Interior Department Issues New Deepwater-Drilling Moratorium

By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The Obama administration on Monday issued a new moratorium on most deepwater-drilling activities, trying again with an approach that has already been invalidated by federal courts and dealing a blow to companies that had hoped at least some activity could resume in the Gulf of Mexico. The U.S. Interior Department said in a statement that while the new moratorium is similar to the initial deepwater-drilling ban, the administration's latest decision reflects new evidence regarding safety concerns, shortcomings in industry equipment to control blowouts, and spill-response capabilities that are strained by the BP PLC (BP, BP.LN) oil spill. The new ban, which is intended to last until Nov. 30, also establishes a process through which Interior will gather new information from the public that could "provide the basis for identifying conditions for resuming certain deepwater drilling activities." It also takes a new approach; instead of banning drilling in waters of 500 feet or more, the drilling ban applies on the basis of drilling configurations and technologies. The oil industry complained that the new ban would cost jobs. "It is unnecessary and shortsighted to shut down a major part of the nation's energy lifeline while working to enhance offshore safety," said Jack Gerard, the president of the American Petroleum Institute, which represents oil and gas companies, in a statement. "The new moratorium threatens enormous harm to the nation and to the Gulf region. It places the jobs of tens of thousands of workers in serious and immediate jeopardy and promises a substantial reduction in domestic energy production. No certain and expeditious path forward has been established for a resumption of drilling." The initial moratorium, which was announced on May 27, was intended to be in place for six months to give a presidential commission time to investigate the causes of a blowout of a BP well in the Gulf of Mexico. But a federal judge threw out the moratorium last month, saying it was arbitrary, and the Fifth Circuit Court of Appeals in New Orleans declined to suspend the lower court's order. The Fifth Circuit is expected to hear the administration's appeal of the lower court ruling by the end of August. -By Siobhan Hughes, Dow Jones Newswires; (202) 862-6654; siobhan.hughes@dowjones.com (Stephen Power contributed to this article.) (END) Dow Jones Newswires July 12, 2010 17:10 ET (21:10 GMT)