Boaters gather as the Royal Dutch Shell PLC icebreaker Fennica heads up the Willamette River in Portland, Ore. | AP Photo Obama pulls plug on new Arctic oil drilling

The Obama administration on Friday pulled the plug on plans to sell new oil and gas drilling rights in the Arctic waters, a pivot away from energy development in the environmentally sensitive region after Shell's costly failure to find crude there.

Interior's move to cancel the sales marked an acknowledgment of the dismal economic reality facing aspiring Arctic drillers, who had shown little interest in the potential lease sales amid a global downturn in oil prices. But it also gave greens the chance to take a fresh victory lap for their successful campaign to press Democratic presidential front-runner Hillary Clinton to publicly oppose all oil and gas development in the Arctic.


Sierra Club chief Michael Brune said in a statement that activists' campaigns against Shell, which walked away from its multibillion-dollar Arctic effort last month , "showed that people power can and will continue to overcome Big Oil."

The Interior Department announced it had scrapped Arctic oil and gas leasing sales planned for 2016 and 2017, and also said it would deny requests by Shell and Norway's Statoil to extend their current Arctic lease terms past the 10-year mark. Environmentalists cheered a move to scrap sales in a region they say is too environmentally sensitive to risk drilling, while senior House Republican Rob Bishop slammed the administration's "dangerous priorities."

Bishop, who is the chairman of the House Natural Resources Committee warned that Interior's decision risks giving Russia the lead in the race to develop the Arctic oil fields. "While the Obama administration pats itself on the back, [Russian President Vladimir] Putin is patting this administration on the head," he said in a statement. "Obama has once again played directly into Russia's hands as he destroys our nation's energy potential."

And Sen. Lisa Murkowski (R-Alaska) said the decision was just the latest injury the administration had delivered to the state.

"This is a stunning, short-sighted move that betrays the Interior Department's commitments to Alaska and the best interests of our nation's long-term energy security," she said in a statement. "Today's decision is the latest in a destructive pattern of hostility toward energy production in our state that began the first day this administration took office, and continued ever since."

Interior, which also decided against extending existing Arctic lease terms on properties controlled by Shell and Norway's Statoil, said the decision was an economic one.

"In light of Shell's announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the Arctic in the next year and a half," Interior Secretary Sally Jewell said in a statement.

Oil companies have slashed their spending because of the sharp drop in crude prices, and few were likely to pour money into risky investments in the Arctic after Shell's failure there.

In August, Clinton moved to the left of President Barack Obama by declaring her opposition to drilling in the Arctic waters - one in a series of positions that drew praise from the environmental wing of the Democratic Party - and that came amid a strong challenge to her campaign from Sen. Bernie Sanders (I-Vt.).

Environmentalists are likely to use the Friday decision to press the administration to abandon future plans for Arctic leasing in its next five-year offshore plan, which is set to be finalized in the coming months. But the Interior cancellation also puts fresh pressure on leaders in Alaska, where Independent Gov. Bill Walker described himself as "disappointed."

"Any action that limits our ability to explore for more oil - to increase much-needed oil production through the Trans-Alaska Oil Pipeline - creates unnecessary uncertainty and burden on our economy," he said in a statement.