Ban Banned

U.S. District Judge Martin Feldmans ruling drew praise from oil-industry officials and politicians who said the ban would result in thousands of layoffs locally and across Louisiana.

Environmentalists who joined the federal government in defending the ban in court derided the judges decision. They claim the moratorium is needed to determine what caused the Deepwater Horizon drilling rig to explode April 20 and to improve safety amid the nations worst oil spill.

It was not clear whether the ruling would spur drillers to resume deepwater operations in the Gulf.

U.S. Interior Secretary Ken Salazar said he will impose a new moratorium within days along with additional information making clear why the six-month drilling ban is necessary.

In his ruling, Feldman sided with several offshore boat companies that argued the governments ban was arbitrary and capricious.

The blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger, Feldman wrote in a 22-page opinion. An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country.The suit was filed by Hornbeck Offshore of Covington and joined by a handful of other companies, including Edison Chouest Offshore of Galliano and Bollinger Shipyards of Lockport, all part of the oilfield-service industry crucial to the Houma-Thibodaux economy.

BACK TO DRILLING?

Efforts to reach company representatives Tuesday were unsuccessful, but others in the local oil industry expressed optimism. They said the judges decision could encourage major oil-and-gas companies to delay leaving the Gulf and buy some time for service companies who had been contemplating mass layoffs.

Its the right decision, said Chett Chiasson, director of Port Fourchon, the Lafourche parish port that serves as a shore base for 90 percent of deepwater activity in the Gulf. Its the first bit of good news weve had in a long time.

Its immediate effect may be to slow the feared exit of the affected 33 deepwater rigs from the Gulf, said Ken Wells, president of the Offshore Marine Service Association, which represents boat companies that serve offshore oil rigs.

This ruling says to a drilling contractor or oil company that theres still some hope, still some way we can work this out, Wells said. They definitely have it in their power to leave with their equipment; this gives them reason to think about it.

White House Press Secretary Robert Gibbs said the Obama administration believes the judge made the wrong decision.

The president strongly believes that continuing to drill at these depths without knowing what happened does not make any sense and potentially puts the safety of those on the rigs and safety of the environment in the Gulf at a danger, Gibbs said.

Obama enacted the ban May 27, ordering rigs drilling exploratory wells in waters 500 feet and deeper to halt work while a presidential commission tries to determine the causes the Deepwater Horizon explosion and make safety recommendations.Obama, as well as a range of environmental and other interest groups, contend the spill is a grim reminder of the dangers of oil production and a wake-up call for America to break its dependence on fossil fuels, an argument Gibbs reinforced Tuesday during a news briefing in Washington.

The tragic explosion, the unstopped gushing of oil and resulting damage to fishing and tourism industries, cultures, wildlife and the whole Gulf Coast should be more than enough cause for pausing risky deepwater activities until safety and environmental protection is assured, said Catherine Wannamaker, senior attorney at the Southern Environmental Law Center, who argued before the court on behalf of the environmental groups. Unfortunately, todays court decision allows short-term profit for some to trump safety, lives and the environmental health of the Gulf Coast upon which so many depend. Continuing the same business-as-usual approach to risky deepwater drilling that led to the loss of life and environmental disaster in the Gulf as if nothing had happened is outrageous.

But the ban sparked a strong backlash among local and state leaders, who say the administration fails to understand the vital role deepwater Gulf oil production plays in the economy, not just for rig workers but also for the boats that take them to the platforms, plants that make drill pipe and the cooks who make the food consumed offshore. As many as 20,000 jobs over the next 18 months could be affected, according to the states economic-development department.

U.S. Sen. Mary Landrieu, D-La., said she is overwhelmingly encouraged by the judges ruling.

Im going to strongly urge the administration not to appeal this ruling but try and find a way forward that would achieve the presidents goals for safety and responsibility that at the same time would not jeopardize and threaten a vibrant industry, she said in a telephone news conference.

UNACCEPTABLE COST

The decision came a day after the New York Times published a story in which the head of the presidential panel charged with overhauling deepwater-drilling safety said the ban could stretch into next year and that the commission will not hold its first meeting until mid-July.In a news release heralding the ruling, Gov. Bobby Jindal urged federal officials to speed their efforts.

Even more frustrating is the clear lack of urgency the federal government has in pursuing their own commission set up to study deepwater drilling, Jindal said. This is an unacceptable cost to our people of the federal government not being able to do their jobs quickly to ensure drilling is done safely.

The judges ruling lifts the ban, so drillers could legally start working immediately, said Robert Force, a professor of maritime law at Tulane University. But knowing this may not be last word, the prudent operator will wait to see whats going to happen.

Shell and Marathon Oil said Tuesday they would wait to learn the outcome of the legal proceedings before resuming.

The case now heads to the 5th U.S. Circuit Court of Appeals, and it will likely take at least a few weeks to get a hearing, said Eric Smith, a professor at the Tulane Energy Institute in New Orleans.

If appealed again, the case would head to the U.S. Supreme Court. Smith said it could take as late as December or longer to get a hearing there, though Force said the special circumstances of the spill could prompt quicker action.

Source:shiptalk