Workers Missing in Oil Rig Fire in Gulf of Mexico

As many as 12 workers are missing after an explosion and a fire aboard a Transocean Ltd. oil rig leased to BP Plc in the Gulf of Mexico, the U.S. Coast Guard said.

All BP workers are safe and accounted for, David Nicholas, a spokesman for the London-based company said today in a statement. Guy Cantwell, spokesman for Transocean, didn’t return calls seeking an update on a company statement that “a substantial majority” of the 126-member crew is safe.

The Deepwater Horizon rig, located about 41 miles (66 kilometers) off the coast of Louisiana, was used to discover an oil and natural-gas prospect in the gulf called Tiber, which BP estimated may hold the equivalent of 3 billion barrels of oil. BP agreed in September to extend its contract on the rig.

“Some of the pictures suggest this is a total loss,” Arun Jayaram, an analyst for Credit Suisse Holdings USA Inc. in New York, said in a telephone interview. “This rig generated about 34 cents in annual per-share earnings or a little less than 4 percent.”

Jayaram lowered his rating today on Geneva-based Transocean to “neutral” from “outperform,” citing a glut in some classes of rigs. Transocean probably won’t have a replacement available for the BP drilling project until late this year or early next, he said.

The rig itself is probably insured for $600 million, he said.

Transocean fell $1.60, or 1.7 percent, to $90.43 at 11:02 a.m. in New York Stock Exchange composite trading. BP fell 7.4 pence to 648 pence in London.

Exploration Well

The Deepwater Horizon was drilling an exploration well that wasn’t producing, Sheila Williams, a BP spokeswoman in London, said today in an interview.

“It was in a block that we’d indentified some prospects on and some drilling was being done there,” she said.

The Coast Guard responded at about 10 p.m. local time yesterday to a report of an explosion and fire aboard the drilling vessel. The rig was still ablaze this morning and the cause of the fire is under investigation, the Coast Guard said in a statement.

The government has accounted for 114 of the 126 people known to have been aboard the rig at the time of the explosion, said Elizabeth Bordelon, a spokeswoman for the Coast Guard. Aircraft flew 15 injured workers to hospitals and 99 are expected to arrive at Port Fourchon, Louisiana, by boat at about 8 p.m. local time, Bordelon said.

Fuel-Oil Leak

The rig is listing at 70 degrees and leaking fuel oil. The size and rate of the spill hasn’t been determined, she said. A Coast Guard spill-response team has been mobilized ashore, she said.

The rig can hold 27,855 barrels of fuel, according to the Transocean Web site.

Eileen Angelico, a spokeswoman for the U.S. Minerals Management Service, had no immediate comment on the incident. The agency oversees drilling in federal waters.

The U.S. Chemical Safety and Hazard Investigation Board is considering investigating the rig fire, said Daniel Horowitz, a spokesman for the agency. The board, which investigates other oil industry fires and incidents, hasn’t previously probed accidents on rigs, he said.

The board investigated a 2005 fire and explosion at BP’s Texas City, Texas, refinery.

Rig Rates

BP agreed in September to extend its lease on the Deepwater Horizon rig for three years and pay an additional $3.4 million a year in rent.

The company agreed to pay $544 million, or $496,800 a day, during the three-year period, Transocean said at the time. That was above the prior rent, which averaged about $487,500 a day.

The Deepwater Horizon is a semi-submersible drilling unit that can drill in water up to 8,000 feet deep, according to Transocean’s Web site. The floating rig was built in 2001 and was designed to withstand rough waters.

Transocean said last year the ultra-deepwater rig drilled the deepest oil and gas well ever, more than 6 miles, while working for BP in the Gulf of Mexico.

Oil companies typically appoint a senior drill-site manager aboard offshore drilling vessels in the Gulf of Mexico to oversee exploration projects. The drill-site manager is assisted by a crew of subordinates on the rig, as well as by engineers, geologists and physicists watching a real-time feed of drilling data at onshore control rooms in Houston or New Orleans.

The oil companies also employ contractors to perform specific functions such as remotely controlling robots that can inspect and manipulate equipment on the sea floor. The rig owner is usually responsible for tasks such as maintaining the vessel’s position over the well.

To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net.

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