Shell battles to preserve U.S. drilling rights in Arctic Ocean

WASHINGTON — Royal Dutch Shell is fighting to preserve U.S. drilling rights in Arctic waters three months after halting exploration indefinitely there because it failed to find meaningful oil or natural gas deposits.

Europe’s largest oil company filed a notice of appeal Tuesday challenging the Interior Department’s Oct. 29 rejection of the company’s requests to stop the clock on Arctic oil and gas leases that otherwise expire between 2017 and 2020. The dispute is expected to undergo an administrative review by the Interior Board of Land Appeals, possibly delaying a final judgment until after a new president takes office.

“We believe suspensions are warranted for reasons outlined in our original request,” Shell spokesman Curtis Smith said. “The appeal does not affect our recent decision to stop exploration offshore Alaska for the foreseeable future.”

Shell’s request comes as other companies have abandoned Arctic oil exploration that is bitterly opposed by Greenpeace, Oceana, Sierra Club and other environmental groups that say the drilling risks damaging a fragile ecosystem. The Obama administration also has backed away from selling new leases and canceled two planned auctions, citing low industry interest.

Shell said in October it was considering options “to protect the remaining value of our assets and leases” in the Chukchi and Beaufort seas north of Alaska. Chief Executive Officer Ben van Beurden told reporters that Shell has other prospects in the region, though disappointing results at a critical test well condemned the company’s Burger project, a Chukchi Sea site where it drilled for oil last summer.

Norwegian oil company Statoil last month said it would abandon 16 solely held leases in the U.S. Arctic and relinquish its stake in 50 others it held in partnership with ConocoPhillips.

ConocoPhillips, meanwhile, has asked the Interior Board of Land Appeals to consider suspending its own leases after the agency’s Bureau of Safety and Environmental Enforcement rejected the request. That appeal is stayed while settlement talks are under way.

In general, leases expire at the end of their terms unless operators are “conducting operations” such as drilling, reworking wells or producing oil and gas. Federal law does not give the Interior Department authority to issue blanket extensions and requires companies to lay out a specific plan for drilling and developing leased acreage in order to get more time.