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BP tries again to curb oil spill, stock falls anew

BP tries again to curb oil spill, stock falls anew
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First Published: Wed, Jun 02 2010. 02 23 PM IST
Updated: Wed, Jun 02 2010. 02 23 PM IST
Venice: BP Plc forged ahead with its latest effort to curb the flow of oil spewing into the Gulf of Mexico as its shares fell anew on Wednesday and the US government launched criminal and civil probes into the disaster.
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 oil by first using robot submarines to cut away what is left of the offshore well’s leaking riser pipe, then lower a containment dome over the remaining wellhead assembly.
The FBI and other federal agencies are aggressively investigating the spill and “if we find evidence of illegal behavior, we will be forceful in our response,” US Attorney General Eric Holder said on Tuesday after meeting with state and federal prosecutors in New Orleans.
BP pledged cooperation with the investigations.
The BP oil spill that began in April is causing an ecological and economic catastrophe along the US Gulf Coast.
BP’s share price has been pounded following the company’s failure to stop the leak over the weekend. In early trading in Europe on Wednesday, BP extended its slide from the previous session and fell about 3%.
“There was a sharp drop-off in the US overnight on the news of the US criminal and civil investigation,” said Will Hedden, sales trader at IG Index. “We are coming in line with the selloff in the US”
BP has lost more than a third of its market value, or about 46 billion pounds ($67 billion), since the crisis began, reflecting an increasingly gloomy outlook for the company by energy industry analysts.
BP shares fell by as much as 17% on Tuesday in London before closing down 13% at 430 pence. In New York, BP’s American Depositary Receipts lost nearly 15% to end the day at $36.52.
A source close to the company, speaking on condition of anonymity, said the undersea 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 may offer 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 a mile (1.6 km) 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 (800,000 gallons or 3 million litres) a day has been pouring into the Gulf off the coast of Louisiana since the 20 April explosion that sank the Deepwater Horizon offshore drilling rig and killed 11 crewmen.
The accident ranks as the worst oil spill in US history, surpassing the 1989 Exxon Valdez tanker disaster in Alaska.
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 cleanup 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.
BP will seek to patch up its battered share price by reassuring investors the cost of cleaning up the spill 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.
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First Published: Wed, Jun 02 2010. 02 23 PM IST
More Topics: Oil | Spill | BP | US | Stocks |