BP Works to Stop Gulf Spill Bigger Than Exxon Valdez

The spill has so far cost BP a total of $850 million
The mobile offshore drilling unit Q4000. Photographer: Patrick Kelley/U.S. Coast Guard via Bloomberg

BP Plc resumed pumping thousands of barrels of mud into a damaged oil well to halt a Gulf of Mexico oil spill that is bigger than the Exxon Valdez disaster and may be the largest in U.S. history.

The “top kill” attempt restarted at 7 p.m. New York time yesterday, said U.S. Coast Guard Chief Bob Laura. The effort began May 26 and was suspended the same day at 11 p.m. for checks and for changes to the procedure. The effort may last for the next 24 hours to 48 hours, BP said today in a statement, adding that “response” costs so far amount to $930 million.

“What we do believe we’ve done is successfully pump some drilling mud into the well bore,” Doug Suttles, BP’s chief operating officer for exploration and production, said yesterday at a press conference in Robert, Louisiana. “We will continue the efforts as long as there’s a possibility of success.”

A successful top-kill would bring a temporary end to a leak that has poured an estimated 23 million gallons of oil into ocean and soiled 100 miles (161 kilometers) of coast. The slick, stemming from the April 20 explosion of the Deepwater Horizon rig that killed 11 people, threatens the Gulf fishing and tourism industries.

Exxon Valdez

The well has been leaking oil at an estimated rate of 12,000 to 19,000 barrels a day, Marcia McNutt, head of a U.S. government panel studying the flow, said yesterday.

Based on the midpoint of the best estimates released by the Flow Rate Technical Group, the well may have leaked about 527,000 barrels as of May 26 since the rig sank, April 22. That has exceeded the 262,000 barrels spilled by the Exxon Valdez in 1989 and the U.S. record 300,000-barrel spill by a tanker off the Oregon coast in 1968, according to statistics from the American Petroleum Institute.

The amount of oil being spilled will help determine BP’s liability for the leak. BP leased the rig from Geneva-based Transocean Ltd., the largest deep-water driller.

The company will inject material originally intended for another well-blocking solution known as a “junk shot.” Adding the items to the mud may help BP to seal leaks so that enough pressure can be exerted on the column of oil to block the flow. Some of items are fibrous and small, and others are larger rubber balls, Suttles said.

‘Arm Wrestle’

The first phase of the top kill effort used less than 15,000 barrels of drilling mud to try to fill the well, Suttles said. BP had 50,000 barrels available and has made sure there are additional supplies on hand for when pumping resumes, he said.

The top kill process uses drilling fluid to “arm wrestle” the gusher of oil and natural gas back into the well, said Robert Dudley, managing director for the London-based company.

The procedure will serve as a temporary block on the damaged well until another well can be drilled and used to permanently plug it with cement.

A live video feed provided by BP showed brown fluid flowing from the site. The feed alone can’t indicate the success of the effort to block the well, Suttles said. Ultimately, the effort will be considered successful when mud has fully blocked oil from leaking and the well has been capped with concrete.

Shares Drop

BP fell 1.7 percent to 512 pence in London as of 8:17 a.m. It rose 5.9 percent yesterday after reports on some advance in the operation. Anadarko Petroleum Corp., which owns a 25 percent stake in the well, rose $2.23, or 4.2 percent, to $55.57.

Transocean rose as much as 9.1 percent yesterday in New York trading and closed up 1.9 percent at $59.71. Halliburton Co., which provided services on the rig, rose $1.11, or 4.3 percent, to $26.99. Cameron International Corp., which provided equipment for the rig, rose $2, or 5.5 percent, to $38.08.

An underwater oil plume from the spill may have spread 22 miles northeast toward Mobile, Alabama, researchers from the University of South Florida said in a preliminary report. Tests conducted by the school’s Weatherbird II vessel showed the highest concentrations of “dissolved hydrocarbons” were 400 meters 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 yesterday.

Drilling Moratorium

President Barack Obama yesterday 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 suspended planned drilling by Royal Dutch Shell Plc of exploratory wells in the Arctic off Alaska.

Elizabeth Birnbaum, the head of the Minerals Management Service, the federal agency that oversees offshore drilling, resigned yesterday, according to Interior Secretary Ken Salazar.

The spill has cost BP a total of about $24 million a day. Average daily profit last year was $45 million a day, according to data compiled by Bloomberg.

The accident “threatens to be the worst oil spill disaster in history,” BP investor Southeastern Pennsylvania Transportation Authority claimed in a Delaware Chancery Court lawsuit filed against BP directors on May 21 in Wilmington.

Economic Harm

Directors violated their duties to the company, causing “enormous economic harm for failure to act in the interests of BP and its shareholders” and exposing the company to liabilities in the billions of dollars, Septa lawyers said.

The lawsuit lists potential damage claims of about $2.5 billion to the Gulf fishing industry; $3 billion to tourism; $700 million in remediation efforts so far; $6 million a day in continuing costs and “incalculable damages to BP’s reputation.”

The cleanup has involved more than 1,300 tugs, barges and other vessels and the use of more than 3.15 million feet of containment boom is in place to protect the shoreline and fish nurseries. About 274,000 barrels (11.5 million gallons) of oily liquids have been skimmed from the water surface.

So far 26,000 claims have been filed and 11,650 have already been paid, BP said today.

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