May 27 (Bloomberg) -- BP Plc made progress in efforts to stop the leak from its Gulf of Mexico well, the U.S. Coast Guard said, as a federal panel issued a new estimate indicating the offshore oil spill has become the largest in U.S. history.
The well has been leaking oil at a “best initial” estimated rate of 12,000 barrels to 19,000 barrels a day, Marcia McNutt, head of a U.S. governmental panel, said today. At the midpoint of that rate, the well has exceeded the 262,000 barrels spilled by the Exxon Valdez in 1989 and the record 300,000-barrel spill by a tanker off the Oregon coast in 1968, according to statistics from the American Petroleum Institute.
The effort to block the well bore with mud, which began yesterday, was suspended overnight as the company analyzed data from its initial efforts. The procedure will resume this evening, said Doug Suttles, Chief Operating Officer for Exploration and Production, speaking at a press conference in Robert, Louisiana.
“Everybody is cautiously optimistic, but there’s no reason to declare victory yet,” U.S. Coast Guard Admiral Thad Allen, National Incident Commander for the spill, said in an interview on WWL radio in New Orleans today.
Success of the “top kill” effort would bring to an end a leak that has poured an estimated 22 million gallons of oil into the Gulf and soiled 100 miles (161 kilometers) of coast. BP rose 28.8 pence, or 5.9 percent, to 520.8 pence at 4:35 p.m. in London trading.
Double the Valdez
Based on the midpoint of the best estimates released by the Flow Rate Technical Group, the well may have leaked about 527,000 barrels from the day the rig sank, April 22, through yesterday. That is more than double the Exxon Valdez’s 262,000-barrel spill in Alaska.
The amount of oil being spilled will help determine BP’s liability for the leak.
The top kill process uses drilling fluid to “arm wrestle” the gusher of oil and natural gas back into the well, Robert Dudley, managing director for the London-based company, said.
A live video feed provided by BP showed brown fluid flowing from the site. “The operation is ongoing, we’re not giving a commentary on it,” David Nicholas, a BP spokesman in Houston, said in a telephone interview.
The well began leaking after an April 20 explosion and fire on the Deepwater Horizon drilling rig, which resulted in the deaths of 11 workers. BP leased the rig from Geneva-based Transocean Ltd., the largest deep-water driller.
Transocean rose as much as 9.1 percent today. The shares gained $1.13, or 1.9 percent, to $59.71 at 4:01 p.m. in New York Stock Exchange composite trading. Halliburton Co., which provided services on the rig, rose $1.20, or 4.7 percent, to $26.99. Cameron International Corp., which provided equipment for the rig, rose $2, or 5.5 percent, to $38.08.
Anadarko Petroleum Corp., which owns a 25 percent stake in the well, rose $2.23, or 4.2 percent, to $55.57.
“It will be Friday night or Saturday at the earliest before we know definitively that the well has been killed,” Robert MacKenzie, a Houston-based analyst for FBR Capital Markets, wrote today in a note to clients. “They are in the process of mixing more mud or perhaps even a junk shot to pump before they switch to cement to seal the well.”
BP has said a “junk shot” injection of rubber scraps may be used as needed to seal leaks in the well piping so that enough pressure can be exerted on the column of oil and gas.
An underwater oil plume from the spill may have spread 22 miles northeast toward Mobile, Alabama, a research vessel from the University of South Florida found in a preliminary report. The Weatherbird II’s initial tests show the highest concentrations of “dissolved hydrocarbons” were 400 meters (1,312 feet) underwater.
Congress has scheduled at least 20 hearings on the Deepwater Horizon and offshore drilling since the rig exploded, and the Minerals Management Service and Coast Guard held another day of hearings in Louisiana on the reasons for the accident.
President Barack Obama today extended by six months a moratorium on new deep-water drilling permits that began after oil started to spill from BP’s well. The president also canceled a proposal to drill for oil off the coast of Virginia and planned drilling by Royal Dutch Shell Plc of exploratory wells in the Arctic off Alaska.
The head of the Minerals Management Service, the federal agency that oversees offshore drilling, resigned today, according to Interior Secretary Ken Salazar.
The spill has cost BP a total of $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to data compiled by Bloomberg.
The federal government has spent more than $100 million responding to the spill and will be reimbursed by BP, Coast Guard Rear Admiral Mary Landry said yesterday.
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