WRAPUP 6-BP cements Gulf oil well ahead of permanent plug

Thu Aug 5, 2010 6:14pm EDT

Related Topics

* Daylong cementing operation completed

* Progress is a relief for BP, Obama administration

* Shares show signs of recovery on hopes of final solution

* US government report says most oil "appears to be gone"

* Wary Gulf residents ask "where has it gone?" (cementing operation completed)

By Kristen Hays

HOUSTON, Aug 5 (Reuters) - BP (BP.L) (BP.N) finished pumping cement into its ruptured oil well in the Gulf of Mexico on Thursday to seal off the source of the world's worst offshore spill, paving the way to permanently plug the blow-out later this month.

The daylong cementing operation followed earlier injections of heavy drilling mud this week that had subdued the upward pressure of oil and gas inside the deep-sea Macondo well. The crippled wellhead was provisionally capped in mid-July.

"This is not the end, but it will virtually assure us that no oil will be leaking into the environment," retired Coast Guard Admiral Thad Allen, who oversees the U.S. oil spill response operation, said at a briefing in Washington.

"Monitoring of the well is under way in order to confirm the effectiveness of the procedure," BP said in a statement announcing completion of the cementing work.

The so-called "static kill" at the top of the well is due to be finished off with a "bottom kill" later in August with more mud and cement injected through a relief bore being drilled into the ruptured well shaft. This relief well is regarded as the final step in plugging the reservoir 13,000 feet (4,000 metres) beneath the seabed.

"I will declare this well dead once we've intercepted the annulus (the space between the well pipe and surrounding rock) and we've assessed how much mud or cement we need to do from the bottom to finally kill this well," Allen said.

Allen said BP would likely resume drilling the relief well 24 to 36 hours after the cementing was done, with the initial intercept expected within five to seven days after that.

Progress in shutting off the cause of an environmental disaster for the U.S. Gulf Coast came as a relief for both BP, whose image and stock took a beating, and U.S. President Barack Obama, whose approval ratings suffered over criticism of his administration's handling of the spill. [ID:nN04250367] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage link.reuters.com/hed87k Special report on new BP CEO Dudley [ID:nN29102489] Graphic on relief well link.reuters.com/xes52n Reuters Insider link.reuters.com/ren23n Breakingviews [ID:nLDE6740LL] Political risk factbox on the U.S. [ID:nN02255831] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Reflecting hopes that an end to the 108-day-old drama is now in sight, BP shares hit two-month highs in early trading in London. They later fell back, closing up 0.42 percent. BP shares finished 3 percent higher in New York.

BP shares have gained strongly since hitting a 14-year low on June 25. "Nobody thinks they (BP) are going to go bust in the next five years any more," said Iain Armstrong, an analyst at Brewin Dolphin.

BP, which has lost over a third of its market value since the April 20 blast that killed 11 workers, sank the Deepwater Horizon rig and triggered the spill, has said it would sell about $30 billion in assets to cover costs related to the disaster.

OFFSHORE DRILLING CONCERNS

With the U.S. government announcing this week that some 75 percent of the estimated 4.9 million barrels of oil spewed by the well has either evaporated, dispersed or otherwise been contained, some environmental experts say the U.S. Gulf Coast may have dodged a nightmare scenario. [ID:nN03157658]

But the incident has had far-reaching repercussions for the oil industry from a safety and regulatory point of view.

A group of investors, including the two largest U.S. public pension funds, asked 27 leading oil and gas companies on Thursday to disclose what they have done to improve offshore drilling safety in the wake of the BP spill. [ID:nN05150611]

Industry experts have warned that new government regulations and rising insurance costs stemming from the crisis are expected to drive up the expenses of drilling in the Gulf, pushing many of the smaller oil and gas producers out of the prolific energy zone.

Independent company Plains Exploration & Production Co PXP.N planned to sell its Gulf of Mexico assets and expand onshore, due to the regulatory backlash. [ID:nSGE6740J6]

Mexico's state oil company Pemex will delay the start of its Maximino exploration well in the Gulf until next year due to concerns about deep-water drilling, a regulator said. [ID:nN05252018]

WHERE'S THE OIL GONE?

Despite the encouraging announcements from BP and the Obama administration, many Gulf Coast residents, who have seen their fishing, tourism and livelihoods devastated by the spill, were wary, asking where the remnants of the leaked oil had gone.

"Where is this remaining oil? It's in the reeds, salt marshes, mangroves and on the beaches or it's still at sea -- either floating on, in or near the surface," said Simon Rickaby, chairman of the London-based Institute of Marine Engineering, Science & Technology (IMarEST) Pollution and Salvage Special Interest Group.

BP and U.S. authorities have said that cleanup efforts, though being scaled back, would continue.

Coast Guard Rear Admiral Paul Zukunft said the fragile but environmentally important salt marshes of Louisiana -- the hardest hit of the five Gulf states -- appeared to be more resilient than expected.

During a flyover on Thursday of Barataria Bay, one of the region's most spill-impacted areas and a prime nursery for its seafood industry, Zukunft said he saw healthy pelicans diving for fish. He also said crab traps lined with absorbent boom and submerged in the marshland have attracted little crude.

"There is very little observable oil out there," Zukunft said, though he added that tar balls are expected to keep washing ashore for "months, potentially years."

Carol Browner, Obama's Energy and Climate Change adviser, on Thursday assured anxious business owners in the Florida Panhandle, which suffered oil pollution on some of its beaches, that the administration would continue to assist them.

"I just want to tell you that we are not going anywhere," Browner said. "We remain committed. It's an important regional treasure, but it's also a national treasure," she said, referring to the state's famous white-sand beaches.

Hundreds of miles of shoreline have been soiled by the spill, which also has killed thousands of birds and other wildlife, idled much of the region's fishing and tourism industries and ultimately cost the job of BP Chief Executive Tony Hayward, widely criticized as seemingly insensitive.

BP, which faces an avalanche of economic damage lawsuits, has said it will pay all legitimate claims.

Transocean Ltd (RIGN.VX) (RIG.N), which operated the destroyed rig, reassured investors that BP would bear most of the liability linked to the spill. [ID:nN05135581] (Additional reporting by Michael Peltier in Panama City, Tom Bergin and Cecilia Valente in London, Maggie Fox and Timothy Gardner in Washington, Scott Malone in Boston, Braden Reddall in San Francisco, Chris Baltimore in Houston; Writing by Steve Gorman; Editing by Eric Beech and Alan Elsner)

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