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Driller Sues Federal Government Over 2010 GOM Moratorium

ATP Oil & Gas Corp. has filed a lawsuit claiming that it lost more than $68 million when the federal government "improperly and illegally" suspended offshore drilling in the wake of the April 2010 Macondo well blowout and oil spill in the Gulf of Mexico (GOM) and "unlawfully delayed" permits to the company even after the moratorium was lifted.

The defendants named in the case -- the Department of the Interior (DOI), the former Minerals Management Service, Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM), Interior Secretary Ken Salazar and former BOEM Director Michael Bromwich -- breached a series of oil and gas leases for submerged lands on the Outer Continental Shelf, ATP said in the lawsuit (cv 12-00379), which was filed Thursday in the U.S. Court of Federal Claims in Washington, DC.

The leases were for Mississippi Canyon blocks 305, 711, 941 and 942, according to ATP, which said it had entered into "a number of drilling rig contracts...and arranged for placement and operation of...drilling and production platforms" for the properties prior to the Macondo blowout and subsequent drilling moratorium.

"The consequences of the moratoria and, following the moratoria, the delays in acting on permits to conduct deepwater operations, lie at the heart of ATP's claims in this case," the Houston-based company said in court documents. "Each of the subject leases was impacted by the moratoria and subsequent delays...as a direct result of the defendants' conduct, ATP suffered significant damages."

The Obama administration's moratorium on deepwater drilling in the GOM was lifted in October 2010, but only for those operators that could show that they had complied with new safety and drilling regulations (see Daily GPI, Oct. 13, 2010). The action immediately came under attack from producers and Capitol Hill lawmakers, who questioned whether it would significantly change the status quo in the Gulf. The moratorium had been replaced with a "permitorium," according to its critics.

Salazar recently defended DOI against criticism that permitting is slow in the GOM, even as he conceded that the agency is much more rigorous in processing permits for offshore drilling in the aftermath of the Macondo blowout (see Daily GPI, April 25).

In March 2011 BOEM issued a permit allowing ATP to drill a new well in Mississippi Canyon Block 941, located approximately 90 miles south of Venice, LA (see Daily GPI, March 22, 2011). It was one of the first permits BOEM had awarded since lifting the moratorium. ATP had a rig on location at the site in April 2010 to prepare for installation of a production facility when activities were suspended following the Macondo blowout.

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