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BP dampens hope of early leak fix, court fight looms

BP dampens hope of early leak fix, court fight looms
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First Published: Thu, Jul 08 2010. 03 41 PM IST
Updated: Thu, Jul 08 2010. 03 41 PM IST
Washington: BP dampened hopes that it could plug its leaking Gulf of Mexico well sooner than forecast on Thursday, while a battle between the US government and the oil industry over a deepwater drilling ban heads to court.
BP stuck to its August target to complete a relief well to halt the worst oil spill in US history, after a press report raised hopes the company could stem the 80-day-old leak sooner.
The head of BP’s Gulf Coast restoration unit, Bob Dudley, told the Wall Street Journal that it could be possible to stop the well between 20 July and 27 July “in a perfect world with no interruptions”.
“He (Dudley) gave that as the very, very best scenario if everything went absolutely superbly according to plan and there are no interruptions but the expectation is that it will be August,” a spokeswoman said.
Bankers say BP’s chief executive Tony Hayward is currently on an international marketing drive for its stock, whose price has fallen by around half since the Macondo subsea well blew out in April, spewing crude oil into the Gulf of Mexico and soiling the shores of every US Gulf Coast state.
The shares were up 0.8% at 365 pence by 1020 GMT on Thursday, when the Stoxx 600 European oil and gas sector index was up 0.85%.
Singapore state investor Temasek Holdings on Thursday dismissed talk it had held discussions with BP for a strategic stake. “It’s speculation,” Temasek executive director Simon Israel told reporters when asked if Temasek was talking to BP.
Temasek’s comment comes after Hayward met an Abu Dhabi state investment fund on Wednesday.
Also on Thursday, the oil drilling industry was set to confront the Obama administration in court over the White House’s effort to suspend deepwater oil drilling in the Gulf of Mexico for six months.
Given the business and environmental stakes, the US Court of Appeals for the Fifth Circuit in New Orleans is expected to rule quickly, after a rare one-hour oral argument, on whether deepwater drilling should be temporarily halted again.
A federal judge, also in New Orleans, lifted the moratorium last month after Hornbeck Offshore Services Inc argued it was arbitrary because it was a blanket ban on all new drilling in depths below 500 feet (152.5 metres).
The Obama administration appealed, saying the suspension was needed to give time to investigate the cause of the BP blowout and ensure other drilling rigs operate safely.
It is seeking a stay of the judge’s ruling at the hearing, sscheduled for 3 p.m. local time (2000 GMT) on Thursday.
The US Energy Information Administration said the ban would reduce crude output by an average of 82,000 barrels a day, more than previously estimated.
A successful court challenge “could give some of these (drillers’) stocks a lift in the near term,” said Channing Smith, co-portfolio manager of Tulsa, Oklahoma-based Capital Advisors Growth Fund.
The European Union’s energy chief said on Wednesday the bloc should consider its own moratorium on new deepwater oil drilling until after a probe into the BP spill.
Political challenge
Meanwhile the oil from the Macondo well is wreaking havoc on coastal ecosystems, killing birds, sea turtles and dolphins and risking multibillion-dollar fishing and tourist industries at a time of high unemployment.
Estimates of the leak’s severity vary widely, to as high as 100,000 barrels per day. A new collection vessel that should more than double BP’s oil-capture capacity to 53,000 barrels a day from around 25,000 is projected to take three more days to hook up, as rough seas hamper efforts to finish the job.
With the region now a month into the six-month hurricane season, US forecasters reported late on Wednesday that a tropical depression had formed over the southern Gulf and was set to slam into the Gulf Coast near the Texas-Mexico border on Thursday.
Another serious storm in the Gulf of Mexico could further disrupt efforts to contain the massive oil spill.
The region is still recovering from Hurricane Alex, the first named cyclone of the season, which battered northern Mexico last week, dumping heavy rains and flooding the Mexican city of Monterrey, killing 12 people.
Alex, a Category 2 storm when it hit, shuttered some oil and gas production in the Gulf of Mexico as a precaution and delayed efforts to capture oil gushing from the damaged well.
Pushed by the Obama administration, BP has committed to a $20 billion fund for clean-up and other costs stemming from the spill. Its costs to date have topped $3 billion.
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First Published: Thu, Jul 08 2010. 03 41 PM IST
More Topics: Oil Spill | Gulf of Mexico | BP | Oil | Crude |