WRAPUP 8-BP to continue test, seepage unrelated to well

* News helps BP shares recover after dropping

* Talks to sell stake in Alaska field to Apache back on (Edits second paragraph)

By Kristen Hays and Tom Bergin

HOUSTON/LONDON, July 19 (Reuters) - Energy giant BP Plc (BP.L) (BP.N) can extend a test on its capped Macondo oil well in the Gulf of Mexico after determining that nearby seepage is not related to the test, a U.S. official said on Monday.

Thad Allen, the top U.S. oil spill official, said the energy company could continue for 24 more hours a pressure test at the well, which was capped last week.

BP shares took a beating on Monday following news that engineers detected seepage on the ocean floor after the well was capped. The stock recovered in New York after BP and Allen said scientists had determined the seepage was not related to the well.

"We do not believe that is associated with this particular ... test or the Macondo well," Allen told reporters, referring to the seepage detected about 3 km (1.9 miles) from the well.

BP's New York shares dropped more than 6 percent as investors sold on fears the seepage could signal that the April 20 blowout of the well might have damaged it, causing oil or gas to leak out the sides or possibly breach the seabed. Shares in New York recovered on the news the seepage was unrelated to the well, finishing down 3.64 percent.

In the test, which began on Thursday, officials are monitoring the pressure in the well to gauge whether it is structurally sound. An intact well would help when a relief well intercepts and tries to plug the leak, but damage could complicate that effort.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For full spill coverage link.reuters.com/hed87k

Breakingviews [ID:nLDE6671DQ]

Insider TV link.reuters.com/hyr57m

Graphic on BP shares link.reuters.com/vys95m

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The worst oil spill in U.S. history has caused an economic and environmental disaster in five states along the Gulf Coast, hurt President Barack Obama's approval ratings and complicated traditionally close ties with Britain.

BP said in a statement that it had spent $3.95 billion on efforts to tackle the well and clean up the millions of barrels of spilled oil.

The explosion that led to the spill and a three-month long effort to plug the leak and clean up the oil has hit BP's finances. BP has started canvassing shareholders about a restructuring that could include a breakup of its businesses, the Sunday Times reported. [ID:nLDE66H072]

BP talks to sell half its stake in Alaska's Prudhoe Bay oil field to Apache Corp (APA.N), which stalled over the weekend, were back on, CNBC reported.

TESTING

As part of a test of the well, BP choked off the flow a mile (1.6 km) under the water's surface with a cap on Thursday, marking the first time oil has not spewed since the April 20 explosion on an offshore rig killed 11 workers.

The company was extending the test in 24-hour intervals, pending U.S. government approval. The latest extension lasts until Tuesday afternoon.

BP hopes to keep the damaged well shut until a relief well intercepts it and kills the well by mid-August, BP's chief operating officer of exploration and production Doug Suttles, said on Sunday.

But Allen has said when the pressure test ends, BP would "immediately" move to begin siphoning oil again to a pair of oil-capture vessels and move to a larger four-vessel siphoning system as planned by the end of July.

Suttles' statement could indicate diverging views between BP and the U.S. government. Yet BP has repeatedly said the final say of how BP proceeds lies with Allen.

On Monday Allen appeared to leave open the possibility of keeping the well capped and shut. He said it was hard to say whether BP will return to that siphoning system.

He also said installation of BP's oil-capture vessel system, designed to handle up to 80,000 barrels a day, could be delayed by a few days as seismic and acoustic sensor vessels scan the area for possible wellhead and seabed anomalies.

"We are negotiating how to trade off and prioritize long-term containment," Allen said.

ROLE OF BP IN LIBYA BOMBER DEAL

The oil spill is likely to loom large when British Prime Minister David Cameron meets Obama in Washington this week. [ID:nLDE66I0I8]

The White House said the company's role in the release of the Lockerbie bomber from a Scottish prison will also come up.

BP has confirmed that it lobbied the UK government in late 2007 over a prisoner transfer agreement with Libya, but said it was not involved in talks on the release of Abdel Basset al-Megrahi, convicted of the 1988 bombing of a Pan Am flight.

The British government said it had no plans to re-examine a prisoner transfer agreement with Libya, despite demands by U.S. lawmakers for an investigation.

Secretary of State Hillary Clinton told senators who had demanded an investigation that the United States was urging Scottish and British authorities to review the circumstances leading to Megrahi's release.

Cameron's visit comes as U.S. lawmakers are considering a range of rules that could require tougher safety regulations on offshore drilling or bar companies like BP from new offshore exploration leases.

BP is also trying to figure out a possible restructuring of its business.

The Sunday Times said options included selling the group's refineries and petrol stations, scaling back U.S. operations and ramping up in-house engineering instead of outsourcing.

(Additional reporting by Tabassum Zakaria in Washington, Matthew Lynley in New York, Writing by Deborah Charles; Editing by Eric Beech and Stacey Joyce)