BP Awaits CEO Go-Ahead for `Top Kill' Plan to Plug Oil Leak
BP’s ‘Top Kill’ Plan to Plug Oil Leak Awaiting Approval
NASA via Bloomberg
A satellite image shows the oil slick on the site of the BP Plc oil spill.
A satellite image shows the oil slick on the site of the BP Plc oil spill. Source: NASA via Bloomberg
May 26 (Bloomberg) -- Philip Weiss, an analyst at Argus Research, talks with Bloomberg's Erik Schatzker about a memo released by two congressmen that highlighted "several new warning signs" of problems aboard the Deepwater Horizon drilling rig prior to the explosion that sank the rig and led to the leak in the BP Plc underwater oil well. Weiss also discusses BP's plan to attempt the so-called top kill procedure to halt the spill. (Source: Bloomberg)
May 26 (Bloomberg) -- Daniel Riesel, principal at Sive Paget & Riesel PC, talks with Bloomberg’s Betty Liu and Adam Johnson about the potential costs faced by BP Plc resulting from the oil spill in the Gulf of Mexico. Riesel also discusses BP's efforts to contain the leaking oil, the potential lawsuits facing the company and the outlook for its market value. (Source: Bloomberg)
May 26 (Bloomberg) -- Brian Gibbons, an analyst at CreditSights Inc., and Jason Schechter, chairman of the corporate practice at public-relations firm Burson-Marsteller, talk with Bloomberg's Adam Johnson about BP Plc's handling of the oil spill in the Gulf of Mexico and the outlook for cleanup and legal costs. (Source: Bloomberg)
Crews conduct overflights of controlled burns taking place in the Gulf of Mexico. Photographer: John Kepsimelis/U.S.Coast Guard via Bloomberg
Last-minute preparations are under way by BP Plc to plug its hemorrhaging well in the Gulf of Mexico as Congressional investigators said the company missed several “warning signs” before a rig explosion last month that killed 11 workers.
The company’s tests will determine whether to proceed with the so-called top kill, which involves pumping liquids into the well then sealing it with cement, London-based BP said today in a statement. Top kill, which may take two days to implement, will begin today should Chief Executive Officer Tony Hayward approve it “later this morning,” he said on NBC’s “Today” show.
“The procedure has not been carried out in 5,000-feet (1,524-meter) water depth before and BP has stressed its success cannot be assured,” Andrew Whittock, an analyst in London at Oriel Securities Ltd., said in a note. “Many commentators believe the chance of success is less than 50 percent.”
The bid to halt the monthlong leak comes as President Barack Obama prepares to outline new safety measures for offshore drilling tomorrow. A memo released by two congressmen following a briefing by BP yesterday highlighted “several new warning signs” about the well hours and minutes before the April 20 explosion aboard the Deepwater Horizon drilling rig that BP leased from Transocean Ltd.
Fundamental Mistake
The results of pressure tests on a drill pipe in the hours before the accident indicated a “fundamental mistake” may have been made because they showed a “very large abnormality,” according to the memo by Democratic Representatives Henry Waxman of California and Bart Stupak of Michigan.
Hayward said on CNN today there were a “whole series of failures” in the incident, and investigations are “far from complete.”
After receiving an initial report tomorrow on the cause of the explosion, Obama will respond with new permitting procedures for oil exploration and tougher inspections to ensure safety and environmental rules are being followed, according to an administration official who asked not to be identified before the announcement.
Obama will travel to Louisiana on May 28 to assess the response to the spill that has reached Louisiana’s shores and threatens Florida and the East Coast. Oil continues to spread along the Louisiana coastline, reaching almost 70 miles (113 kilometers) of beach and marsh, according to Governor Bobby Jindal.
Clean ‘Every Drop’
BP has said the well can be permanently sealed only by one of two relief wells it’s drilling, which won’t be complete before August. The chances of top kill’s success are 60 percent to 70 percent,Hayward said May 24. BP will clean up “every drop” of oil, he said.
The potential failure of top kill will lead to another effort that may only reduce the leak and, if it fails, might increase the spill rate, BP Senior Vice President Kent Wells said yesterday.
If the top of the well can’t be plugged, the company plans to replace the damaged riser pipe at the well. That requires cutting away a kink in the existing pipe, at least temporarily increasing the size of the leak, Wells said.
Crews would then attach a rubber-sealed cap to the top of the blowout preventer, a series of valves designed to cut off flow from the well. That effort would divert more oil to the surface than BP has been able to manage with a small pipe inserted in the broken riser on May 16, according to Wells.
BP fell 1.6 pence to 483.60 pence at 12:48 p.m. in London. The company has lost about 31.5 billion pounds ($45.2 billion) of its market value since the incident.
The company’s first attempt to divert oil leaking from the well using a 40-foot-tall containment box failed on May 8. The second effort to capture oil, via the tube inserted in the riser, has been able to recover an average of 2,400 barrels of oil a day, Toby Odone, a BP spokesman, said yesterday.
The spill has cost BP about $760 million, or $22 million a day, the company said May 24.
To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net
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