Offshore drilling ban: Will revised moratorium appease courts?

The Obama administration released a new version of its moratorium on offshore drilling, saying the ban was needed to protect against the risks of another accident.

The Obama administration on Monday unveiled a retooled moratorium on deepwater drilling intended to withstand legal attacks by the oil and gas industry, which in May won a federal court injunction blocking an earlier six-month moratorium.

Just last week, a federal appeals court panel refused to grant an administration appeal to suspend the injunction.

To blunt the industry's argument that it is being "arbitrary and capricious" in its decision to suspend all deepwater drilling, the Department of Interior is trying a new tack.

Under its revamped plan, the "new suspension" no longer cites the depth of water to define what drilling is banned – but rather bans drilling by any floating deep-water drill rigs – a critical substitution.

The administration had not been able to convince the federal judges that all drilling in water over 500 feet deep is dangerous. But focusing on equipment designed to operate in deeper water has the same effect, showing little sign that the administration was backing down in the face of claims that the suspension is causing big economic damage to the Gulf economy, analysts said.

"We reiterate our expectation that continued 'safety first' messaging from the White House will continue to trump explicit political concerns related to [Gulf of Mexico] job losses," wrote Kevin Book, an energy analyst with ClearView Partners, a Washington-based energy policy firm in an analysis of the decision.

This time the administration also is not citing a six-month time period, but is leaving the door open to an earlier resumption if it sees fit. This, too, was seen by analysts as less about flexibility and more about deflecting legal challenges.

“More than 80 days into the BP oil spill, a pause on deepwater drilling is essential and appropriate to protect communities, coasts, and wildlife from the risks that deepwater drilling currently pose,” said Ken Salazar, Secretary of the Interior, 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.”

The new pause on deepwater drilling, the department said, would give time for:

• Evidence to be submitted by operators that demonstrate they have the ability to respond effectively to a potential oil spill in the Gulf, especially in light of the "unprecedented commitment of available oil spill response resources that are now being dedicated to the BP oil spill."
• Assessment of "wild well intervention and blowout containment resources" to determine strategies to make those resources swiftly available if another blowout were to occur.
• Collect and analyze evidence data on the potential causes of the explosion and sinking of the Deepwater Horizon offshore drilling rig, including input from the presidential commission and congressional investigations.

In the new moratorium, the administration is much more specific about the threat. The suspension is needed because of "an extensive record of existing and new information indicating that allowing new deepwater drilling to commence would pose a threat of serious, irreparable, or immediate harm or damage to the marine, coastal, and human environment."

Blowout preventers of the sort that failed aboard the Deepwater Horizon have come in for particular scrutiny. New extensive testing of the preventers being used by the two rigs drilling relief wells to try to plug the Deepwater Horizon have found several potentially serious problems with mechanisms on the unit.

Three of four problems involved "shuttle valves" that, if they don't work, can cause the large safety device to fail to close off a well that is running wild, the department said.

The fourth problem, however, was related to a failure of one of the blowout preventer's control systems. Each preventer has a yellow pod and a blue pod – the brains of a blowout preventer. Each backs up the other. They are supposed to respond to commands from the surface and order huge "shear ram" valves to close, slicing through drill pipe and shutting off the well in the event of a blowout.

But a broken solenoid connection on the "blue pod" of one of the relief well's blowout preventer's stopped that pod from closing the casing shear rams during a test, the department said.

Such a failure holds potential for the same type of disaster that befell the Deepwater Horizon, experts say.

For Salazar, the four failures were more critical evidence that had to be factored in during the new suspensions. "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.”

Oil industry representatives were little mollified by the new suspension's outlines. "Unfortunately, the administration does not recognize the potential consequences because virtually no changes were made to this new drilling ban – it's simply more of the same shortsighted policies being created," the Independent Petroleum Association of American said in a statement.

Lawmakers on both sides of the aisle either hailed or decried the decision. Rep. Ed Markey (D) of Mass. backed the switch. “This moratorium will reduce oil spill risk while the Gulf will continue to produce oil. As new laws and safety measures are put into place on these few dozen rigs, 97 percent of the manned rigs in the Gulf will still be allowed to work," he said in a statement.

But Rep. Doc Hastings, (R) of Wash. saw things differently: "The Obama Administration’s latest attempt to impose a moratorium on offshore drilling will only cause further harm to Gulf State economies," he said in a statement. "We must ensure that American offshore drilling is the safest in the world, but we should not make knee-jerk decisions that threaten jobs, the economy, energy independence and national security.”

Related:

• Top Kill 2: BP aims to turn off Gulf oil spill spigot soon
• The cap is off: why that is not a disaster in Gulf oil spill
• Gulf oil spill: Two weekend operations could boost oil collection