ExxonMobil Corp. is suing the Department of Interior for canceling three leases in the Gulf of Mexico (GOM) that could yield “billions of barrels of oil.” Statoil ASA, ExxonMobil’s partner in the disputed offshore Julia Unit, joined the lawsuit that was filed earlier this month.
ExxonMobil’s complaint, which seeks a judicial review of a final decision by Interior that led to the cancellation of the “valuable” offshore leases, was filed in U.S. District Court for the Western District of Louisiana, Lake Charles Division (ExxonMobil Corp. v. Kenneth Salazar, Secretary, U.S. Department of Interior, et al., No. 2:11-cv-01474-PM-KK).
In 2008 ExxonMobil asked Interior for permission to suspend production in the Julia fields, which is allowed — and was often granted routinely — under federal regulations. The suspension was requested, ExxonMobil said at the time, “to facilitate proper development of a lease.” Interior denied the request in 2009 because it said ExxonMobil “had not demonstrated a commitment to production.”
Denying the company’s request to develop the lease properly deprived the oil major “of the right to produce a reservoir believed to hold billions of barrels of oil,” the lawsuit states. “In refusing to grant ExxonMobil a suspension of production necessary to maintain these leases, Interior retroactively applied new legal standards, departed from established agency practices and singled out ExxonMobil for unprecedented adverse treatment.”
Canceling the leases “contradicts the Outer Continental Shelf Lands Act and Interior’s own regulations, violates the rulemaking requirements of the Administrative Procedure Act and violates numerous legal restraints on agency conduct.” The lawsuit calls Interior’s decision to cancel the leases “arbitrary, capricious, an abuse of discretion, or otherwise contrary to law” and deprives ExxonMobil of property without due process of law.”
ExxonMobil also alleges that Interior canceled the leases to make more money. “Cancellation of the original Julia leases would give Interior the opportunity to collect millions of dollars in bonuses and royalties that it otherwise would not be entitled to collect,” the court papers said.
Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) is reviewing ExxonMobil’s complaint, a spokeswoman said. “Our priority remains the safe development of the nation’s offshore energy resources, which is why we continue to approve extensions that meet regulatory standards,” said BOEM spokeswoman Melissa Schwartz.
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