New offshore oil moratorium not focused on depth, but government says a pause is still needed

By Frederic J. Frommer, AP
Monday, July 12, 2010

New offshore oil moratorium not focused on depth

WASHINGTON — The Obama administration issued a new moratorium Monday on deep-water offshore drilling that no longer bans operators by the depth of water they’re operating in and stresses new evidence of safety concerns, hoping the revised ban will pass muster with the courts after the initial one was rejected.

The new ban does not appear to deviate much from the original moratorium, as it still targets deep-water drilling operators while defining them in a different way.

“More than 80 days into the BP oil spill, a pause on deep-water drilling is essential and appropriate to protect communities, coasts and wildlife from the risks that deep-water drilling currently pose,” Interior Secretary Ken Salazar said in announcing the new moratorium. “I am basing my decision on evidence that grows every day of the industry’s inability in the deep water to contain a catastrophic blowout, respond to an oil spill, and to operate safely.”

Government lawyers on Monday evening asked the U.S. 5th Circuit Court of Appeals in New Orleans to lift its order barring the moratorium because the new plan had been filed.

Lawyers also filed papers in U.S. District Court arguing lawsuits filed by oilfield service companies seeking to block the original moratorium should be dismissed given the terms of the new moratorium order.

The new moratorium was panned by industry groups and supported by environmentalists.

Last week, a federal appeals court rejected the government’s effort to restore its initial offshore deep-water drilling moratorium, which was issued following the catastrophic Gulf oil spill in April. The moratorium was first blocked last month by U.S. District Judge Martin Feldman.

The Interior Department said that like the original ban, this one applied to most deep-water drilling activities. But the department said the suspensions in the new moratorium “are the product of a new decision by the secretary and new evidence regarding safety concerns, blowout containment shortcomings within the industry, and spill response capabilities that are strained by the BP oil spill.”

The new moratorium also establishes a process to gather and analyze new information on safety and response issues, which could allow for identifying conditions to resume certain deep-water drilling activities. And unlike the last moratorium, which applied to waters of more than 500 feet, the new one applies to any deep-water floating facility with blowout preventers.

The National Ocean Industries Association, an industry trade group for offshore production, said that while the new moratorium doesn’t apply to anchored facilities using surface blowout preventers, “such facilities are generally used in shallow water, which makes the new suspension glaringly similar, if not even more restrictive than the original moratorium. It is not immediately clear how many facilities will be impacted.”

In a Q&A document, the Interior Department said that any count represents a snapshot in time. The document said that at the time of the BP spill, there were 36 floating drilling rigs that would have been affected by the new ban. It’s unclear whether the new moratorium would be more or less restrictive than the original one.

The offshore industry also complained that while the new moratorium opens the door to lifting the restrictions if industry provides assurance for adequate containment and response, “the problem for industry is that it is unclear what exactly it will take to convince the administration that such capability exists.”

In a memo to Michael Bromwich, the new head of the department’s agency that oversees offshore drilling, Salazar said that the moratorium will give industry time to come up with more effective blowout containment strategies and capabilities for deep-water operations.

“I cannot conclude at this time that deep-water drilling can move forward in a safe and environmentally sound manner,” he wrote.

Salazar also said that one factor in having the moratorium go through Nov. 30 is that hurricane season runs through that date.

“During this time of year, as we have already seen this year, the ability to contain and respond to a spill is often compromised by weather conditions,” Salazar wrote.

Other industry groups and pro-drilling lawmakers also criticized the new moratorium.

“It is unnecessary and shortsighted to shut down a major part of the nation’s energy lifeline while working to enhance offshore safety,” said Jack Gerard, president and CEO of the American Petroleum Institute. “The new moratorium threatens enormous harm to the nation and to the Gulf region.”

Sen. Mary Landrieu, a Louisiana Democrat, said in testimony to the presidential oil spill panel that she was “alarmed” at the Interior Department’s statement that its decision is supported “by an extensive record of existing and new information indicating that allowing new deep-water drilling to commence would pose a threat of serious, irreparable or immediate harm or damage to the marine, coastal and human environment.” Landrieu said that statement “contradicts testimony given by drilling experts and ignores the history of oil and gas operations in the Gulf.”

Carl Rosenblum, a lawyer for those who sued to block the moratorium, said they are reviewing the new moratorium and “we have substantial concerns about its consistency with Judge Feldman’s order.” He wouldn’t elaborate or say if they planned to challenge it in court.

Todd Hornbeck, CEO of Covington-based Hornbeck Offshore Services, one of the plaintiff companies, said he didn’t know how the new moratorium would affect deep-water drilling projects.

“I’ve got to review it first,” he said.

Meanwhile, environmental groups expressed support.

Catherine Wannamaker, a lawyer for several environmental groups that support the moratorium, said the new one doesn’t appear to be any less restrictive than the first one.

“We continue to believe it’s a necessary safety precaution,” she said. “The first moratorium was a rational decision made by (Salazar) and should have withstood judicial scrutiny. The new moratorium makes (his) reasoning more explicit and is a step in the right direction.”

Jacqueline Savitz, senior campaign director for Oceana, an international ocean conservation group, said the administration had no other choice.

“We commend the president for putting more drilling on hold,” she said.

Associated Press writer Michael Kunzelman in New Orleans and Pete Yost contributed to this report.

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