US Gulf oil drilling ban overturned by federal judge
- 22 June 2010
- From the section Business
A US federal court judge has blocked President Barack Obama's six-month moratorium on deep water oil drilling in the Gulf of Mexico.
The moratorium was put in place in the wake of the massive oil spill triggered by an explosion at a rig in April.
The judge said the lengthy ban was "invalid" and could not be justified, as the negative impact on local businesses was simply too great.
The White House said it would be appealing against the decision.
"An invalid agency decision to suspend drilling of wells in the depths over 500ft 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," judge Martin Feldman said.
The decision to overturn the ban follows vocal protests by the oil industry.
Top executives from BP, Transocean and other oil firms have warned against over-regulating deep sea oil drilling.
Oil found in deep waters is needed because the world will need 45% more energy by the year 2030, BP's chief of staff, Steve Westwell, told the World National Oil Companies Congress earlier on Tuesday.
Consequently, the world would need new reserves from "new frontiers", he said.
Steven Newman, chief executive of Transocean, which owned and operated the destroyed Deepwater Horizon rig that blew up on 20 April, had attacked the US ban on deep water drilling.
"There are things the [US] administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit," Mr Newman said on the sidelines of the meeting in London a few hours before the ban was overturned by the judge.
A prolonged ban on deep water drilling would also "be a step back for energy security", added Chevron executive Jay Pryor, suggesting it would "constrain supplies for world energy".
Mr Westwell said BP would re-assess how it balanced risks, but he also insisted that the leak in the Gulf of Mexico would not lead to deep water production being halted.
It would be a mistake, he insisted, to create an environment in which investment in deep water would become impossible.
"The world does need the oil and the energy that is going to have to come from deep water production going forward," he said.
"Therefore, the regulatory framework must still enable that to be a viable commercial position."
And he said "BP will come through", suggesting that most of the flow from the well in the Gulf should be staunched by August.