IE 11 is not supported. For an optimal experience visit our site on another browser.

Revised deep drilling moratorium is unveiled

/ Source: staff and news service reports

After two court rulings against its six-month moratorium on new deepwater oil and gas drilling, the Obama administration on Monday announced a revised ban, saying it would end by Nov. 30 or sooner and it would no longer be based on water depths.

The revision did nothing to mollify industry, but the administration said it was confident the more specific moratorium would bolster its bid to get a lawsuit by industry dismissed. The moratorium does not affect existing offshore production platforms, only projects seeking permits to drill for oil.

The Interior Department said the revision incorporates "new evidence regarding safety concerns" as well as new procedures to gather industry feedback. Moreover, the revision suspends drilling not based on water depth, it said, "but on the basis of the drilling configurations and technologies."

"A pause on deepwater drilling is essential and appropriate to protect communities, coasts, and wildlife from the risks that deepwater drilling currently pose," Interior Secretary Ken Salazar said in a statement. "I am basing my decision on evidence that grows every day of the industry's inability in the deepwater to contain a catastrophic blowout, respond to an oil spill, and to operate safely."

Interior said the moratorium could extend through Nov. 30, adding that some permits might be allowed before then if drillers show safety concerns have been remedied.

"I remain open to modifying the new deepwater drilling suspensions based on new information," said Secretary Salazar, "but industry must raise the bar on its practices and answer fundamental questions about deepwater safety, blowout prevention and containment, and oil spill response."

Sen. Mary Landrieu, D-La., welcomed having a set date, saying it would give industry some certainty, but added she thinks any moratorium should not last longer than 30 or 45 days.

Industry not satisfied
The American Petroleum Institute was quick to criticize the revised moratorium, saying it did not provide a clear path for the resumption of deepwater drilling.

At the White House, spokesman Robert Gibbs said the administration is confident that its revised moratorium will stand up in court.

On Thursday, a federal appeals court rejected an administration request that a lower court ruling against the original moratorium be lifted while the case goes to trial.

The appeals court said it would hear arguments on the merits of the case in late August or early September.

The Justice Department said Monday that it would go back to the appeals court with the new moratorium and ask for the lower court ruling to be lifted and the case to be dismissed.

While it's possible that 33 exploratory wells suspended by the moratorium could resume drilling during the legal battle, companies might not bother with the expense while the ultimate future of the projects hangs in the balance.

Diamond Offshore Drilling — the largest U.S. driller, employing 11,000 people in the Gulf alone — said it was moving two rigs out of the Gulf as a result of the moratorium and expected others to follow suit.

The moratorium, which prompted a lawsuit from oil and gas service companies, was first rejected June 22 by U.S. District Judge Martin Feldman, who said it was too broad and failed to take into account the economic impact it would have on the industry and Gulf Coast economies.

The Interior Department appealed, asking the 5th U.S. Circuit Court of Appeals to let the temporary ban stand until it ruled on the merits of the case.

"We continue to believe that it is not appropriate to drill new deepwater wells in the Gulf until we can be assured that future drilling activity can be conducted in a safe and environmentally responsible manner," said Interior Department spokeswoman Kendra Barkoff after the ruling Thursday.

Justice Department lawyer Michael Gray argued Feldman abused his discretion when he overturned the moratorium, which originally halted the approval of any new permits for projects drilled below 500 feet.

Lawyers for the several oilfield service companies argued the administration failed to show that "irreparable harm" would take place if the drilling ban was lifted.

Feldman said the moratorium "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."

Interior Secretary Ken Salazar said at the time that he would issue a new moratorium that could be refined to reflect offshore conditions and allow drilling in areas where reserves and risks are known rather than in exploratory reservoirs.

Presidential panel begins work
The moratorium was issued over six months, the same amount of time that President Barack Obama gave a presidential commission to investigate the accident.

That panel on Monday began two days of hearings in New Orleans on the "root cause" of the Deepwater Horizon rig explosion and subsequent spill. Witnesses were to range from fishermen and academics to government officials and one BP executive.

At the hearing, a rival drilling executive said other oil operators shouldn't be tarred because of one bad apple: BP's Deepwater Horizon rig.

Larry Dickerson, president of Diamond Offshore Drilling, told commissioners that the April 20 explosion and resulting oil spill were "the result of reckless operating mistakes."

Dickerson said on the wells they run, they would stop work immediately if something goes wrong. That's even if a customer, like BP, wants to keep going.

"It appears that somebody may not have adequately monitored what's coming out of the hole," Dickerson said. He said he didn't have first hand knowledge but based his comments on media reports.

He said errors were likely made in monitoring drilling mud, in decisions on when to use the blowout preventer and about whether BP or its contractor, Transocean Ltd., was in charge of safety.

BP Senior Vice President Kent Wells testified about what BP was doing to try to stop the leak. None of the seven commissioners asked him about the causes of the rig explosion, and Wells did not discuss the question of blame.

Co-chair William Reilly told NBC's "TODAY" show ahead of the hearings that the panel's goal is to "make sure this never happens again" and to recommend policies to better regulate and develop offshore energy.

Reilly is a former head of the Environmental Protection Agency who now runs an investment group for water projects and companies. He is also a member of the board of directors at oil major ConocoPhillips, but took a leave for the duration of the investigation.

"The hearing itself is to give voice to the region," Reilly, a Republican, added ahead of the hearings. "Why were some of the decisions made with respect to both regulation and to immediate response?" he asked. "They look irregular to the casual observer."

The panel's other co-chair is Bob Graham, a former Florida governor and senator. Graham, a Democrat, said the panel will focus mostly on how things can be improved for the future.

Reilly, who headed the EPA during the 1989 Exxon Valdez oil spill, said he's already seen enough to fault the way the spill is being cleaned up.

He called current clean-up technology "primitive." He suggested the panel may learn enough about the use of oil dispersants to change the way the spill is being addressed.

Reilly on Monday pressed that point, asking Wells if he thought the cleanup technology had lagged behind the technology that allows drillers to go deeper into the ocean.

Wells did not respond directly, saying only that the accident would provide many lessons to be learned.

The seven-member panel, which has six months to present a report to President Barack Obama, has come under some criticism since it has no subpoena power and the initial hearings include no rig workers who were on board the Deepwater Horizon rig when it exploded on April 20.

One audience member at Monday's hearings bolted up during the first testimony from a Coast Guard admiral to challenge his view that chemical dispersants were "not persistent" in the Gulf. She was escorted out by security.