Drilling moratorium challenged by offshore company

By ALAN SAYRE AP Business Writer

NEW ORLEANS (AP) - The ban on deepwater petroleum drilling in the Gulf of Mexico is being challenged by a Louisiana oil services company that claims the federal government has not shown justification for the shutdown.

Hornbeck Offshore Services Inc., based in Covington, La., operates a fleet of vessels that haul people and supplies to offshore drilling rigs and production platforms. The company filed suit late Monday in U.S. District Court in New Orleans to bar the Interior Department from enforcing the six-month moratorium ordered by President Barack Obama in the wake of the Deepwater Horizon disaster and the huge oil spill in the Gulf.

The moratorium shut down 33 drilling rigs, many of which Hornbeck said it has contracts to serve.

At the center of the suit is Interior Department Secretary Ken Salazar's May 27 report on safety measures in the Gulf, which led to the moratorium. Hornbeck said the government's own inspections of 29 of the 33 drilling rigs turned up nothing more than minor violations.

"The report contains no finding or evidence of a systemic failure by rig operators, drillers or other participants in offshore drilling operations to comply with current regulations or existing permits," the suit said.

Hornbeck also said the moratorium, which it calls arbitrary and capricious, runs afoul of federal law governing offshore lease development requiring the government "to balance orderly resource development with the protection of human, marine and coastal environments."

The suit comes as many industry officials warn that a six-month moratorium will mean a much-longer slowdown in the Gulf as deepwater rigs - some of which command prices as high as $750,000 - leave the region to take long-term contracts in foreign markets, costing the Gulf thousands of jobs.

Hornbeck, which employs about 1,300 people, said the moratorium illegally interferes with its business contracts.

"Hornbeck is suffering immediate irreparable harm and will continue to suffer immediate harm to its business, including the irretrievable loss of its vessel fleet's useful life, loss of its crews that have long been associated with their particular vessels, loss of Hornbeck's shore-side teams and disruption of Hornbeck's long-standing contractual relationships," the suit said.

Interior Department spokeswoman Kendra Barkoff, said the moratorium "is based on the need for a comprehensive review of safety in deepwater operations in light of the BP oil spill."