White House: No New Drilling for Now

The White House Friday said there would be no expansion of offshore oil drilling in new areas until an investigation of an explosion that occurred last week on the BP (CVX) rig Deepwater Horizon and its subsequent massive oil spill in Gulf of Mexico, which is sending thousands of gallons of crude oil toward Louisiana’s shores, has been conducted.

Reuters: “No additional drilling has been authorized and none will until we find out what happened here and whether there was something unique and preventable here,” White House adviser David Axelrod said on ABC’s “Good Morning America” show.

“No domestic drilling in new areas is going to go forward until there is a adequate review of what’s happened here and of what is being proposed elsewhere.”

In late March, President Obama lifted a decades-old moratorium on oil drilling for many offshore areas, including the Atlantic and Gulf areas. Axelrod told ABC the Obama administration reacted quickly to the disaster, which apparently killed 11 workers. “We had the Coast Guard in almost immediately,” he said.

Many select drillers including Dril-Quip, Inc. (DRQ), Energy XXI (Bermuda) Limited (EXXI), ATP Oil & Gas Corp. (ATPG) and W&T Offshore Inc. (WTI), were downgraded this morning on concerns over the oil leak taking place in the Gulf of Mexico. Continued negative publicity around the recent BP offshore oil spill is likely to continue depressing the entire offshore group.

Meanwhile, BP’s Chief Executive Tony Hayward told Reuters in an interview that his company takes full responsibility for the spill. “We will clean it up and where people can present legitimate claims for damages we will honour them. We are going to be very, very aggressive in all of that,” he said.

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