Ensco challenges new U.S. oil drilling moratorium

WASHINGTON Tue Jul 20, 2010 5:57pm EDT

WASHINGTON (Reuters) - Ensco Plc filed a lawsuit on Tuesday challenging the Obama administration's new deepwater oil drilling moratorium, saying it was mostly the same as the first ban that a U.S. court already put on hold.

The Interior Department "did not analyze the situation anew and with an open mind when deciding to impose the second moratorium," Ensco said in a complaint filed with the U.S. District Court for the Eastern District of Louisiana.

"Instead, it was a pre-ordained result that was announced on the very same afternoon this court enjoined the first moratorium," Ensco said, referring to comments by Interior Secretary Ken Salazar that he would issue a new moratorium.

A Justice Department spokeswoman declined to comment on the new challenge. The Obama administration suspended deepwater drilling after a blown-out well owned by BP Plc caused a massive oil spill in the Gulf of Mexico.

The initial moratorium, issued in late May and barring new drilling below 500 feet for six months, was put on hold after U.S. District Judge Martin Feldman found the order too broad, arbitrary and inadequately justified.

The Obama administration has defended the need for suspending deepwater drilling so that officials have time to investigate the cause of the BP disaster, issue new safety regulations and improve oversight.

The Interior Department issued the new moratorium on July 12. It barred drilling through November 30 on new wells that use subsea or surface blowout preventers similar to the one used on the BP well.

The administration said the suspension could be lifted once drillers provide more evidence of their ability to prevent a blowout and respond adequately should another deepwater catastrophe occur, and detail what assets are available to contain a second spill should it occur.

LEGAL UNCERTAINTY

Amid the legal uncertainty surrounding drilling in U.S. waters, some companies have begun moving their drilling rigs and employees elsewhere, adding more woes to the economies of U.S. Gulf Coast states with oil washing up on their beaches.

Ensco asked the court to declare the new moratorium unlawful and order the Interior Department to process and approve applications for permits to drill.

The Obama administration's "unlawful actions have wreaked havoc upon the entire offshore oil service industry in the Gulf of Mexico -- both deepwater and shallow water," Ensco said in its lawsuit filed with Feldman.

Only two of London-based Ensco's eight rigs under contract in the Gulf of Mexico are deepwater drillers, but a newly built deepwater rig is set to start work in the region next month.

Other drilling companies on Tuesday also criticized the new moratorium on deepwater drilling as no different from the suspension that Feldman blocked.

Hornbeck Offshore Services Inc and other oil drilling companies urged Feldman to reject the Obama administration's request to throw out the case against the drilling ban because of the newly revised moratorium.

Salazar "has issued a new, mirror image order the real-world effects of which are essentially identical to the moratorium whose legality plaintiffs challenge," they said in a court filing.

The Ensco case is Ensco Offshore Co v. Kenneth Salazar et al in U.S. District Court for the Eastern District of Louisiana, case no. 10-cv-01941. The Hornbeck case is in the same court, case no. 10-cv-1663.

(Additional reporting by Braden Reddall in San Francisco; Editing by Peter Cooney)

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