/ 2 June 2010

BP embarks on latest bid to capture gushing oil

Robot submarines wielding powerful cutting tools went to work on BP’s latest bid to curtail the flow of oil spewing from its ruptured wellhead as the US government launched criminal and civil probes into the six-week-old disaster in the Gulf of Mexico.

The legal steps announced on Tuesday by the Obama administration capped a tough day financially for the British energy company, whose share price was pounded by news of BP’s setbacks in stopping the leak over the weekend.

BP has now lost more than a third of its market value, or about £46-billion ($67-billion), since the crisis began, reflecting an increasingly gloomy outlook for the company by energy industry analysts.

The oil spill is causing an ecological and economic disaster along the US Gulf Coast.

Moving on from its failed “top kill” attempt to plug up the undersea gusher, BP embarked on a risky new plan to siphon off some of the billowing oil by first cutting away what is left of the leaking riser pipe, then lowering a containment dome over the remaining wellhead assembly.

A source close to the company, speaking on condition of anonymity, said operations to saw through the riser pipe began late on Tuesday. The source did not say how long this process would take.

Last, best hope
The strategy was widely seen as offering the last best hope of at least curbing the leak before August, when the company expects to finish drilling two emergency relief wells now considered the only option for actually choking off the oil flow altogether.

“We’re not talking about capping the well anymore. We’re talking about containing the well,” US Coast Guard Admiral Thad Allen said on Tuesday.

The containment dome, designed with a gasket on the bottom to fit snugly over the leak and seal out seawater, is intended to capture a large portion of the billowing oil and channel it through a hose to a ship 1,6km up on the surface.

The cap also is equipped with valves to allow operators to inject methanol or warm water that would prevent the buildup of slushy gas hydrates that thwarted an earlier siphoning effort.

But sawing off the end of the damaged riser pipe through which oil has been pouring nonstop could increase the flow of crude by 20% until the containment dome is lowered into place. Work also began on Tuesday to cut away a number of smaller, extraneous pipes using a diamond saw operated by one of several robots at the seabed.

Allen said it could take 72 hours to get the containment cap operational.

As much as 19 000 barrels of oil (three-million litres) a day has been pouring into the Gulf off the coast of Louisiana since the April 20 explosion that sank the Deepwater Horizon offshore drilling rig and killed 11 crewmen.

The blowout now ranks as the worst oil spill in US history, surpassing the 1989 Exxon Valdez tanker disaster in Alaska’s Prince William Sound.

Grim outlook
Adding to onshore angst over the BP spill, the National Oceanic and Atmospheric Administration said shifting winds could drive the surface slick, which mostly has hit Louisiana’s shores so far, closer to the Alabama and Mississippi coasts.

The warning coincided with the official start of the Atlantic hurricane season and predictions that this summer’s could be the stormiest since 2005, when Katrina and Rita wreaked havoc on the Gulf Coast.

Commercial fishing, shrimping and oyster harvests have been shut down for weeks along much of the US Gulf Coast, home to a $6,5-billion seafood industry.

While clean-up crews have attacked the oil slick on the surface with skimmers, dispersants and controlled burns, shoreline-protection teams have scurried to block the spread of oil with containment booms, sandbags and other barriers.

Scientists and Gulf residents are most concerned about the encroachment of oil into bayous and marshes teeming with shrimp, oysters, crabs, fish, birds and other wildlife.

The financial fall-out for BP grew more serious as well.

BP shares fell by as much as 17% in London before closing down 13% at 430 pence on Tuesday. In New York, BP’s American Depositary Receipts lost nearly 15% to end the day at $36,52.

BP will seek to patch up its battered share price by reassuring investors the cost of cleaning up the oil spill in the Gulf of Mexico is manageable and will not affect dividends, British media reported on Wednesday.

“If our current efforts were to fail and we have to wait for the relief wells to be drilled and had six months of clean-up, we estimate the cost at $3-billion,” BP chief executive Tony Hayward told the Daily Mail.

BP pledged cooperation with the newly revealed government investigations, confirmed to reporters by US Attorney General Eric Holder after he met in New Orleans with state and federal prosecutors from the Gulf Coast.

“We will be meticulous, we will be comprehensive, and we will be aggressive,” Holder said. “We will not rest until justice is done.” – Reuters