U.S. Instructs BP to Reopen Gulf Well, Capture Oil After Concluding Tests

BP Plc was ordered by U.S. officials to open its sealed Macondo gusher in the Gulf of Mexico and resume capturing the escaping oil after it concludes tests on the well.

BP, based in London, stopped the flow of oil and began testing on July 15 to look for damage. After reviewing more than two days of data, BP found no evidence of hidden leaks, Kent Wells, BP’s senior vice president for exploration and production, said on a conference call with reporters yesterday.

National Incident Commander Thad Allen ordered the London- based company yesterday to do at least another 24 hours of monitoring, including additional seismic mapping intended to detect oil leaking from the seafloor.

“The test has provided us with valuable information which will inform the procedure to kill the well and a better understanding of options for temporary shut-in during a hurricane,” Allen said in an e-mailed statement.

Relief wells that BP is drilling to plug the leak with mud and cement next month remain the “ultimate step” in stopping the spill, Allen said. BP plans to finish drilling the first relief well this month and kill the gusher by mid-August.

BP had been considering whether the positive test results would allow it to keep the well sealed, stopping the flow of oil until the leak could be permanently plugged. Allen has said consistently that it was “likely” the government would choose to use BP’s new, tighter-fitting cap to resume capturing oil after the tests.

More Oil Spilling

While the company eventually plans to reach collection capacity of 80,000 barrels a day, more than the estimated size of the leak, reopening the well would lead to some oil escaping to the sea before the vessels are connected, Wells said yesterday.

“Thad Allen wants to do containment because they want to find out what the real flow rate was,” Don Van Nieuwenhuise, director of Petroleum Geoscience Programs at the University of Houston, said in an interview yesterday. “Unless they do something like that, they’ll almost never be able to prove what the true flow rate was.”

More than 48 hours of data from pressure tests, seismic surveys and temperature gauges indicate the structural integrity of the well may be intact and the amount of oil in the reservoir is being depleted after three months of flowing into the Gulf of Mexico, Wells said.

Data Watching

“We feel more comfortable that we have integrity,” Wells said. “We have a tremendous amount of monitoring going on, and we’re very much focused on making sure that this test is run perfectly. We’re watching every piece of data.”

Pressure inside the well rose slowly to 6,745 pounds per square inch yesterday from 6,700 pounds per square inch at the start of the day Friday, an encouraging sign that the inside of the well may have escaped damage following an April 20 explosion aboard the Deepwater Horizon drilling rig, Wells said.

The current pressure is a little lower than the 7,500 pounds per square inch BP initially said would give it confidence to declare the well sound.

The Macondo well has produced the biggest oil spill in U.S. history, spewing 35,000 to 60,000 barrels of oil a day into the Gulf, according to a U.S. government-led panel of scientists.

Allowing oil to flow from the well will make the final kill procedure easier and safer, as it will lower the pressure in the reservoir and make any potential hidden leaks less risky, Van Nieuwenhuise said.

“They’re moving in a very careful and deliberate direction,” he said.

Spill Damages

BP halted its dividends to shareholders, trimmed capital spending and said it would sell $10 billion of assets over the next year to help pay for damage caused by the spill. The company also agreed under pressure from President Barack Obama to establish a $20 billion escrow fund to compensate victims of the spill.

With the well under control, Europe’s largest oil producer may look to change leadership as it starts rebuilding its reputation, management experts, industry analysts and investors said.

Iain Conn, head of refining and marketing at BP and one of the main executives under Chief Executive Officer Tony Hayward, said June 29 Hayward is backed by the board and is not about to resign.

Macondo well manager, Donald Vidrine, is scheduled to testify next week at government hearings in Louisiana that are investigating the cause of the disaster. Hours before the explosion, Vidrine overruled objections from representatives of rig owner Transocean about how to finish the well, Douglas Brown, the chief mechanic on the vessel, told the joint investigation panel in May. He’s scheduled to appear July 20.

To contact the reporter on this story: Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net

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