Obama loses drilling moratorium appeal

By Allen Johnson (AFP) – 1 day ago

NEW ORLEANS, Louisiana — The Obama administration lost its bid to keep a six-month freeze on offshore drilling, and BP was to outline Friday its next steps to cap the well gushing oil into the Gulf of Mexico.

A federal judge blocked the deepwater drilling moratorium last month after 32 oil companies and local officials argued it was causing irreparable economic harm.

The Fifth Circuit Court of Appeals on Thursday denied the administration's emergency request to stay that judge's order pending appeal.

The government failed to show "a likelihood of irreparable injury if the stay is not granted," the appeals panel judges wrote in a 2-1 ruling.

The government also "made no showing that there is any likelihood that drilling activities will be resumed pending appeal."

Interior Secretary Ken Salazar has said he will soon issue a new order to block deepwater drilling regardless of how the court ruled, and oil companies have not resumed operations due to the legal uncertainties.

The court noted that Salazar "has the right to apply for emergency relief if he can show that drilling activity by deepwater rigs has commenced or is about to commence."

Louisiana Governor Bobby Jindal hailed the court's decision but expressed concern that the uncertainty has created a "de facto moratorium" which could cost the state 20,000 jobs.

"The federal government has an entire agency dedicated to monitoring safe drilling," Jindal said in a statement.

"It shouldn't take them six months or longer for a new national commission to ensure safety measures are in place and their laws and regulations are being followed."

Meanwhile, US officials ordered BP to outline by Friday afternoon its next steps in the fight to stop the spill, saying efforts to cap a blown out well were entering a "critical stage."

After days of high winds hampered clean-up and containment efforts, forecasters are predicting seven to eight days of good weather, and the US administration is keen to press ahead before the Atlantic hurricane season truly gets underway.

BP is preparing to replace the containment cap on the ruptured wellhead with a more secure seal and hook up a third containment ship to the system in a bid to capture nearly all the gushing oil.

"The sea is calming, which gives us the window in what... we now understand as an extremely active tropical storm and hurricane season," a senior US official told journalists.

A new well cap would give engineers greater flexibility if they have to move the containment ships quickly because of an approaching storm.

But before the administration gives BP permission to go ahead, it wants detailed timetables for the steps ahead and contingency plans in case things go wrong.

BP managing director Bob Dudley said earlier Thursday that the firm was hoping to permanently cap the gushing well ahead of schedule, as early as July 27, when the troubled energy giant reports second-quarter earnings.

It is the first time BP has set a fixed target date for ending the disaster, and is ahead of a mid-August time frame outlined by the government for completing two relief wells to seal the leak.

But US officials remained cautious about the date, stung by a string of botched efforts to contain the massive spill now in its 11th week.

If the relief wells can be completed ahead of schedule "we can all jump for joy," said Admiral Thad Allen, Washington's pointman on the disaster, adding the government's mid-August target was more of a "realistic expectation."

Dudley conceded in an interview with The Wall Street Journal that the company's "perfect case" deadline, threatened by the rough weathers of hurricane season, was "unlikely."

An estimated two to four million barrels of oil have gushed into the Gulf of Mexico since the catastrophic April 20 explosion destroyed the BP-leased Deepwater Horizon drilling rig and killed 11 workers.

Oil has now washed up on 519 miles (835 kilometers) of shoreline across all five Gulf states -- Texas, Louisiana, Mississippi, Alabama and Florida, forced the closure of vast areas of fishing grounds and threatened scores of coastal communities with financial ruin.

BP said Thursday more than 100,000 spill-related compensation claims have now been filed against the company.

Ken Feinberg, the US lawyer overseeing BP's 20-billion-dollar disaster fund, said there was "no cap" on the fund, and that the firm would still be on the hook for claims payments should they exceed the 20 billion.


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Gulf oil spill: Drilling moratorium rejected again
July 8, 2010 | 5:10 pm

A federal appeals court on Thursday rejected the Obama administration’s request to keep a six-month moratorium on deep-water oil drilling, saying the government failed to show it would suffer “irreparable harm” if work resumes on the approved well sites in the Gulf of Mexico.

The decision, issued shortly after the three-judge panel of the U.S. 5th Circuit Court of Appeals heard arguments in a crowded New Orleans courtroom, was a blow to the administration’s plan to cease new drilling operations in waters deeper than 500 feet while investigators probe the cause of the devastating April 20 oil rig explosion and massive spill.

Attorneys for Interior Secretary Ken Salazar had urged the appeals court panel to leave the drilling ban in effect while emergency crews work to contain the oil still gushing out of the damaged wellhead at the rate of up to 60,000 barrels a day.

Eleven people were killed when Deepwater Horizon rig exploded, setting off the biggest offshore oil spill in U.S. history.

One of the three judges dissented, saying he would have granted the government’s request for a stay on the lower court's order. The panel ruled unanimously, however, in calling for an expedited hearing on the merits of the government need for a drilling halt in the wake of the BP spill disaster. That hearing was set for late August.

U.S. District Judge Martin L.C. Feldman struck down the government moratorium on deep-water drilling on June 22, at the urging of drilling-support companies, which argued that the halt threatened devastating economic harm to the region. The companies, led by Hornbeck Offshore Services, argued that Feldman’s ruling was correct in deeming the administration action excessive and unsupported by facts.

As Louisiana Gov. Bobby Jindal sat in the front row of the crowded courtroom, the appeals court judges peppered the lawyers for both sides with questions that foreshadowed their 2-1 ruling against allowing the blanket moratorium.

The judges also questioned the likelihood of another spill occurring, one of the government’s main arguments for keeping the moratorium in place while implementing new safety measures on drilling operations.

-- Carol J. Williams and Nicole Santa Cruz