May 12, 2010 / 5:08 AM / in 8 years

WRAPUP 6-Congress quizzes oil executives, BP tries new fix

* House panel finds flaws with rig’s blowout preventer

* BP moves ahead with “top hat” fix, outcome uncertain

* White House proposes $118 million to help with response

* BP protests planned in several U.S. cities (Adds comments from BP executive and Coast Guard official, wind forecast)

By Tom Doggett and Steve Gorman

WASHINGTON/PORT FOURCHON, La., May 12 (Reuters) - U.S. lawmakers on Wednesday pressed oil executives about flaws in a key safety device on a blown-out Gulf of Mexico well, as BP pushed another effort to control a huge oil spill that threatens environmental disaster.

BP Plc (BP.L), operator of the well off Louisiana’s coast, said it hoped to have a small containment dome in place by late Thursday, its latest attempt to staunch the roughly 5,000 barrels (210,000 gallons/795,000 litres) of oil gushing from the well per day.

London-based BP, Transocean Ltd. (RIG.N) and Halliburton Co. (HAL.N) were back in the hot seat in Washington over their responsibility in an April 20 rig explosion that killed 11 workers and triggered what could be the worst-ever U.S. oil spill if the spewing crude remains unchecked.

Transocean owned the rig, while Halliburton did a variety of work on the well.

A U.S. House of Representatives panel said it had uncovered significant problems with a safety control mechanism on BP’s well that could have contributed to the accident.

Representative Bart Stupak, a Democrat, said his panel’s investigation showed the Deepwater Horizon rig’s underwater blowout preventer leaked and was not powerful enough to cut off the oil flow before the rig blew up. [ID:nN12189610]

Democratic Representative Henry Waxman, quoting from a BP document describing its view of events, said the well failed a pressure test in the hours before the blast.

Panel investigators spoke with officials of the company that manufactured the blowout preventer and reviewed company documents, finding that the device on the rig was modified, making it hard to operate after the accident.

“The safety of its entire operations rested on the performance of a leaking and apparently defective blowout preventer,” Stupak said.

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TAKE A LOOK on the spill [ID:nSPILL]

INSIDER TV: link.reuters.com/gen92k

Graphic: link.reuters.com/xeh23k

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A race is on to contain the catastrophe, with oil already reaching at least four shorelines.

Cleanup crews found oil washing ashore at Whiskey Island in Louisiana’s Terrebonne Bay, west of the Mississippi Delta. Crude was found previously at the Chandeleur Islands and Port Eads in the state, as well as on Dauphin Island in Alabama.

The National Oceanic and Atmospheric Administration forecast persistent southeast winds throughout the week, which it said had the potential to move oil as far west as Louisiana’s Atchafalaya Bay by Thursday.

An attempt to maneuver a “top hat” containment dome over the leak was underway. BP engineers lowered it to the seabed and are hoping to start capturing oil by late Thursday.

BP Chief Operating Officer Doug Suttles said the company is studying whether to try just positioning the top hat over the leak or inserting a tube directly into the existing equipment on the sea floor.

    Both methods would involve siphoning the crude to a tanker through a pipe.

    “That decision will probably be made over the next 24 hours and then we’ll proceed with one of those,” he told reporters.

    The company is not guaranteeing success, citing the difficulties of working almost a mile (1.6 km) under the ocean surface. A buildup of slushy gas hydrates stymied its first attempt at covering the rupture with a huge metal dome.

    BP also is drilling a relief well, which could take 80 more days to finish. By late next week, it aims to try to plug the leak by pumping materials like shredded tires and golf balls into the well at high pressure.

    Despite the efforts, U.S. Interior Secretary Ken Salazar said he is unhappy with the inability so far to stop the leak.

    “We’re depressed, frankly, with what has happened here,” he said after he and Energy Secretary Steven Chu met with BP engineers in Houston. “There is a great deal of frustration.”

    Investors have cut the value of BP shares by more than $30 billion since the accident, exceeding even the worst estimates of the spill’s cost.

    BP shares fell 0.7 percent in London, while Transocean fell 1 percent and Halliburton rose 2.7 percent in New York.

    Fisheries and tourism, two of the Gulf’s economic mainstays, along with wildlife, are threatened by the unfolding fiasco that could surpass the Exxon Valdez disaster in Alaska in 1989 in terms of spilled oil and resulting damage.

    So far, 87 sea turtles, 18 birds and six dolphins have been found dead, officials said. Scientists are testing to determine if the oil spill killed them, or if there were other causes.

    LOCAL IMPACT

    With most of the shrimping grounds near Grand Isle, Louisiana, shut down, Ronald Polkey was one of dozens of fishermen waiting in line at the town’s community center on Wednesday, hoping BP would write him a check.

    “We’re screwed this year for shrimp,” Polkey, 42, said. “I took all the nets off my boat.”

    To make matters worse, he said, he left a temporary job laying boom when BP offered to pay him $2,000 a day for spill mitigation. He is still waiting to be put to work.

    The White House proposed new legislation which foresees $188 million in one-time discretionary spending — most of which will be covered by BP — so assistance can be sped to those affected if the spill worsens. [ID:nN12197447]

    It would also lift an existing cap on damage liability for the company responsible — in this case BP — relating to economic losses caused by the spill. The legislation also calls for a 1 cent-per-barrel increase in the tax that oil companies pay to an oil spill liability fund.

    Protesters are becoming more active in Washington and the Gulf region. An activist group called Seize BP planned protests at the company’s offices and other sites across the country on Wednesday to demand the government freeze BP’s assets to ensure payment for the cleanup and compensation for those impacted.

    About a dozen people protested outside JP Morgan Chase’s headquarters in New York on Wednesday night, carrying signs that said “US Congress bought and paid by oil” and urging the government to seize BP’s assets.

    In St. Petersburg, Florida, about two dozen people rallied peacefully outside a BP gas station, waving signs that urged a boycott of the company and accusing it of being a “Billionaire Polluter.”

    A new opinion poll, however, showed that 57 percent of likely voters agree that offshore drilling “is still a safe, reliable and cost-efficient method of producing oil.” The poll also showed 53 percent thought expansion of offshore drilling will lead to increased environmental problems.

    Cathy Norman of the Edward Wisner Donation, a land trust that owns the property that makes up the Port of Fourchon, the main harbor for the Gulf’s deepwater oil and gas industry, said the area’s shoreline already is “disappearing at an astronomical rate.”

    In Kenner, Louisiana, a U.S. Coast Guard official told federal investigators probing the incident that current regulations are outdated for effective oversight of today’s ultra-deep water drilling, such as with BP’s well.

    The rules were written in 1978, when drilling was nearer shore with quicker access to help should it be required, Lieutenant Commander Michael Odom told a joint Coast Guard-Minerals Management Service board. (Additional reporting by Tom Doggett, Ayesha Rascoe and David Alexander in Washington, Erwin Seba in Kenner, Louisiana, Verna Gates in Mobile, Alabama, Karina Ioffee in New York, Robert Green in St. Petersburg and Pascal Fletcher; Writing by Deborah Charles and Jeffrey Jones; editing by Bill Trott and Paul Simao)

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