Exxon Sues U.S. Interior Department Over Canceled Gulf of Mexico Leases
By Phil Milford – Aug 18, 2011 10:25 AM ET
Exxon Mobil Corp. (XOM) sued the U.S. Interior Department, asking a judge to set aside the agency’s decision to cancel offshore leases that may yield “billions of barrels of oil.”
The department overstepped its authority in a ruling on Gulf of Mexicoleases for the so-called Julia Unit, Exxon Mobil said in a complaint filed Aug. 12 in federal court in Lake Charles, Louisiana. Statoil ASA (STL), a partner of Exxon Mobil’s in the Julia fields, filed a similar lawsuit in the same court on Aug. 15.
“The Interior decision is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law,” and “deprives Exxon Mobil of property without due process of law,” the Irving, Texas-based company said in its complaint.
Exxon Mobil, the world’s largest publicly traded oil company, said federal regulations allow oil producers to suspend production in their fields, partly “to facilitate proper development of a lease.” Because of drilling complexity, Exxon Mobil said, it asked for a suspension for Julia in 2008.
The Interior Department denied the request in 2009, stating that the company “had not demonstrated a commitment to production,” according to court papers. Unsuccessful appeals followed.
The Interior Department is reviewing the Exxon Mobil complaint, Melissa Schwartz, spokeswoman for the department’s Bureau of Ocean Energy Management, Regulation and Enforcement, said in an e-mailed statement.
“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,” Schwartz said.
Exxon Mobil fell $2.95, or 4 percent, to $71.21 at 10:20 a.m. in New York Stock Exchange composite trading. Statoil’s American depositary receipts, each representing one ordinary share, declined $1.51, or 6.3 percent, to $22.57.
The lawsuits were reported earlier by the Wall Street Journal.
President Barack Obama stopped deep-water oil and natural- gas drilling early last year after aBP Plc (BP/) well blew out off the Louisiana coast, claiming 11 lives and causing the largest U.S. oil spill. Interior Secretary Ken Salazar lifted the ban in October.
Exxon alleges that the Interior Department canceled the Julia leases to gain new leases and 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,” Exxon said in court papers.
If the agency’s decision stands, Exxon Mobil and Statoil will “lose the enormous value of those leases and their hundreds of millions of dollars in investments,” Statoil said in its complaint.
Ola Morten Aanestad, a spokesman for Stavanger, Norway- based Statoil, had no immediate comment on the complaints.
The case is Exxon Mobil Corp. v. Kenneth Salazar, 11CV1474, U.S. District Court, Western District of Louisiana (Lake Charles).
To contact the reporter on this story: Phil Milford in Wilmington, Delaware, firstname.lastname@example.org.