U.S. court approves Gulf of Mexico oil drilling plan

WASHINGTON (Reuters) - In a big win for oil companies, a federal appeals court said it will allow the U.S. Interior Department to move forward with oil and natural gas leasing plans for the Gulf of Mexico that were drawn up by the Bush administration.

The department in May sought clarification of a court decision that struck down the Bush administration’s five-year (2007 to 2012) offshore oil and gas drilling plan based on the court’s findings that a proper review had not been done on how the drilling would affect the environment.

The initial dispute focused on offshore drilling in Alaskan waters, but the department wanted to know whether leases in the Gulf of Mexico would also be affected.

In a ruling on Tuesday, the U.S. District Court in Washington said leasing plans for the Gulf could continue, as could drilling off Alaska, but the department would have to conduct a review of the environmental risks before approving significant energy development activities.

If the department fails to carry out the risk analysis, the court said it may throw out the leasing plan.

Interior Secretary Ken Salazar said he was pleased with the court’s decision and will go forward with a Gulf of Mexico lease sale planned for August 19.

“President Obama has made clear that a comprehensive energy plan that reduces America’s dependence on foreign oil must include domestic production, and the Court’s ruling allows us to move forward in a balanced way,” Salazar said.

“The court made the right decision by allowing the continued production of oil and natural gas from Gulf of Mexico,” said the American Petroleum Institute, which sued to allow drilling in the Gulf to continue. “The nation’s energy security depends upon these resources.”

The trade group encouraged the department to quickly conduct new environmental reviews of offshore leases in Alaska so future exploration and production of the state’s vast oil and gas resources can take place.

The Alaska Wilderness League said the court will keep “strict oversight” of the department as it conducts a new environmental analysis.

“This drilling plan and the associated seismic testing, increases in vessel traffic, proposed large onshore and offshore infrastructure projects, and projections of oil spills in our unindustrialized homelands is extremely stressful,” said Caroline Cannon, president of a native Alaskan village who sued to block the five-year drilling plan.

Reporting by Tom Doggett; editing by Jim Marshall