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Louisiana Federal Judge Blocks Drilling Moratorium
eldavojohn writes "In the ongoing BP debacle, the Obama administration imposed a six-month moratorium on offshore drilling and a halt to 33 exploratory wells going into the Gulf of Mexico. Now a federal judge (in New Orleans, no less) is unsatisfied with the reasons for this and stated, 'An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country.' The state's governor agrees on the grounds that blocking drilling will cost the state thousands of lucrative jobs." The government quickly vowed to appeal, pointing out that a moratorium on 33 wells is unlikely to have a devastating impact in a region hosting 3,600 active wells. And reader thomst adds this insight on the judge involved in the case: "Yahoo's Newsroom is reporting that the judge who overturned the drilling moratorium holds stock in drilling companies. You can view his financial disclosure forms listing his stock holdings online at Judicial Watch (PDF)."
The idea was to hit the "pause" button on 33 new wells while we figure out why the new-well drilling at Deepwater went so wrong.
There are still 3300+ wells operating in the Gulf which were unaffected by the moratorium.
Do you think that six months of wait on 1/100th of the Gulf wells will destroy the economy?
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I honestly don't think this will be much of an issue. You've seen what happened to BP. If you're a deep water drilling company and you don't have all your ducks in a row after that, you're an idiot. So Obama's reasoning for the moratorium, until the safety measures can be re-evaluated, is redundant because these companies had better be at the forefront of responsibility without further external incentives.
Kind of like how Ford, GM, and Honda were probably double and triple checking their acceleration systems after Toyota's little stint in the headlines recently.
What doesn't kill you only delays the inevitable
I have no problem with this ruling, seeing as the agency concerned has no evidence to show that what happened with the problematic rig is likely to happen, with any sort of likelihood, on any other rig.
This is the opposite of insightful.
The event on the problematic rig was highly unlikely to happen, but when it did happen there was no way to recover. It's still leaking now - two months later. Claiming that lightning won't strike twice is not an intelligent response.
We're so used to being shamed into believing that just because personal inclinations exist we have to throw out all logic and reason.
We're dealing with big oil. Conflicts of interest over oil companies are something we'd be idiots not to take seriously. Remember Joe Barton, on the House Energy and Commerce Committee? Actually apologized to BP a few days ago for them having to pay for the damage they caused? Should we assume that guy had public interest at heart?
They should all be compensated by BP.
134340: I am not a number. I am a free planet!
Were these the same regulators that were "inspecting" Deepwater Horizon?
The world moves for love. It kneels before it in awe.
Go ask Gulf fishermen.
Is this before or after the largest environmental disaster in that geographic region, caused by my industry? Because frankly, I'm not *that* much of an asshole to think my job is above tens of thousands of square miles of ecosystem.
Deepwater Horizon was a series of mistakes with known causes, not a tail-end probabilistic event. Future deep-water drilling will likely be more carefully regulated.
You have no idea what you are talking about. They are preventing any drilling in the GOM for 6 months and each rig costs about $1,000,000 a day to be on site. The rigs will be moved out of the gulf if they are not active. Scheduling a new rig can take as long as 3 years and there are plenty of areas overseas that would love to have them ASAP, so they won't be sitting around doing nothing. Its realatively cheap to run existing wells. The vast majority of work comes from drilling new wells. If that is on hold for 6 months the oil industry in the United States will be devestated, but that seems to be what everyone wants.
10: PRINT "Everything old is new again."
20: GOTO 10
I'm really getting sick of this little bit of misinformation.
Joe Barton, on the House Energy and Commerce Committee? Actually apologized to BP a few days ago for them having to pay for the damage they caused?
That is NOT what happened. I don't think anyone, including Joe Barton, thinks that BP should not pay for the mess thy have made. The apology was for the methods used by the administration to basically force BP to set up a $20B fund, completely bypassing due process. To be clear, I believe that BP should pay for everything but I question I question the viability of forcing BP to liquidate assets and set aside $20B - even big evil oil companies need operating revenue. Don't forget that a log of British citizens stand to lose a large chunk of their retirement if BP goes belly up.
If the preceding makes no sense to you take a basic finance class.
I still cannot find the droids I am looking for...
Oil industry apologists are saying we're all being whining, ungrateful children because we reap the benefits of cheap energy but bash the poor, hard-working people who put the gas in our cars. But what they don't mention is the fantastic amount of money spent buying this oil-dependent reality in the first place. From buying politicians to clouding the issues in the public forum to preventing research in clean alternatives. It's a sick, terrible system. And it's impossible to use the tools of democracy to fix it because even when we try to vote for change it's bait and switch.
The thing that gets me is how the writing can be plain on the wall and people who don't know better take their cue from people who do know better but whose financial best interests depend on pretending they don't. "Global warming is just a theory! It's still debatable!" Yeah, about as debatable as the theory that tobacco is a carcinogen. Hell, we can even get Republican presidents to mouth the words "oil addiction" and "we need to kick the habit." We just can't get anyone -- reps or dems -- to do a fucking thing about it. They're both beholden to the special interests.
I can't even begin to fathom that latest talking point, Obama's being mean to BP. Chicago-style takedown! What the fuck?! And I bet you're still upset about those fucking Eskimos beating up on poor ol' Exxon for all those decades trying to get the money they've been promised. $20 billion is going to be a drop in the bucket for all the damages wracked up and there will never be a full accounting. Most victims will never be made whole.
From the bleating on the right, you'd think that Obama had nationalized BP, crucified their board of directors on a line of crosses on a tarred beach, and signed an executive order to go to 100% renewables before 2012. If only! I'm actually pissed at how anemic his response has been. No, he can't snap his fingers and make the well go shut, he can't stand on the heads of the engineers and make them work faster but he could at least help unsnarl the clusterfuck that is the disaster response. He could take BP's management out of the loop on disaster mitigation. He could put the environmental experts in the control room so they can get the unfiltered information from the well head minus the BP spin. At the very least he could prevent the BP contractors from burning the sea turtles.
Yeah, yeah, mod me down. Go and confirm exactly what I'm saying.
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Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
Actually it's the folks on the Gulf coast who are most concerned about the moratorium, because they're the folks who make their living supplying the rigs that were put under the moratorium. A moratorium could put them, their friends, and their neighbors out of work.
All at a time when lots of people (fishermen etc) are already out of work from the spill, and when the unemployment rate before the spill was already high.
This isn't a case of people who don't care. They do, because it's their homeland getting polluted with oil. But they're worried about supporting their families too.
We may walk around in fields, and the odds of being bitten by a snake are rare. But if there are known to be poisonous snakes there, it makes sense to bring a snake bite kit with you, even if you never use it. If someone was bitten out in the field, then maybe we should postpone our picnic.
BP has essentially proven that at least some oil companies don't know what to do if there is a problem. A moratorium is just saying "get your act together". Except companies are desperately trying to point to BP as an anomaly, the shoddy worker in a collection of saints. So the moratorium is also saying "ok, let's check if you guys really are that saintly after all." After a massive catastrophe like this, it makes no logical sense to go full steam ahead as if nothing happened.
He was right that the government basically telling BP "Start coughing up without a being found guilty because we said so or we'll might start fining you/killing your licenses" should be illegal. Due process exists, and it should be followed. That's extortion.
He was an idiot for phrasing it as an apology to BP.
The idea that the government is setting a precedent that it can interfere with a business like that worries me. The BP case is really clear cut. Even if it was the contractor that messed up, BP was supposed to keep tabs on them and owned the well. But what happens when some large company gets accused of something else (say the Vioxx lawsuits) and the government starts pressuring them to pay out before any legal decision? What happens if it turns out, like power line cancer and thimerosol autism, that the company isn't at fault? How do they get all that money back?
I understand getting people money faster instead of the 20 year Exxon-Valdeeze thing, but this seemed so close to coercion.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
He didn't give it to people, he put it in escrow. You can argue that this is still wrong, but at least accuse him of what he actually did. He didn't just hand out a bunch of money to whomever he wanted.
"In America, first you get the sugar, then you get the power, then you get the women..." -H. Simpson
Also true. The number of fishing/shrimping/tourism/etc. jobs that rely on the Gulf *far* outweigh the number of oil/gas jobs in the area.
I am sure that there was no issue of "due process" here. BP did not have to do as the President requested. It was just the President asking BP to step up and do what they should do out of moral decency. Of course, they could have turned down the President. Of course, in that case they probably would have been sued by the Federal government into even greater oblivion for the damages they have caused. They also could have had their regulatory ass handed to them for the next how ever many years this administration was in power over every little infraction. I think BP just made a reasonable business accommodation. And for those of you whining about how unfair to BP this is... it's our local ecosystem. They can always go home and screw up their own if they don't like the way the game is played here.
That is all.
Nice try. If I'm walking in a field and I know that if I'm struck by lightning it will affect millions of people in the area, I better make damn sure I have my portable lightning deflector (work with me here) handy or I am being monumentally irresponsible.
I live ze unknown. I love ze unknown. I am ze unknown.
Maybe because it hasn't been exploding every day for three months and promising to do so for at least another four, affecting the fishing and tourism industries of four states?
But really, I don't think you want to hitch your rhetorical wagon to Massey Mining. They have more safety violations than BP, and their CEO should be in goddam jail.
"I guess the moral of the story is, don't paint your airship with rocket fuel." -- Addison Bain
To be clear, I believe that BP should pay for everything but I question I question the viability of forcing BP to liquidate assets and set aside $20B
They way you make it sound, BP was forced to go down to the local pawn shop and sell all the family heirlooms the next day. The Obama administration got a promise from BP that they would set aside a $20 billion account. The details have not been worked out but one detail that I did hear was that it was $5 billion a year for 4 years. Considering that BP made $16 billion in profits last year, I would think they could figure out a method to do so without disrupting the company financially.
- even big evil oil companies need operating revenue.
As a company, BP's revenue of $246 billion in 2009. Asking for less about 2% of revenue to be funded over the course of a year isn't a major strain on their revenue.
Don't forget that a log of British citizens stand to lose a large chunk of their retirement if BP goes belly up.
Did anyone say anything about bankrupting BP? No. BP made profits of $16, $22, $21, and $22 billion the last 4 years. At most, they will be losing out on profits for one of their last 4 years or 25% of the profits for the last 4 years.
One main reason that the administration was insistent about a fund is that though the Exxon Valdez incident happened over 20 years ago, some litigants in Alaska still haven't been paid yet. Could you wait 20 years for money that was owed to you?
Well, there's spam egg sausage and spam, that's not got much spam in it.
I've been waiting for someone to bring up this argument. It is completely flawed. If someone doesn't drill a well the oil doesn't magically disappear. If someone doesn't know how to drill a well without flooding the gulf with it they need to get the fuck out of the business. Another rig will be right behind them. If not, the oil isn't going anywhere.
Having to work for a living is the root of all evil.
LOL, tool.
Exactly what are you laughing at? A year ago, the common wisdom -- particularly on towards the right side of the political spectrum -- was that environmental concerns are just handwringing by whacko liberal moonbats, that increased offshore drilling is a necessary part of a comprehensive energy plan, that it would help reduce our dependency on foreign oil (somehow, magically, despite the fact that in free market system it all goes on the global market anyway), and that The Industry can be trusted to self-regulate.
Hell, if you read this thread, you'll *still* see people saying the industry can be trusted to self-regulate... it'll all take care of itself, don't you worry now.
You know what's behind this? You know that meme that probably more than half of slashdot FIRMLY believes -- that the private sector is always more competent than the public? That the public sector can't do anything right, can't regulate correctly, can't do anything other than act as a net negative drag on the private sector?
Yeah. Obama the radical socialist that he is? He partially believed that too. He believe what he was told by the executive apparatus and the oil companies -- that the oil companies had top expertise, that they knew exactly what they were doing, that they had safety dialed in and had right incentives to behave without further regulation. And, of course, that there wasn't massive regulatory capture during a presidential administration headed up by two guys who've been Oil guys for a long time.
What would be funny if it weren't so utterly pathetic and gravely consequential for the future of our society is that even though Obama has apparently learned his lessons, there's millions who won't.
Funny how it's playing out that way in financial regulation, too. We're all going to be asked to believe that cosmetic choices that won't cause any real pain for Wall Street are the best way to go -- and after all, the bankers and finance guys are the industry experts, so who better to advise us? We certainly wouldn't want meddling outsider officeholders drafting legislation about an industry they know little about without heavily consulting the industry about the best path, right? We wouldn't want heavy government involvement, anyway. That's a drag on The Market at best... and Socialism at worst.
You're going to hear this stuff. Again. And Again. Lots of times between now and the election. Some of you with fiscal conservative tendencies are going to fall for it. Some of you with libertarian tendencies are going to fall for it hook, line, and sinker. If enough of you fall for it, we're going to be here again in 5-10 years, same people saying loudly that the real problem was government meddling, socialism, we should have just let the private sector work. And the same actors in the private system will be racing their yachts and walking away with billions while socialized environmental and financial cleanup costs mount, one way or another.
Well, that's what you'll hear from some commentators. From others, you'll hear "LOL, tool."
Tweet, tweet.
The proper solution is not to stop drilling, but to require a relief drill to be dug at every site. That way if this happens again, we don't have to wait 4 months. This way we can be safe, collect oil, AND double employment on drilling platforms.
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The long term consequences are of the petroleum industry's own fault. BP (and others) should have weighed the risks of something really bad happening against cutting corners during drilling. Consequences include the swift reactive and punitive response of federal and local governments.
Where's the incentive for industries to regulate themselves (which they should do in addition to the government) if they are quickly relieved of the consequences?
These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
The magazine frowns upon all these things and it makes some sense. If, as The Economist suggests, BP's value has already dropped by $89 billion and that's "far in excess of all but the most dire forecasts of the ultimate costs of the spill," what is to be gained by all this backlash against the oil industry but a bunch of political posturing?
If a reduction in market capitalization was an actual expense for BP, this would be a moderately reasonable point.
Since that's absolutely not the case, then the point of the backlash is to ensure that BP actually pays the price for the spill, with the result that they and other companies are actually driven to improve their safety procedures and more importantly follow those procedures that they already should have been.
All that $89 billion means for BP is that they're a somewhat easier target for a stock buyout. It means that the fraction of their own stock that they own is less valuable, so if they were planning on any acquisitions using stock it's going to be more costly as long as the stock price is low. It means anyone who plans on cashing out their holdings in BP right now will make less money. It's not insignificant from a larger corporate strategy perspective, but it's actual impact to BP is nothing like what an actual $89 billion actually suggests.
Shame on The Freaking Economist for suggesting otherwise.
News flash: The United States is still inexorably reliant on its oil industry. If the Obama administration wants to do something about future oil disasters, maybe it should think more seriously about that and what can be done about it.
Like developing alternative energy sources from solar to nuclear, and encouraging the development and adoption of fuel efficient and preferably electric vehicles? Yeah, that's being done. I'm sure more can be done. I'm all for it. I hope you are too.
Also, had government done a better job of regulating the oil industry in the first place, BP's shoddy practices might not have gone unchecked and this disaster might never have happened.
Yes, that's very true. Who would have thought that doing everything possible to deregulate, and the underlying philosophy that regulation is unnecessary, would result in insufficient regulatory action?
Unfortunately firing the new MMS head for not cleaning up the cesspool of corruption and deliberate inefficacy that she inherited was only just the beginning of a long, long road to fixing this.
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If the moratorium continues, the drilling rigs will move where they can be utilized, and they'll stay there while there is work. Most won't just sit around and wait the moratorium out and hope it isn't extended. There are limited numbers of deep water drilling rigs, they take time to build, and nobody wants to build replacement rigs to meet a spot shortage because they've all moved to other areas due to this. So there could be a longer term impact even if the moratorium does end in 6 months.
So they are saying "if you don't let me play I'm going to take my toys and go home"?
Either there's oil (money) to be found in the gulf or there's not. If there is, then there will be companies ready to drill when the moratorium is lifted. Maybe it will take them 6 months to relocate equipment there, but they'll definitely be back.
Delaying a few dozen exploratory wells for a year while they investigate this accident and have a better idea of the cause *and* have time to enact new rules to prevent the same scenario from recurring doesn't seem like a bad course of action.
So, we had a environmental catastrophe drilling for oil in deep water, obviously the answer is to leave all future drilling in deep water to those who have a proven record on the environment, like the Chinese.
The truth is that all men having power ought to be mistrusted. James Madison
What I don't understand is, when I worked in the navy in a nuclear power plant, all the fail safes were designed around the worst imaginable thing going wrong and preventing that from causing core damage. Why the hell are any deep sea oil rigs being allowed to continue operating when we now know for a fact that they have no way to reliably stop their worst case scenario? It just seems illogical to me that they would risk what just happened again or even worse?
The local people who work for the oil companies are only a small fraction of the people who work in the tourist industry and fishing industry that are being destroyed by this oil spill. Not to mention the environmental damage and loss in quality of life.
Actually it's the folks on the Gulf coast who are most concerned about the moratorium, because they're the folks who make their living supplying the rigs that were put under the moratorium.
Oh, I don't know. I'm from the Gulf Coast originally, and everyone I know there is spitting mad about the spill, and would be perfectly happy to see the rigs gone, lest this get worse, or happen again, and the various malefactors severely punished. I don't know anyone opposed to the moratorium. And if oil rig workers would lose their jobs as a result, why not let them get jobs cleaning up the spill, just like the fishermen are having to do.
-- This and all my posts are in the public domain. I am a lawyer. I am not your lawyer, and this is not legal advice.
How many other industries have consequences of the same magnitude when they fuck up?
Have there been stricter demands made on offshore drilling? no. Has there been a mandatory safety review/inspection legislated? no. The problem is that nothing is happening. If Obama had put some requirment in place that the oil companies could start to comply with, that would be one thing, but as it is, no one is doing anything. The oil companies and a significant part of the jobs on the gulf are sitting idle by presidential decree, and the president is sitting idle by choice, as it pertains to the ban.
Not at all. They're saying these toys are costing a bunch of money every day setting on the shelf when they could be drilling producing wells in my field over here, so let's go. Home moves and drilling holes to completion takes a finite amount of time.
There is money to be made in the gulf, but it isn't the only place to play. There is money to be made all over. I agree they'll definitely return assuming the political climate doesn't disintegrate. At this point that is an open question that nobody knows the answer to because nobody can make an accurate guess as to when the rupture will be completely sealed and what the total damage will be.
I think most of the drillers understand best practices. BP appears to have cut corners and they won't be the last to do so, regardless of the rules in place. Rules are fine. Oversight gets iffy with the small number of qualified people that the government is likely to employ. I don't really think additional delay will make things magically fail safe.
Give us the money now or things could get hard for you later.
would be perfectly happy to see the rigs gone, lest this get worse, or happen again
Honest question: Why do people seem to accept this argument as valid for oil rigs, but using Chernobyl as a reason against nuclear is (generally, and rightfully) rejected as irrelevant and a piss poor argument?
Because after Chernobyl the design of still operating RBMK reactors (and in fact all reactors) was improved to the point that a repeat disaster should be near-impossible.
But looking at the oil spill, we had the same problems in 1979 off the Gulf of Mexico. Since then the capability to respond to this type of problem hasn't improved. The pre-revised BP document shows they knew this. Same story in Alaska - oil pipelines are not being well maintained. That's a repeat of 1979 too.
Nuclear industry has learned their lesson and moved on. Oil industry is still crossing their fingers that risk/reward will fall in their favor.
If western nuclear plants were built the same way Chernobyl was built then I WOULD be up in arms about it, and I'm one of the strongest Nuclear supporters you would find.
Likewise, if all the other oil rigs had relief wells drilled in advance, then I'd have no problem with them continuing operating.
The difference between the two situations is that with Chernobyl we have made damn sure all nuclear plants we build have the safety features needed to prevent a similar disaster. With the oil rigs, the same is not true. Many of them still lack safety features (pre-drilled relief wells ) that are considered standard in many parts of the world.
Because many years after Chernobyl, it is clear that it was a uniquely horrible reactor and beyond idiotic test procedure that lead to the accident, and that technology has developed to the point where none of its failings are in any way relevant.
In contrast, every rig in the gulf is using the same safety technology that failed at Deepwater Horizon, and many were certified by the same corrupt regulators who gave Deepwater Horizon a clean bill of health despite failing and deliberately disabled safety equipment. There is absolutely no reason to believe that this rig is unique or exceptional, other than that it is the one where the chickens came home to roost.
Chernobyl was an outstanding argument to stop construction of Chernobyl-style reactors (obviously), and to reconsider regulation of reactors (particularly in Russia) to make sure nothing as stupid as the disaster-causing test would be allowed.
Similarly, if in twenty years it's clear that the Deepwater rig was unique, and technology has moved beyond the current state of the art to a regime of "inherent safety" like nuclear, then Deepwater will no longer be a good argument to stop drilling.
In short, the difference is context.
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