Ensco, U.S. Seek, Get More Time to Reach Deep-Water Deal

Ensco Offshore Co. and the U.S. Justice Department sought and received more time to negotiate an end to its lawsuit over deep-water oil drilling permits.

U.S. District Judge Martin Feldman in New Orleans today gave the government an 11-day extension until June 20 to act on six offshore drilling permit applications that Ensco claims were unreasonably delayed by regulators. Ensco and the government asked for the delay in a joint filing on May 20.

“The parties have been engaged in settlement negotiations that would resolve Ensco Offshore Company’s remaining claims in this case without further litigation,” according to the May 20 filing. “The parties have made significant progress but have not yet reached a final settlement. The parties believe that further negotiations may enable the parties to reach a mutually agreeable resolution.”

Both sides said an 11-day temporary delay of the judge’s May 10 order would “prevent further unnecessary litigation.” If they can’t reach a settlement by June 20, they may seek to extend the stay to continue talks, according to the filing.

On May 10, Feldman, ruling on one of six issues in the protracted suit, agreed with Ensco arguments that the London- based company’s applications to the U.S. Interior Department had been “unreasonably delayed” and he ordered the government to act within 30 days on six deepwater drilling permit requests.

Safety, Spill Response

The Interior Department opposed Ensco’s suit, saying that a delay in issuing new permits was needed to give the industry time to boost safety and spill-response capabilities after the Deepwater Horizon drilling rig off the Louisiana coast exploded in April 20, 2010. The blast and spill released 4.1 million barrels of crude from BP Plc (BP/)’s Macondo well.

President Barack Obama temporarily halted all drilling in waters deeper than 500 feet in May 2010. Feldman threw out the ban as overly broad and punitive to the Gulf Coast economy. The government imposed a similar, second ban that was withdrawn in October. In February, Feldman found the Obama administration in contempt for continuing to stall the resumption of deep-water drilling through what he called a de-facto ban.

Wyn Hornbuckle, a Justice Department spokesman, declined to comment on today’s order. Sean O’Neill, an Ensco spokesman, didn’t immediately return a call and e-mail seeking comment.

The case is Ensco Offshore Co. v. Salazar, 2:10-cv-01941, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Allen Johnson Jr. in New Orleans at allenmct@gmail.com; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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