Gulf oil well seal holding, BP looks to final kill

HOUSTON Fri Aug 6, 2010 5:50pm EDT

1 of 5. A screen grab of the MC252 well is captured from a BP live video feed from the Gulf of Mexico, August 6, 2010.

Credit: Reuters/BP/Handout

Related Video

HOUSTON (Reuters) - BP said on Friday the cement seal on its crippled Gulf of Mexico oil well was holding and a relief well to permanently plug the ill-fated borehole was on track to reach its target in mid-August.

As the final stages of the long-awaited "kill" operation moved forward, nagging questions remained about the lasting environmental and economic impact to the U.S. Gulf region from the world's worst offshore oil accident.

More than 100 days after the start of the catastrophic spill that ravaged ecologically sensitive wetlands and lucrative coastal economies, BP said no oil was leaking from the undersea Macondo well and no "recoverable oil" was left on the surface of the Gulf of Mexico.

BP finished pumping cement on Thursday into the ruptured well one mile below the surface after injections of drilling mud earlier this week subdued the pressure of oil and gas. The wellhead was provisionally capped in mid-July.

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 that will be drilled into the well shaft. This relief well is regarded as the final solution to plug the reservoir 13,000 feet beneath the seabed.

BP's chief operating officer for exploration and production, Doug Suttles, told reporters at a briefing the cement job "appears to be performing as expected."

"All of the indications so far look very encouraging," he said in New Orleans. Engineers were pressure-testing the injected cement.

Retired Coast Guard Admiral Thad Allen, who heads the oil spill response for President Barack Obama's administration, said the relief well was scheduled to reach the well shaft below the seabed "somewhere between August 14th and 15th."

"We are unequivocally committed to completing the relief wells," Allen said in a conference call. A second, back-up relief well is also being drilled.

Asked if BP would sell its rights to the Macondo field, Suttles replied: "We just haven't thought about that."

"Clearly there is lots of oil and gas here and we will have to think about what to do with that at some point," he said.

The well's sealing was a relief for both the British energy giant, whose shares and image have taken a beating from the spill, and for Obama's administration, which has faced criticism over its response and has pledged to help the pollution-struck Gulf Coast recover.

BP shares, which have recovered strongly since hitting a 14-year low on June 25, appeared once again to be buoyed by the news of the progress in plugging the well. They rose more than 2 percent in early London trading before falling back to close up 0.46 percent. In New York, BP shares were up 1.7 percent in late-day trading.

"FAR FROM FINISHED"

Suttles, who had led BP's overall oil spill response in the Gulf but was now returning to his chief operating officer role in Houston, nevertheless acknowledged the coastal cleanup effort was "far from finished."

"Clearly we feel like its moving to a new phase because we've been three weeks without new oil flowing into the sea, and we don't have oil out on the open water anymore. But we still have a lot of work around the shoreline," he said.

Mike Utsler was appointed to take his place in BP's Gulf spill response operation.

The company 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.

Questions remain about the final total of the cleanup bill and the damage liabilities and possible fines BP will face.

"If chapter one of BP's corporate nightmare took place largely under sea in the battle to plug the leak, the next chapter in this odyssey is likely to play out in courtrooms and law offices," IHS Energy analyst Andrew Neff wrote in a briefing note.

BP, which already agreed to a $20 billion escrow fund to guarantee cover of economic damage claims, has said it would sell about $30 billion in assets to address the costs related to the spill, and this asset selling process has started.

"More assets are expected to be up for grabs as BP shrinks itself to steel the company for a vastly different future than it envisioned back in April, when the firm was reportedly days away from announcing a massive oil discovery in the Gulf of Mexico," Neff added.

FEARS OF LONG-TERM IMPACT

Many Gulf Coast residents have seen their fishing and tourism livelihoods devastated by the spill. They and some scientists have expressed skepticism about the government's assertion this week that around 75 percent of the estimated 4.9 million barrels of oil leaked by the well had either evaporated, dispersed or otherwise been contained.

Carol Browner, Obama's energy and climate change adviser, on Friday defended the government declaration.

"No one is trying to oversell or undersell anything," she told a community forum in St. Petersburg, Florida, where local business owners said even the threat of oil washing ashore had been enough to dent their income. There was no actual oil impact on the St. Petersburg part of the Florida coastline.

BP was working to produce a Gulf Coast recovery masterplan within six months and hoped to get support for it from federal, state and local government, according to James Lee Witt, a former head of the Federal Emergency Management Agency and now a crisis management consultant, who has been contracted by BP.

Michael Hirshfield, chief scientist with the ocean conservation advocacy group Oceana, said it could be years before experts fully understood the spill's effects on the Gulf of Mexico ecosystem, or on species like the Atlantic bluefin tuna, which spawns in these waters.

"It's like trying to prove a negative. You have to wait longer for the absence of something," he said, as the group prepared to embark on a two-month trip to assess long-term impacts on coral, fish, sharks and other marine life.

(Additional reporting by Tom Bergin in London, Michael Peltier in St. Petersburg, Tom Brown in Dania Beach, Fla., Matthew Bigg in Atlanta, Writing by Pascal Fletcher; Editing by Eric Beech)