U.S. issues new offshore oil drilling ban

NEW ORLEANS/WASHINGTON (Reuters) - The Obama administration issued a new moratorium on deepwater oil drilling on Monday, a move the industry said was unnecessary and would place tens of thousands of jobs at risk.

Shares in BP Plc shares surged and sources said the British energy giant is in talks with U.S. energy company Apache Corp and others to sell assets worth up to $10 billion.

Meanwhile, BP was in the process of installing a new cap on its ruptured deep-sea well to try to capture almost all the oil that was spewing into the Gulf of Mexico for the 84th day.

Interior Secretary Ken Salazar unveiled the new six-month moratorium, worded differently from an earlier drilling ban after a U.S. appeals court struck down the original moratorium last week.

“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,” Salazar said.

The new ban will extend until November 30 and affects the same drill rigs as before, although it is based on types of drilling technologies rather than on water depths as the old one was.

President Barack Obama is under pressure to make offshore drilling safer and hold BP accountable as the spill hurts multibillion dollar tourism and fishing industries across all five states along the Gulf of Mexico.

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The oil industry reacted to the new drilling ban by saying it would make matters worse.

“It is unnecessary and shortsighted to shut down a major part of the nation’s energy lifeline while working to enhance offshore safety,” said American Petroleum Institute CEO Jack Gerard. “It places the jobs of tens of thousands of workers in serious and immediate jeopardy and promises a substantial reduction in domestic energy production.”

Analysts said the oil industry was likely to contest the new ban in court, but drilling was unlikely to resume any time soon given the prospect of lengthy legal battles.

The White House was confident the new moratorium would stand up in court, spokesman Robert Gibbs said.

Fear of new rules and regulations has already led many drillers to slow their exploration in the Gulf of Mexico, and some energy analysts have said the hesitation could last longer than six months.

In New Orleans, Obama’s independent oil spill commission held its first hearings on the impacts of the spill and of the drilling ban.

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Michael Hecht, of the development agency Greater New Orleans Inc, told the hearing a drilling freeze threatened 24,000 jobs in Louisiana alone.

The panel of seven engineers, environmentalists and former politicians is investigating decisions by oil companies and government regulators that may have led to the disaster. Its findings will be crucial to any new regulations put in place and an eventual relaxation of the drilling ban.

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BP shares surged more than 9 percent in London and nearly 8 percent in New York on Monday, driven by the potential asset sales and hopes for a new system to capture almost all of the spewing oil.

“It’s probably worth more than what it’s trading for right now if they can ever get this well capped and get the cleanup effort really going,” said Ted Parrish, a co-portfolio manager at Henssler Equity Fund in Georgia.

The asset sale talks are at an exploratory stage and it was uncertain whether any plans would be advanced enough to be disclosed before BP announces second-quarter earnings this month.

BP owns a 26 percent stake in Alaska’s Prudhoe Bay, the largest oilfield in North America and one of the 20 largest ever discovered.

BP and Apache declined to comment on reports of the talks.

BP is to install a new cap on the gushing well later on Monday that it said could capture virtually all of the leaking oil for the first time.

“It’s very close,” said Doug Suttles, BP’s chief operating officer of exploration and production. “We’re going through the final checks.”

BP, which said the cost of the spill was now about $3.5 billion, expects its first relief well to reach the blown-out well late this month, a first step in finally plugging the gusher by the first half of August as planned.

As several previous attempts to contain the oil have failed, BP is preparing a backup if the relief wells do not succeed. BP said it could install a new permanent oil-capture system by late August or early September.

Additional reporting by Kristen Hays in Houston, Alexandria Sage in New Orleans, Jeff Mason and Richard Cowan in Washington, Matthew Lynley and Matt Daily in New York; Writing by Timothy Gardner; Editing by Simon Denyer and Chris Wilson