BUSINESS
FEBRUARY 24, 2011, 4:16 P.M. ET
by GUY CHAZAN
A High Court judge in the U.K. has decided to hear a legal challenge by environmental group Greenpeace to the British government’s decision to allow new deepwater drilling in British waters, potentially hampering efforts by international energy companies to explore for oil in the U.K. North Sea.
The move reflects growing concerns about the potential environmental impact of offshore oil exploration in the wake of last year’s explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico, which triggered the worst offshore oil spill in U.S. history.
Greenpeace has been waging a campaign in recent months to obstruct new deepwater drilling, especially in relatively unexplored areas like the coastal waters of Greenland and the Atlantic Ocean west of the Shetland Islands-a region thought to contain the bulk of the U.K.’s untapped oil and gas resources.
Last September, the organization’s activists surrounded a Chevron Corp. rig which was en route to drill an exploration well west of Shetland. A similar protest last year off Greenland forcedCairn Energy PLC to suspend drilling operations.
Greenpeace is not alone. Last year, Germany pushed to impose a moratorium on deepwater drilling in European waters-a move that was blocked by a number of EU member states, including the U.K.
Also, British lawmakers have raised doubts about the oil industry’s preparedness for dealing with a large-scale spill in the rough Atlantic waters west of Shetland. In a report published last month, Parliament’s Energy and Climate Change Committee called on the government and regulators to compel companies to improve their spill response plans, install extra failsafe equipment on rigs and increase financial provisions for spill costs.
As part of its campaign against deepwater drilling, Greenpeace applied for a judicial review of the U.K. government’s continuing issuance of licenses for deepwater exploration. The organization argued ministers had acted unlawfully, because they had failed to carry out an appropriate assessment of the risks that new drilling poses to protected habitats and species in the light of last year’s Gulf of Mexico disaster. Thursday Greenpeace was told it had been given permission for a hearing.
The U.K.’s Department of Energy and Climate Change, or DECC, now has 35 days to prepare a legal defense of its decision to grant drilling licenses and present it to the judge. In a statement, DECC said it had responded to Greenpeace’s application and would “robustly defend its actions in the hearing.” It stressed that “normal licensing work continues.”
Oil & Gas UK, the main trade body for North Sea oil producers, dismissed Greenpeace’s claim as “frankly ludicrous and completely unjustified.”
“Oil and gas operations in the U.K. are carried out under a robust and fit-for-purpose regulatory regime which is widely recognised as one of the most stringent in the world,” said Malcolm Webb, Oil & Gas UK’s chief executive, in a statement.
Greenpeace said the U.K. government was ignoring the lessons from Deepwater Horizon. “The BP spill was a game-changer, highlighting the very real risks of dangerous deep sea drilling for both important widllife and the economy,” executive director John Sauven said.
Special thanks to Richard Charter