BP to test new cap to stem oil flow
HOUSTON (Reuters) - BP Plc prepared on Tuesday to test a new cap on its runaway well in an effort to finally arrest the flow of oil gushing into the Gulf of Mexico for the last 12 weeks.
The tests, due to last between six and 48 hours, will begin later on Tuesday on BP's newly installed "capping stack", which has a better seal than the last cap placed on the well and aims to stop oil from spewing out of the failed blowout preventer.
A critical test to gauge the integrity of the blown-out well is expected to start "in a couple of hours," a BP executive said at about 3:30 p.m. EDT (1930 GMT).
Regardless of the test results, BP should be able to contain the ruptured well's flow with oil-siphoning vessels by mid-July, said retired Coast Guard Admiral Thad Allen, the top U.S. official overseeing the oil spill.
As the oil giant prepared for a potential turning point in the worst offshore spill in U.S. history, it also said its plans to sell some non-core assets, which will help pay for a $20 billion clean-up fund, were moving forward.
Both pieces of news had helped BP shares maintain their recent recovery in London, although they seesawed in New York with profit-taking erasing most of the early gains.
"We are in discussions with a number of companies about a number of assets," BP spokeswoman Sheila Williams said in London, declining to give details. "Talks are going well."
In Dubai, Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahayan said the emirate was considering investing in BP.
"We are still thinking about it," Bloomberg quoted him as saying when asked about buying a stake in the firm.
BP Chief Executive Tony Hayward visited Abu Dhabi last week and met with the sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA).
BP divested a small non-core downstream asset on Tuesday, selling Magellan Midstream Partners L.P. its crude oil storage tanks in Cushing, Oklahoma and related petroleum pipelines for $289 million.
Williams said the sale, in the works since February, is not part of BP's plan to unload $10 billion in non-core upstream assets to help pay for the cost of the Macondo cleanup.
The recent focus on divestments highlighted just how much a pounding BP shares have taken, since the firm's net asset value is around $80 billion more than its market value, said analyst Jason Kenney at ING in Edinburgh.
About seven non-core assets -- including ones in Alaska, Colombia, Venezuela and Vietnam -- could be worth $45-50 billion, he said.
In London BP shares ended up about 2.9 percent. But in New York, profit-taking set in around midday. The shares closed up marginally at $36.88.
"Let's not forget the stock was $28 six or seven days ago," said Robert Lutts, chief investment officer at Cabot Money Management in Salem, Mass. "It was overbought shorter term relative to the potentially improving fundamental situation."
The U.S. shares have advanced around 36 percent since the stock collapsed to a low at the end of June.
NO MORE OIL FLOWING?
BP's leaking wellhead is a mile underwater. The new 160,000-pound (73-tonne) capping stack was custom-designed and built for the leaking well.
Even if the new cap fails, BP will have the ability to siphon up to 80,0000 barrels per day of oil from the blown-out well by mid-July and either burn it or store it aboard vessels on the surface, Allen said.
"Either through a potential shut-in of the well or being able to produce most if not all of the flow that is generated, either way, we will have a way to contain the oil," he said.
Kent Wells, senior vice president of exploration and production, said BP and government scientists would monitor the cap during the tests at "very minute intervals."
If tests progress as hoped, BP said no oil would flow from the well for the first time since a rig being drilled for BP by Transocean Ltd sank days after an explosion on April 20 that killed 11 workers.
During the tests, two smaller siphoning systems, including the one brought online on Monday, will be turned off. But BP warned the outcome was uncertain since the system has never been tested at such depths.
Depending on the results, BP will either keep the cap closed entirely or use it to resume siphoning oil to ships on the surface. If it works effectively, the cap should either hold all the oil in or allow it to be safely captured and funneled away.
While the cap could contain the flow, Wells said relief wells remain the sole means to kill the leak permanently. The first of those wells has another 30 feet to drill before inserting pipe and preparing to intercept the blown-out well by the end of July, Wells said.
(Additional reporting by Ayesha Rascoe and Alexandria Sage in New Orleans, Matthew Lynley in New York and Eric Onstad in London; Writing by Deborah Charles; Editing by Simon Denyer and Jerry Norton)
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