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A New Orleans judge is hearing opening statements in the first legal challenge to the deepwater...

A New Orleans judge is hearing opening statements in the first legal challenge to the deepwater drilling ban. Hornbeck Offshore Services (HOS +1.9%), joined by more than a dozen offshore companies, challenges the moratorium as "arbitrary and capricious" and says it could decimate the offshore labor force.
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  • Herr Hansa
    , contributor
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    The industry chatter I have been hearing is that many companies can survive 3 or more months, if there is an uptick in business once the moratorium is lifted. Barriers to that include the change of 30 day permits through Minerals Management Service to 90 days, which effectively could make the process more like a 9 month moratorium.


    The aspect of irreparable harm can be shown partially by the amount of business Brazil, mostly through Petrobras, is pulling away from the Gulf of Mexico, and by the recent moves to declare force majeure on rig contracts. Once the resources move out of the GoM and into other waters, they will be on 3 to 5 years (or longer) contracts. So the effect would be that rigs would be unavailable once a moratorium is lifted. The damage from the delay in return could last more than 3 years. The companies that service and supply the rigs will suffer as a consequence, unless they also move their resources out of the GoM.


    While I could imagine the US Government could tie this up in the legal system until after November, it would seem there is more at stake than the knee jerk reaction politics. Why punish and damage an entire industry for what seem to be obviously bad choices by BP? The US Department of the Interior is already releasing new guidelines. My feeling is that companies willing to meet the new guidelines, and with good safety records, should be allowed to file permits prior to November, so that at least the requests to restart operations in the GoM will already be in place.
    21 Jun 2010, 03:51 PM Reply Like
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