Tuesday, June 22, 2010

Day 64: BP Oil Spill: Federal Judge Lifts Drilling Ban

Jun 22: U.S. District Judge Martin Feldman in New Orleans has ruled to lift the moratorium on deepwater offshore drilling ((Hornbeck v. Salazar CA 10-1663). In his Order the Judge said, ". . .after receiving evidence at a hearing on June 21, 2010, hereby finds: (1) that plaintiffs are substantially likely to prevail on the merits of their claim for the government defendants' violations of the Outer Continental Shelf Lands Act and its implementing regulations; (2) that, in the absence of the relief requested, plaintiffs will incur immediate and irreparable harm to business including the irretrievable loss of vessels' useful life, loss of crews that have long been associated with their particular vessels, loss of shore-side teams and disruption of longstanding contractual relationships with offshore service vendors and other satellite services for the operation of its fleet, all of which is not subject to calculation; (3) that the irreparable harm to plaintiffs should the Court decline to grant the application for the relief requested outweighs the harm which the granting of such relief may cause to any legitimate interests of defendants; and (4) that the entry of this Order will serve the interests of justice and the public interest."
    The Court's Order requires the Department of Interior, "until a full trial on the merits is had, are hereby immediately prohibited from enforcing the Moratorium, entitled "Suspension of Outer Continental Shelf (OCS) Drilling of New Deepwater Wells," dated May 28, 2010, and NTL No. 2010-N04. . . as applied to all drilling on the OCS in water at depths greater than 500 feet. . ."
    The American Petroleum Institute (API) issued a statement regarding the decision and said, "We welcome Judge Feldman's decision to lift the moratorium on deepwater operations in the Gulf of Mexico. The administration acted appropriately in its immediate steps to inspect every rig in the Gulf following the Deepwater Horizon explosion. Those inspections were necessary to assure Americans that offshore operations were safe and subject to appropriate oversight. In addition, the oil and natural gas industry took immediate steps to review practices and equipment to ensure safety and environmental protection, through the formation of two industry-wide task forces. The task forces provided important insights to the Department of Interior during its earliest examination of Gulf operations.
    "Those task forces, and two recently created ones, are actively working to find ways to improve the safety of offshore operations, subsea well control and oil spill response. They should prove invaluable to the independent commission established by the president to investigate the Deepwater Horizon incident. Their work, and the work of the commission, will help ensure that deepwater oil and natural gas exploration and production is the safest and cleanest in the world. The moratorium was an initial reaction to concerns about the safety of offshore oil and natural gas operations. However, an extended moratorium would have a tremendous impact on the nation's energy security -- and cause significant harm to the region of the country that was already suffering from the spill -- without raising safety or improving industry procedures. With this ruling, our industry and its people can get back to work to provide Americans with the energy they need, and do it safely and without harming the environment."
    In other news, the Obama Administration sent a third bill for $51.4 million to BP and other responsible parties. The Federal government bills BP and the other responsible parties regularly. BP and other responsible parties have paid the first two bills in full -- totaling $70.89 million.
    According to information from BP, for the last 12 hours on June 21st (noon to midnight), approximately 7,150 barrels of oil were collected and approximately 5,250 barrels of oil and 27 million cubic feet of natural gas were flared. On June 21st, total oil recovered was approx. 25,830 barrels (15,560 barrels of oil were collected; 10,270 barrels of oil were flared; and 52.2 million cubic feet of natural gas were flared). Total oil recovered from both the LMRP Cap and Q4000 systems since they were implemented is approx. 298,600 barrels. An additional 22,000 barrels were collected from the RIT tool earlier in May bringing the total recovered to approx. 320,000 barrels. BP will provide the next update at 6:00 PMCDT on June 22, 2010.
    In a speech to the World National Oil Companies Congress in London describing the spill and response, BP said, "We continue to make progress. We are now containing and collecting up to 25,000 barrels of oil a day, and additional systems we are putting in place should have the capacity to contain up to 50,000 bbl/day and beyond in the coming weeks. Ultimately, we believe that the relief wells we are drilling will enable us to kill the well." In a response update, BP indicated on June 21, that work on the first relief well, which started May 2, continues and has currently reached a measured depth of 15,936 feet. The second relief well, which started May 16, is at a measured depth of 10,000 feet. Both wells are still estimated to take approximately three months to complete from commencement of drilling.
    To date, BP reports that over 65,000 claims have been submitted and more than 32,000 payments have been made, totaling over $105 million. The cost of the response to date amounts to approximately $2.0 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and Federal costs. Additionally, NOAA expanded the no fishing zone to 36 % of the Gulf (See related article below).
    Access Judge Feldman's 22-page opinion (click here). Access the 3-page Order (click here). Access various media reports on the decision (click here). Access a release from API (click here). Access the complete and lengthy speech from BP at the Oil Congress (click here). Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here).