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Federal court rejects drilling moratorium


A Federal appeals court has refused to restore a moratorium on offshore drilling as requested by the Obama administration.

The AP is reporting that a three-judge panel of the 5th U.S. Circuit Court of Appeals issued the ruling following an afternoon hearing in New Orleans.

While the appeal court’s ruling could open the door to a resumption of drilling in the Gulf of Mexico pending another hearing later this summer, the AP says, the decision likely won’t affect Shell’s Arctic drilling operation, planned for this summer. That’s because the U.S. Interior Department also raised separate concerns about the challenges of operating in — and cleaning up an oil spill — in the Arctic.

When the U.S. Department of the Interior announced the first moratorium in late April, it also announced the suspension of pending or new drilling permits for offshore projects in new locations like the Arctic, pending further environmental reviews. Although Shell isn’t sure which mandate its Alaska operations falls under, it says any lifted bans will come too late to restart its 2010 exploration plan for Alaska’s waters. And unless it gets good early warning signs about the mood at the Interior Department, 2011 may be at risk, too, said company spokesman Curtis Smith.

The company is unwilling to wait until Spring to make expensive decisions about its operations and wants assurances soon concerning whether the Interior Department will even consider new permits for 2011 and if so, whether its regulators have the time and ability to give attention now to pending proposals, Smith said.

The battle over the moratorium does, however, affect Shell’s operations in the Gulf where it has both production wells and new sites slated for drilling.

The Interior Department issued the drilling moratorium on offshore deepwater drilling in May, about a month after BP’s Deepwater Horizon rig exploded in the Gulf of Mexico, killing 11 workers.

Several oilfield service companies sued to block the moratorium. A federal judge agreed with them on June 22 and the Justice Department appealed to the 5th Circuit panel.

The AP says the three-judge panel likely will hold another hearing on the merits in late August or early September.

Jul 8, 2010


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