BP to Try Again to Control Oil Leak as Hearings Start

BP Plc will make another attempt to control its leaking oil well in the Gulf of Mexico within a week by putting a smaller containment dome over it, Chief Executive Officer Tony Hayward said.

Hearings began today in Washington and Louisiana on the explosion and sinking of the Deepwater Horizon drilling rig, which caused the leak. BP, based in London, and contractors Transocean Ltd. and Halliburton Co. gave conflicting accounts of responsibility for causing the blast in testimony before a Senate committee.

BP has been trying to halt the estimated 5,000-barrel-a-day oil leak from its Macondo well since the April 20 blast on the rig resulted in the death of 11 crew members. BP, which leased the rig from Transocean, said yesterday it has spent $350 million so far to stop the spill and clean it up.

“This is the largest, most comprehensive spill response mounted in the history of the United States or the oil and gas industry by probably two orders of magnitude,” Hayward said in Houston yesterday. The implications from the leak for the oil industry may be “pretty severe,” he said.

The company is confronting “quite a few unknowns” in its efforts to stanch the flow of oil, Hayward said at a press conference. A first bid to use a containment device to capture oil near the seafloor and pipe it to a ship failed on May 8 when the structure became clogged.

‘Top Hat’

The second, smaller container, known as a “top hat,” is about five feet (1.5 meters) tall and can hold a single barrel of oil, compared with the 40-foot-tall chamber tried first, Hayward said. It may be operating by the end of the week, Kent Wells, BP’s senior vice president of exploration and production, said at the Houston press conference.

BP fell 3.7 pence to 545.5 pence at 4:35 p.m. in London. It has slumped 17 percent since the blast.

Congressional hearings into the event began today, with officials from BP, Transocean, and Halliburton testifying before the Senate Energy and Natural Resources Committee and the Senate Environment and Public Works Committee.

“Transocean’s blowout preventer failed to operate,” Lamar McKay, chairman of BP America Inc., said in testimony to the energy committee hearing.

Halliburton was “contractually bound,” to follow BP’s instructions, Tim Probert, president of global business lines for the Houston-based energy services company, told the panel.

‘BP Decided’

“All offshore oil and gas production projects begin and end with the operator,” Stephen Newman, chief executive officer of Geneva-based Transocean said in his prepared remarks. BP decided “where and how” its well was to be drilled, Newman said.

The U.S. Coast Guard and Minerals Management Service began the first of a two-day public hearing today in Kenner, Louisiana. The board they are leading has subpoenaed evidence from the explosion.

The Minerals Management Service, which oversees drilling in federal waters, is reviewing deep-water operations in the Gulf. Interior Secretary Ken Salazar said today he will split the agency’s oversight of safety from its role leasing areas for oil development and collecting royalties.

Oil Slick Forecasts

The Coast Guard has no reports of oil coming ashore within the last 12 hours, David Mosley, a guard petty officer, said in a phone interview today.

Wind will tend to push the slick from the leaking well westward this week, the National Oceanic and Atmospheric Administration said in a forecast posted overnight. Wind and choppy seas prevented oil skimming and burning yesterday. Winds from the southeast will rise to as much as 23 miles (37 kilometers) an hour today, NOAA said.

The Gulf of Mexico Loop Current, which passes through the Florida Straits into the Atlantic Ocean, is forecast to remain south of the slick, NOAA said.

Louisiana isn’t getting enough floating protective barriers to keep the oil from its shoreline, Senator David Vitter said yesterday in Port Fourchon.

Vitter, a Republican, said the state has requested more of the floating boom from the Coast Guard. Louisiana is getting far less of the barriers per mile of environmentally sensitive coastline compared with Alabama and Mississippi according to Coast Guard figures, he said.

“There is an enormous discrepancy that needs to be corrected and Louisiana is not getting adequate supplies of what is out there,” Vitter said.

‘Junk Shot’

BP is pursuing multiple options in its efforts to stop the leak at the sea floor, contain oil at the surface and clean any damaged shoreline, Hayward said.

Part of the response is a plan to shoot tire pieces, golf balls and other rubber items into the top of the well to plug it. This “junk shot,” a technique used in combating Kuwaiti oil well fires, will happen during the next two weeks, Hayward said.

BP said it has opened eight offices across the coast to process claims related to the spill and seven more will open by May 15. The average claim so far has been $5,000, said Doug Suttles, chief operating officer of exploration and production for BP.

The initial effort to capture oil near the seafloor and direct it to the surface failed after the steel containment chamber became clogged with an icy slush of gas and water formed because of the water depth and cold, Hayward said.

Controlling Hydrates

BP hopes to better control formation of the slush, known as hydrates, in the smaller chamber so that oil, gas and water can be directed up a pipe to Transocean’s Discoverer Enterprise drill ship, which can decant the water, burn off the gas, and transfer the oil to a tanker for processing at a refinery, Hayward said.

The first containment chamber, now set aside on the seabed, was BP’s plan to slow the spread of oil while it drills a relief well to inject heavy mud and cement into the leak and plug it permanently, which it said will take 90 days.

To contact the reporters on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net

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