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BP hopes to 'kill' well as SEC probes trading
Source: Agencies |
August 3, 2010, Tuesday
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BP Plc said yesterday it might still attempt the first of two operations to permanently plug its ruptured Gulf of Mexico well today despite the technical delay of a crucial test.
Optimism about the planned "static kill," which will involve the injection of drilling mud into the top of the well, helped fuel a rally in BP and other energy shares yesterday despite reports that US regulators are investigating insider trading in the British energy giant's stock.
But BP said a test ahead of the operation, which had been planned for yesterday, would now likely take place today because a hydraulic leak was detected. BP had been aiming to begin the static kill itself today and remained cautiously optimistic it could still do so.
"It is anticipated that the injectivity test and possibly the static kill will take place Tuesday," BP said in a brief statement late yesterday, after US markets had closed.
The well was temporarily sealed two weeks ago but the static kill followed by the completion of a relief well later in August are seen as the permanent solutions to the leaking well, which US government scientists estimate has released almost 5 million barrels of oil since late April.
The worst oil spill in US history has been an environmental and economic nightmare for the Gulf coast and even if the crude is no longer flowing unchecked, the legal and political fall-out is still spreading unabated.
At the same time, the Securities and Exchange Commission is investigating insider trading in shares of BP, including whether BP employees profited illegally from the spill.
FLOW REVISION
The full extent of the disaster was given added clarity yesterday when US government scientists refined estimates of how much oil had flowed into the Gulf from the well.
The Flow Rate Technical Group and a team of scientists with the US Department of Energy say 4.9 million barrels of oil have been released. The flow rate was put at 62,000 barrels a day at the start of the spill in late April.
That rate dropped to 53,000 barrels a day immediately before the well was sealed on July 15, the group said. Officials also said BP had siphoned about 16 percent of the 4.9 million barrels to vessels at the ocean's surface, but the rest went into the sea.
The group's previous leak estimate ranged from 35,000 to 60,000 barrels a day.
Investors will scrutinize these figures closely as BP's final costs may be tied to how much oil is estimated to have flowed into the Gulf from the spill. BP has already announced plans to sell US$30 billion in assets over the next 18 months to help cover its liabilities related to the disaster.
The US insider trading probe will also rivet investors.
Two sources familiar with the preliminary SEC probe said the alleged insider trading took place after the start of the BP oil spill on April 20.
At issue is whether people illegally profited from trading on non-public information at BP. Investigators are also looking at whether the company properly disclosed information on risks related to its deepwater Gulf operations, one source said.
BP did not return calls for comment, but the investigation comes as the British company is trying to rehabilitate its image and tamp down public anger in the United States over its handling of the spill.
"BP can do no right by anybody and the US government today -- it's not surprising they're trying to throw the whole book at BP for anything they can," said Robert Lutts, president, chief investment officer at Cabot Money Management.
STATIC KILL
But Lutts said investors were focused on BP's "static kill," when it plans to inject drilling mud into the top of the well to push oil back where it came from -- a reservoir 13,000 feet/ (4,000 metres) beneath the seabed.
BP's stock gained ground in New York, climbing 2.5 percent in afternoon trading, despite news of the SEC investigation.
"The stock has rallied since they may finally have a 'cap' to their problems. Now if we get a permanent fix, shareholders will be much more pleased going forward," Lutts said.
Energy shares had a strong rally, fueled by optimism over BP's plans and a 3 percent jump in crude oil prices. Companies linked to the Macondo oil field rallied, with Transocean Ltd up 9.6 percent to US$50.68. The Philadelphia exchange oil services sector index climbed 4.5 percent.
The White House said it was "cautiously monitoring" the situation, mindful of previous setbacks in efforts to permanently kill the well.
President Barack Obama's approval rating has slipped in part because voters have frowned on his handling of the spill
The top US official overseeing the spill response, retired Coast Guard Admiral Thad Allen, said the kill would take 33-61 hours to complete once it got under way.
"I think everybody would like to have this thing ended as soon as possible," Allen said.
To ensure the ruptured well is permanently sealed, BP will also proceed with its plans for a relief well that will intersect the damaged well and pump more heavy drilling mud and cement in from below to plug any openings.
Kent Wells, BP's senior vice president of exploration and production, said the company expected the relief well to intercept the blown-out well between Aug. 11-15.
A permanent seal to the well would end the months-long technical nightmare that began in April with an explosion on the rig that killed 11 workers and triggered the leak.
Gulf communities are still counting the costs after the forced the closure of large swaths of rich fishing grounds and the blow dealt to wildlife and tourism by the spill.
Optimism about the planned "static kill," which will involve the injection of drilling mud into the top of the well, helped fuel a rally in BP and other energy shares yesterday despite reports that US regulators are investigating insider trading in the British energy giant's stock.
But BP said a test ahead of the operation, which had been planned for yesterday, would now likely take place today because a hydraulic leak was detected. BP had been aiming to begin the static kill itself today and remained cautiously optimistic it could still do so.
"It is anticipated that the injectivity test and possibly the static kill will take place Tuesday," BP said in a brief statement late yesterday, after US markets had closed.
The well was temporarily sealed two weeks ago but the static kill followed by the completion of a relief well later in August are seen as the permanent solutions to the leaking well, which US government scientists estimate has released almost 5 million barrels of oil since late April.
The worst oil spill in US history has been an environmental and economic nightmare for the Gulf coast and even if the crude is no longer flowing unchecked, the legal and political fall-out is still spreading unabated.
At the same time, the Securities and Exchange Commission is investigating insider trading in shares of BP, including whether BP employees profited illegally from the spill.
FLOW REVISION
The full extent of the disaster was given added clarity yesterday when US government scientists refined estimates of how much oil had flowed into the Gulf from the well.
The Flow Rate Technical Group and a team of scientists with the US Department of Energy say 4.9 million barrels of oil have been released. The flow rate was put at 62,000 barrels a day at the start of the spill in late April.
That rate dropped to 53,000 barrels a day immediately before the well was sealed on July 15, the group said. Officials also said BP had siphoned about 16 percent of the 4.9 million barrels to vessels at the ocean's surface, but the rest went into the sea.
The group's previous leak estimate ranged from 35,000 to 60,000 barrels a day.
Investors will scrutinize these figures closely as BP's final costs may be tied to how much oil is estimated to have flowed into the Gulf from the spill. BP has already announced plans to sell US$30 billion in assets over the next 18 months to help cover its liabilities related to the disaster.
The US insider trading probe will also rivet investors.
Two sources familiar with the preliminary SEC probe said the alleged insider trading took place after the start of the BP oil spill on April 20.
At issue is whether people illegally profited from trading on non-public information at BP. Investigators are also looking at whether the company properly disclosed information on risks related to its deepwater Gulf operations, one source said.
BP did not return calls for comment, but the investigation comes as the British company is trying to rehabilitate its image and tamp down public anger in the United States over its handling of the spill.
"BP can do no right by anybody and the US government today -- it's not surprising they're trying to throw the whole book at BP for anything they can," said Robert Lutts, president, chief investment officer at Cabot Money Management.
STATIC KILL
But Lutts said investors were focused on BP's "static kill," when it plans to inject drilling mud into the top of the well to push oil back where it came from -- a reservoir 13,000 feet/ (4,000 metres) beneath the seabed.
BP's stock gained ground in New York, climbing 2.5 percent in afternoon trading, despite news of the SEC investigation.
"The stock has rallied since they may finally have a 'cap' to their problems. Now if we get a permanent fix, shareholders will be much more pleased going forward," Lutts said.
Energy shares had a strong rally, fueled by optimism over BP's plans and a 3 percent jump in crude oil prices. Companies linked to the Macondo oil field rallied, with Transocean Ltd up 9.6 percent to US$50.68. The Philadelphia exchange oil services sector index climbed 4.5 percent.
The White House said it was "cautiously monitoring" the situation, mindful of previous setbacks in efforts to permanently kill the well.
President Barack Obama's approval rating has slipped in part because voters have frowned on his handling of the spill
The top US official overseeing the spill response, retired Coast Guard Admiral Thad Allen, said the kill would take 33-61 hours to complete once it got under way.
"I think everybody would like to have this thing ended as soon as possible," Allen said.
To ensure the ruptured well is permanently sealed, BP will also proceed with its plans for a relief well that will intersect the damaged well and pump more heavy drilling mud and cement in from below to plug any openings.
Kent Wells, BP's senior vice president of exploration and production, said the company expected the relief well to intercept the blown-out well between Aug. 11-15.
A permanent seal to the well would end the months-long technical nightmare that began in April with an explosion on the rig that killed 11 workers and triggered the leak.
Gulf communities are still counting the costs after the forced the closure of large swaths of rich fishing grounds and the blow dealt to wildlife and tourism by the spill.
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