U.S. deepwater drilling ban overturned

A federal judge in New Orleans has blocked a six-month moratorium on new deepwater drilling projects imposed in response to the massive oil spill in the Gulf of Mexico.

White House vows immediate appeal

A U.S. federal judge has blocked a six-month moratorium on new deepwater drilling projects that was imposed in response to the massive oil spill in the Gulf of Mexico. The White House said immediately it would appeal the decision.

In a briefing, White House press secretary Robert Gibbs said President Barack Obama believes that until investigations can determine why the spill happened, continued deepwater drilling could expose workers and the environment to "a danger that the president does not believe we can afford."

Several companies that ferry people and supplies and provide other services to offshore drilling rigs had asked U.S. District Judge Martin Feldman in New Orleans to overturn the moratorium.

Steven Newman, Transocean Ltd. president and CEO, during a break at the World National Oil Companies Congress in London on Tuesday. ((Lefteris Pitarakis/Associated Press))

Obama's administration has halted the approval of any new permits for deepwater drilling and suspended drilling at 33 exploratory wells in the Gulf.

But Feldman ruled that the Interior Department failed to provide adequate reasoning for the moratorium, and accused it of appearing to assume that because one rig failed, all companies and rigs doing deepwater drilling pose an imminent danger.

Earlier Tuesday, oil industry executives also took aim at the ban, saying the world doesn't have enough other sources of fuel to allow for the moratorium.

In late May, Obama moved to suspend all deepwater drilling in U.S. waters for six months.

That halted exploration off the coast of Virginia, Alaska and throughout the Gulf Coast, and suspended operations at several already operational Gulf of Mexico rigs.

The ban, and the massive oil slick in the Gulf of Mexico, dominated discussions on Tuesday at the World National Oil Companies Congress in London.

Steven Newman, president and CEO of Transocean Ltd., which owned the destroyed Deepwater Horizon rig, called Obama's ban "unnecessary."

"There are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit," Newman told reporters on the sidelines of the meeting.

Obama's ban reflects growing unease about oil companies seeking to drill farther out to sea and in deeper waters than ever before. The process is expensive, risky and largely uncharted, highlighted by the April 20 explosion at the BP-operated rig that killed 11 workers and set off the worst oil spill in U.S. history.

Chevron executive Jay Pryor, also at the London conference, said the U.S. government's move would "constrain supplies for world energy."

BP CEO Tony Hayward leaves a meeting with U.S. President Barack Obama at the White House in Washington on June 16. ((Jim Young/Reuters))

"It would also be a step back for energy security," said Pryor, global vice-president for business development at the American oil company.

BP chief of staff Steve Westwell, who was heckled during a speech in which he stood in for BP CEO Tony Hayward, said, "regulators around the world will obviously want to know what happened" to cause the Gulf well blowout and subsequent undersea gusher, and change their procedures accordingly.

But he said deepwater drilling is needed as supplies of land and shallow-water oil diminish.

The world needs the oil and the energy from deepwater production, Westwell said. "Therefore, the regulatory framework must still enable that to be a viable commercial position."

Hayward pulled out of the conference Monday after facing stinging criticism for spending Saturday at England's Isle of Wight to see his yacht compete in a famous race, an outing that drew outrage on the Gulf Coast and an acerbic response from the White House.

Westwell was interrupted twice during his address by protesters from Greenpeace shouting, "We need to end the oil age!" before the hecklers were bustled out of the central London hotel by security. 

Hurricane season arrives

BP said this week it has spent $2 billion fighting the spill, with no end in sight. It has set up a $20 billion fund to compensate victims of the disaster, and the company said Tuesday it is working to distribute those funds faster.

As bad as the Deepwater Horizon disaster has been perceived to be thus far, the crisis took a new turn on Tuesday as the first major storm of the Atlantic hurricane season was poised to move into the Gulf as early as next week.

The U.S. National Hurricane Center has given a 40 per cent chance of a series of thunderstorms currently forming south of the Haitian coastline of developing into a tropical cyclone and moving northwest into the Gulf.

"Upper-level winds appear to be conducive for gradual development … a tropical depression could form during the next couple of days," the agency warned on its website Tuesday.

The hurricane centre is forecasting this year's Atlantic hurricane season to be among the worst on record.

With files from The Associated Press