BP Plunges After Attempt to Plug Gulf of Mexico Oil Leak Fails

BP Plunges After Attempt to Plug Gulf of Mexico Oil Leak Fails


June 1 (Bloomberg) -- BP Plc fell the most in 18 years in London after abandoning an attempt to plug a leaking oil well in the Gulf of Mexico, the worst spill in U.S. history.

BP plunged as much as 15 percent to 420 pence, the steepest one-day drop since June 1992. The company said on May 29 a “top kill” attempt to plug the leak using heavy fluids and debris had failed. That rules out stopping the flow of oil from the well until relief drilling is completed in August.

The company will now try to contain the spill by fitting a pipe over the leak later this week to bring the oil to a drillship on the surface, it said in statement in London today. It may temporarily increase the flow of oil into the Gulf before a cap can seal the pipe. The cost of responding to the spill has risen close to $1 billion, BP said.

“All of these operations, including the cutting of the riser, are complex, involve risks and uncertainties, and have to be carried out by remote-operated vehicles at 5,000 feet under water,” BP said in the statement. The techniques “have never before been deployed at these depths and conditions, and their efficiency and ability to contain the oil and gas cannot be assured.”

Chief Executive Officer Tony Hayward’s effort to stop the leak and clean up the spill is becoming more urgent as hurricane season starts. The shares traded at 423.15 pence at 8:24 a.m. London time.

BP said today it has so far spent $990 million responding to the explosion on the Deepwater Horizon rig on April 20 that killed 11 workers, as well as the cleanup from the oil spill.

Diamond Band Saw

Using robots at the mile-deep well, BP plans to shear away most of the damaged pipe that once rose from the well to the Deepwater Horizon. Then it will make a more precise cut with a diamond-toothed band saw, BP Managing Director Robert Dudley said in television interviews last weekend.

That will make a clean junction for a gasket-lined cap intended to catch most of the oil and route it to the surface through a pipe, Dudley said.

Engineers expect the method to work better than a smaller pipe used to capture 22,000 barrels of oil, he said.

The well has spewed from 12,000 barrels to 19,000 barrels of oil a day, a government panel estimated May 27. Government experts estimate the spill will increase over the four to seven days BP needs to fix the cap, White House Energy Adviser Carol Browner said on May 30.

Commence Cutting

The cutting will commence soon, BP spokesman Jon Pack said yesterday.

BP reiterated that the first relief well, which it began drilling May 2, is now at 12,090 feet, two-thirds of the way to completion. The drilling effort is “on track, even slightly ahead,” said BP’s Pack.

President Barack Obama ordered BP’s cleanup efforts tripled in oiled areas that encompass 107 miles of shoreline and 30 acres of tidal marsh.

“Every day that this leak continues is an assault on the people of the Gulf Coast region, their livelihoods, and the natural bounty that belongs to all of us,” Obama said in a statement May 29. “It is as enraging as it is heartbreaking.”

source: bloomberg.com