2nd UPDATE:US Federal Court Throws Out 5-Year Oil-Leasing Plan
April 17 2009 - 5:08PM
Dow Jones News
A federal appeals court Friday threw out some of the U.S.
government's largest leasing programs for offshore oil and gas
exploration, potentially halting development in the Gulf of Mexico,
Virginia and Alaska.
The Washington federal court of appeals told the Department of
Interior in its ruling that the agency needed to better consider
the environmental impact of oil exploration in those regions.
The decision further delays exploration and development of Outer
Continental Shelf resources at a time when energy analysts warn
that more investment is needed in the sector to prevent price
spikes in coming years. It also comes as producers are finding it
increasingly difficult to find new reserves and boost production at
home and abroad and have seen their reserves subsequently fall.
The three-judge panel found that an Interior Department ranking
of environmentally sensitive areas conducted under the Bush
administration was "irrational." The agency must first reconsider
its assessment, the court ruled, before moving ahead with its
2007-2012 lease sale program, especially in the Beaufort, Bering,
and Chukchi seas off Alaska.
Interior Department spokesman Frank Quimby said the agency was
reviewing the decision. It was unclear, however, whether the ruling
would halt development in acreage leased in five previous Gulf of
Mexico sales that companies have invested billions of dollars to
explore and develop, or just the scheduled lease sales in Alaska
and Virginia.
Peter Van Tyne, the lawyer who represented several Alaska native
and environmental groups in the claim, said the ruling gives
Interior Secretary Ken Salazar a legal reason to revisit at the
very least the Alaskan lease sales.
The American Petroleum Institute said in a statement the ruling
could deal a "devastating blow to the economy" if the decision
delayed development of domestic oil and natural gas resources.
Oil majors Royal Dutch Shell (RDSA) and ConocoPhillips (COP),
which have spent billions of dollars on Alaska lease sales and
seismic surveys, couldn't immediately comment on the ruling and how
it would affect their operations.
The Alaska seas are considered some of the most ecologically
sensitive areas of the world, hosting polar bears, whales, seals
and walruses. The lawsuit was brought by three environmental groups
that want to protect the ecosystem and the Native Village of Point
Hope, Alaska, a tribe that lives off the wildlife on the Chukchi
Sea coast.
Even if the Interior Department reassesses the environmental
sensitivity in a manner deemed "rational" by the courts, the ruling
leaves the door open for the same groups to challenge the lease
sales under other federal laws, specifically the National
Environmental Protection Act.
By Ian Talley, Dow Jones Newswires; (202) 862 9285;
ian.talley@dowjones.com;