/ 23 July 2010

Gulf storm puts BP spill efforts on hold

Tropical Storm Bonnie threatened efforts on Friday to plug BP’s Gulf of Mexico oil leak for good, with vessels and rigs involved in the operation set to move out of the system’s path.

“While these actions might delay the effort to kill the well for several days, the safety of the individuals at the well site is our highest concern,” the top US oil-spill official, retired Coast Guard Admiral Thad Allen, said late on Thursday.

BP said it was temporarily suspending relief well activities due to the weather. Among the rigs involved is the one drilling a relief well intended to kill the leak permanently. It had been on track to intercept the ruptured well by mid-August.

BP capped the leaking well last week, choking off the flow of oil for the first time since an April 20 rig explosion killed 11 workers and sent crude gushing into the Gulf, soiling coastlines and devastating tourism and fishery industries.

Officials have said an evacuation could delay operations by 10 to 14 days. But the blown-out well will remain capped during the temporary halt to operations, including monitoring.

“It is a concern. The cap is only a temporary measure. The fact they’ve had to draw back to the coast is quite a worry,” said Doug Youngson, oil analyst at brokerage Arbuthnot

“The pressure is building up. There is a risk it blows off,” he added.

Workers have been close to completing the relief well and launching a “static kill” operation to pump heavy drilling mud and possibly cement into the well.

BP’s containment efforts have been keenly eyed by investors because BP’s ultimate costs may hinge on how much oil is determined to have flowed into the Gulf.

Its shares were off early before recovering somewhat to be up 0,4% at 401 pence, in line with the sector, as the focus shifted to the impact of the spill on the company’s second-quarter results due on Tuesday.

Analysts expect BP to take large provisions for the disaster, with the final bill seen in a wide $15-billion to $60 billion range.

The company’s stock is off about 40% from levels before the accident, despite a rally over the past month sparked by hopes of asset or stake sales and an end to the spill. At one stage $100-billion had been wiped off market capitalisation. — Reuters