel islands built in Alaska state waters. One company, Hilcorp Alaska LLC, has proposed building another gravel island to reach the Liberty field, an undeveloped oil field in federal waters of the Beaufort Sea.

Shell spent more than $7 billion in its unsuccessful effort to find oil in the Chukchi. In September the company said it failed to find commercially developable quantities of oil at the Burger prospect in the Chukchi.

The decision was lamented by Alaska officials worried about the loss of economic prospects. It was hailed by environmental advocates fearful of the consequences of offshore work and possible oil spills.

To contact the reporter on this story: Alan Kovski in Washington at

To contact the editor responsible for this story: Larry Pearl at

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