Coastal sues Florida for value of lease

Coastal Petroleum Co. Tuesday sued Florida for the value of a state lease it holds in the Gulf of Mexico, saying that by denying it a drilling permit, the state is taking its property without compensation. It asked the court to determine the fair market value of the 60-year-old state lease.

Jan 16th, 2001


Coastal Petroleum Co., Apalachicola, Fla., Tuesday sued Florida for the value of a state lease it holds in the Gulf of Mexico, saying that by denying it a drilling permit, the state is taking its property without compensation.

The lawsuit, filed in Leon County Circuit Court, asked the court to determine the fair market value of the 60-year-old state lease that gives Coastal the exclusive right to drill for oil and gas in state waters in the gulf.

Coastal President Philip Ware said, "The state wants it both ways. The state is refusing to allow Coastal Petroleum to exercise its legal right to explore for oil and gas under the leases the state sold to us. At same time, the state is refusing to compensate us for taking away our property rights.''

Ware said Coastal is not asking the court to allow it to drill the leases. Although it had sought a state permit to drill on the lease, the company said Florida public officials are opposed to offshore drilling and are unlikely to change their minds.

Coastal claimed there is "strong scientific evidence" of oil on the leases. It said the validity of its leases repeatedly has been upheld by state and federal courts and acknowledged by state officials.

Last June 26 the First District Court of Appeal affirmed an earlier ruling that the Florida Department of Environmental Protection (DEP) could deny Coastal Petroleum a permit to drill an exploratory well 9 miles south of St. George Island in the Florida Panhandle.

Coastal said although the appeals court held that DEP could bar drilling as not being in the public interest, it also found that DEP's action would be unconstitutional "if just compensation is not paid for what is taken.'' The appeals court said the circuit court should resolve that issue.

Coastal's circuit court suit seeks compensation for lease 224-A, which covers about 400,000 acres in the Gulf from Apalachicola to Pasco County. The lease includes the location off St. George Island where the company was denied a drilling permit.

The state initially granted the leases in 1941 to Arnold Oil Exploration Co., Coastal's predecessor. Coastal said it explored its leases for years, but about 1968 public officials sought to regain them and they have been the subject of litigation since.

Coastal is a majority-owned subsidiary of Coastal Caribbean Oils & Minerals Ltd.

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