The People of America's Oil and Natural Gas Indusry

Moratorium Back in Court

Jane Van Ryan

Jane Van Ryan
Posted August 10, 2010

The lawsuit filed by Hornbeck Offshore Services Inc. against the administration's moratorium is headed back into court. U.S. District Court Judge Martin Feldman, who granted a stay against the first deepwater drilling ban calling it "arbitrary and capricious," will hear the government's arguments in support of the moratorium today.

Last week, Ensco Offshore Co. filed a 450-page brief in its suit against the moratorium, accusing the administration of imposing "onerous new requirements for both shallow water and deep-water drilling" that violate the government's own rulemaking process. Rather than sending "notices to lessees" containing new drilling requirements, Ensco asserts the government should have issued a formal notice of rulemaking and held a public comment period.

Ensco is asking Judge Feldman to block the deepwater drilling moratorium, prevent the government from enforcing other offshore drilling requirements, and compel the government to act expeditiously on drilling applications. (Houston Chronicle)

Although administration officials continue to say there is no moratorium on shallow-water drilling, the government's own permit-tracking Web site shows only two new wells have been approved in the past few months. With fewer wells being drilled, the U.S. Department of Energy (DOE) yesterday revised its predictions for Gulf oil production.

According to the Short-Term Energy Outlook, Gulf of Mexico oil production is expected to decline 120,000 barrels per day (bbl/d), "mostly average reduction...of about 82,000 bbl/d in 2011 due to the current 6-month moratorium on deepwater drilling." At the same time, the U.S. Energy Information Administration also projects that U.S. oil consumption will rise next year by an estimated 170,000 bbl/d.

Increased demand and reduced domestic production doesn't bode well for America's energy future. It's clear that the administration's moratorium could put the United States on the road toward greater dependence on imported oil and lessened energy security.