Environmentalists vs. Oil Explorers

I can understand how environmental groups may be upset at BP (NYSE: BP  ) for the Gulf of Mexico oil spill last spring. But this week they took a strange turn in suing the Obama administration. The Sierra Club was among the environmental groups suing over an approved permit for Shell (NYSE: RDS-A  ) to drill in the deep waters of the Gulf.

The suit brings to light the lasting aftermath of the BP oil spill and what little has fundamentally changed about drilling in the past year. An attorney for the suit with Earthjustice said the government hadn't made a good "assessment of the risk to the Gulf's ecosystem, its communities, and the many jobs that depend on tourism, fishing, and recreation."

Drilling and oil companies would make the argument that the administration has been too slow in getting permits approved for the deep water. Noble (NYSE: NE  ) received a permit to continue work on a previous well, but this Shell approval is the first new well to be permitted.

Seadrill (NYSE: SDRL  ) and Transocean (NYSE: RIG  ) , which have growing fleets of deepwater drill ships, would love to see deepwater drilling open up. And Exxon Mobil (NYSE: XOM  ) recently announced one of the largest oil discoveries in the Gulf, so it's ready to move forward as well. But this roadblock may take a while to clear, because it's unlikely that environmental groups will back down or go quietly.

The problem with Shell's wells is the sheer size of the potential problem. Shell estimated that first-day flow would be 405,000 barrels of oil, 7 times the volume involved in the Deepwater Horizon disaster. Environmentalists argue that there isn't a viable plan to mitigate this type of disaster. The courts may have to decide who's right.

Foolish bottom line
Drilling in the Gulf of Mexico is tentatively back on track, but this latest twist might throw a wrench in drillers' plans for the area. While environmentalists and oil companies debate drilling in the Gulf of Mexico, I'll ask Foolish readers to weigh in on the topic.