Capped BP Gulf well under scrutiny

The cap on BP’s stricken Gulf of Mexico oil well appeared to hold on Friday, but officials intensified monitoring after a critical test showed pressure rising slower than they hoped.

BP began pressure tests on the well after choking it off on Thursday for the first time since the April 20 rig explosion that triggered the leak. Underwater robots scanned the sea floor for signs the undersea well was damaged.

“We’ve seen no negative evidence of any breaching there,” said Kent Wells, BP’s senior vice-president of exploration and production.

The tests, which began Thursday afternoon and are expected to last up to 48 hours, showed the cap was building pressure in the well, meaning it was strong enough to contain the oil without leaking. But it was not rising fast enough.

“We have decided to move forward with another six-hour increment [of testing],” retired Coast Guard Admiral Thad Allen, the US government’s point man on the spill, told reporters at a briefing on Friday afternoon.


Allen had said pressure above 7 500 pounds per square inch would show the well was intact, while pressure that lingered below 6 000 psi would signal damage.

The pressure on Friday afternoon remained close to 6 700 psi — the same level as BP announced eight hours earlier — and was barely rising by two to 10 psi per hour.

BP was told to step up monitoring for any seabed breaches and gather additional seismic data to detect any pockets of oil in the layers of rock and sediment around the well, Allen said.

Earlier, US President Barack Obama warned that more work was needed before the well could be considered fixed.

“We won’t be done until we actually know that we’ve killed the well and that we have a permanent solution in place. We’re moving in that direction, but I don’t want us to get too far ahead of ourselves,” Obama said at the White House.

The US leader is under fire to push BP to permanently plug the leak and clean up an environmental and economic mess across five US Gulf states. The spill has cut into multibillion-dollar fishing, tourism and drilling industries.

The offshore spill, the worst in US history, has spewed millions of gallons of oil into the Gulf.

Investors cautious
Several previous attempts to plug the leak did not work, and investors remained cautious on BP’s latest effort.

The British energy giant’s shares, which fell about 50% in the first two months of the crisis but have gained 40% since late June, were down nearly 5% as part of a broader sell-off on the New York Stock Exchange.

They inched higher in London.

Following the pressure tests, BP planned to siphon up to 80 000 barrels of oil a day using a seal installed earlier this week and send it 1,6km up to waiting ships.

Estimates had put the spill rate at between 35 000 barrels (5,56-million litres) and 60 000 barrels (9,5-million litres) a day.

Hopes that a Taiwanese-owned “super skimmer” known as “A Whale” would help with the clean-up were dashed on Friday when the Coast Guard announced that the ship collected virtually no oil during a two-week trial and would not be deployed.

BP still expects to drill a new well by early August to intersect the ruptured one and seal it with mud and cement.

The capping of the well came nearly three months after an oil rig explosion ruptured the well and killed 11 men.

But some residents in battered coastal communities remained skeptical. “This is only the second day. I am not celebrating anything yet,” Cindy Nelson of Biloxi said.

Under pressure from Obama, BP has established a $20-billion fund to cover the costs of the spill.

Three analysts surveyed by Reuters Insider television forecast the company will pay between $63-billion to $100-billion over the next 15 years in fines and cleanup and legal costs. Peter Hutton, an analyst at NCB Securities in London, pegged the total cost at $40-billion.

“It’s relief all around to see that [undersea] camera with no oil coming out,” said Hutton. “But people recognise that they’re not completely out of the woods.”

Investors welcomed reports that BP was moving closer to sealing the first deal in its planned $10-billion of non-core divestments to help pay cleanup costs.

The company and bankers were finalising details of the asset sales, including some US interests to Apache Corp, said CNBC and the Financial Times.

Political environment
The crisis has complicated US relations with close ally Britain. Many Britons believe Washington is treating BP too harshly, to the detriment of British pension funds and other investors who have big stakes in the company.

The US Senate Foreign Relations Committee plans to ask BP officials to testify after the company said it had lobbied the British government in 2007 over a prisoner transfer agreement with Libya.

US Secretary of State Hillary Clinton told Britain’s foreign minister in a phone call on Friday that Britain may want to communicate with the US Congress about Libyan intelligence officer Abdel Basset al-Megrahi release.

The Scottish government denied on Friday it had any contact with BP before its decision last year to release the Libyan.

US lawmakers also are considering a range of new rules that could impose tougher safety regulations on offshore drilling or bar companies like BP from new offshore exploration leases.

The Obama administration issued a revised offshore drilling moratorium this week after a previous six-month ban was struck down by the courts. – Reuters

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