WRAPUP 1-Deepwater drill ban in court, more Gulf fishing shut

* Judge to decide on temporary injunction by Wednesday

* BP shares fall 4.5 percent in New York

* NOAA expands fishing area closed in Gulf of Mexico

By Mary Rickard and Ernest Scheyder

NEW ORLEANS/LAFITTE, La., June 22 (BestGrowthStock) – Oil services
companies were waiting on Tuesday to see if their legal bid
would succeed in overturning a six-month ban on deepwater
drilling in the Gulf of Mexico as more fishing areas were
closed in response to the worst oil spill in U.S. history.

The ban by President Barack Obama’s administration was
imposed in response to the explosion aboard an oil rig in the
Gulf of Mexico on April 20 that killed 11 workers and ruptured
a well owned by BP Plc (BP.L: ) (BP.N: ), unleashing millions of
gallons of crude oil and causing an environmental catastrophe.

U.S. District Court Judge Martin Feldman promised he would
decide by Wednesday whether to temporarily lift the ban while
the case is heard. More than a dozen companies involved in
offshore drilling operations filed the lawsuit, calling the ban
“arbitrary and capricious.” [ID:nN2198879]

“The government’s unchecked authority has shut down this
entire industry,” argued lawyer Carl Rosenblum, representing
the oil industry.

The lawsuit is the first seeking to reverse Obama’s May 27
moratorium, which the companies say will force job cuts in the
labor force needed to service offshore oil platforms. The ban
has caused the shutdown of 33 deepwater drilling rigs.

The Obama administration argues that the moratorium is
necessary to prevent further accidents while a presidential
commission investigates what caused the BP well to rupture.

The spill, now in its 64th day, has soiled the coasts of
four U.S. states, threatening tourism and fishing industries.
It has seeped into ecologically sensitive wetlands and tested
Obama, who has come under fire for his handling of the crisis.

BATTERED SHARE PRICE

It has also battered the image of BP, which saw its share
price lose 2 percent in London on Monday and 4.5 percent in New
York, extending a slide that has lopped off nearly half of its
market value since the oil began gushing into the Gulf.
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The National Oceanic and Atmospheric Administration said it
had expanded the closed fishing area to about 36 percent of the
federal waters in the Gulf of Mexico from 33 percent.

On the ground, struggling fishermen are reeling from the
crisis.

“The oil spill has just shut the charter business down.
I’ve seen some areas that were pristine and are now destroyed,”
said Bill Heinz, 60, a charter boat fisherman in Boothville,
Louisiana, whose business has dried up.

The lawsuit over the ban is another example of the
administration’s strained relations with big business, which
was on display last week when BP bowed to pressure from Obama
and agreed to set up a $20 billion oil spill damages fund.

BP is trying to siphon more oil from the blown-out deep-sea
well. It said it collected or burned off 23,290 barrels
(978,180 gallons/3.7 million litres) of crude on Sunday, well
below the 35,000-60,000 barrels a day that government
scientists estimate are gushing from the well. [ID:nN21242268]

Fueling investor concern about BP’s final bill for the
spill, a Democratic U.S. lawmaker released an internal company
document on Sunday that said, in a worst-case scenario, up to
100,000 barrels (4.2 million gallons/15.9 million liters) a day
of oil could gush from its ruptured deep-sea well.

The British energy company dismissed it, saying the figure
was being taken out of context.

Investing Research

(Writing by Ed Stoddard in Dallas; editing by Chris Wilson)

WRAPUP 1-Deepwater drill ban in court, more Gulf fishing shut