About one month after Royal Dutch Shell plc and other producers collectively abandoned millions of acres of leasehold in Alaska's Chukchi Sea, Spain's Repsol SA has joined the exodus, relinquishing nearly 100 federal leases it acquired at auction in 2008.
Repsol spokeswoman Jan Sieving told NGI that the company relinquished 55 of its 93 Outer Continental Shelf (OCS) lease blocks in the Chukchi effective June 1. She said Repsol plans to relinquish the remaining 38 Chukchi leases over the next year.
“Successful development in the Chukchi Sea will require sufficient synergies and partnerships with other energy companies,” Sieving said Wednesday. “The recent exit of other operators was a deciding factor in Repsol’s decision.”
Repsol joins Shell, ConocoPhillips, Italy's Eni SpA and Iona Energy Inc. in pulling out of the Chukchi. Collectively, the companies have relinquished an estimated 350 leases in the Chukchi, covering an estimated 2.2 million acres of drilling rights. Had the companies kept the leases, they would have been required to make payments to the Department of Interior (DOI).
Despite spending billions of dollars and fighting years of court battles, Shell said last month it would abandon all but one of its leases in the Chukchi, citing an "unpredictable" regulatory environment and poor initial drilling results (see Daily GPI, May 11).
Bureau of Ocean Energy Management (BOEM) spokesman John Callahan, who covers the Alaska region, confirmed to NGI that Repsol had relinquished 55 leases. Repsol would continue to hold 29 federal leases in the Beaufort Sea, in partnerships with Eni and Shell, the company said.
The DOI received a record $2.7 billion for the Chukchi leases at the February 2008 auction, nearly all held by shell (see Daily GPI, Feb. 8, 2008). Subsidiary Repsol E&P USA Inc. submitted 104 total bids for $15.6 million, including 93 high bids for more than $14.4 million.
ConocoPhillips scuttled its plans to explore the Chukchi in 2013 and has announced no developments since (see Daily GPI, April 11, 2013). Statoil ASA did likewise two years later, citing poor exploration results from a neighboring lease held by Shell (see Daily GPI, Nov. 17, 2015).
Last March, the DOI said the OCS Oil and Gas Leasing Program for 2017-2022 would include 13 potential lease sales, including 10 in the Gulf of Mexico and three in offshore Alaska -- one each in the Cook Inlet, the Beaufort and the Chukchi (see Daily GPI,March 15). But in October 2015, the DOI canceled two lease sales scheduled for 2016 and 2017 -- one in the Beaufort and one in the Chukchi -- citing "low industry interest" (see Daily GPI, Oct. 19, 2015).