Louisiana deep oil drilling disaster

[Jan Klimkowski]

So, BP may be "taken over".

Looks like a variant on the Bhopal and Dalkon Shield scams all over again:

Shares in BP rose more than 5% in early trading today as the oil firm said the latest attempt to cap the gushing well in the Gulf of Mexico is proceeding "as planned".

In an update on the progress of work to try to cap the damaged well, which began over the weekend, BP said it removed the original cap on the failed blow-out preventer on Saturday afternoon, local time. While that means oil is now gushing unhindered into the sea, the next step is to install what BP calls a "capping stack" that should contain the whole flow.

The update, which put the cost of the clean-up at $3.5bn (£2.33bn) so far, comes amid speculation that BP could be facing a hostile takeover from a rival firm, which has also helped push BP shares higher. They were up 17.75p at 382.55p, having earlier touched 386p. The company is vulnerable, having seen its share price plunge since the explosion on the Deepwater Horizon oil rig killed 11 people on 20 April. Weekend reports suggested the Obama administration has told ExxonMobil – the world's largest oil firm – that it would not stand in the way of a takeover bid for the stricken British rival. A merger would create a group with a stock market value of $400bn .

Tony Hayward, BP's chief executive, is only too aware of the precarious position of his company and has spent the past two weeks trying to sign so-called white knight investors from among some of the world's most wealthy sovereign states. He is understood to have met with the Abu Dhabi Investment Authority (ADIA) and the Kuwait Investment Office, a current investor.

The update also comes as a presidential commission appointed to determine the causes of the disaster, holds its first public hearing in New Orleans later today. It will review industry safety standards and government regulations. William Reilly, the commission's co-chair, who led the Environmental Protection Agency under President George Bush Sr, said he also wants to look at the response to the spill. The public hearing will hear from coast guard officials and BP executives about the progress of the clean-up effort.


Diversionary tactics

While the original cap only caught about half of the estimated 35,000 to 60,000 barrels of oil spewing into the gulf a day, the new cap will divert the entire oil flow into a containment system so it can be disposed of. As of Saturday, BP said the total volume of oil that has been collected or flared by the existing system was roughly 749,100 barrels. The new system that it is introducing, which includes the new cap, should be able to deal with 60,000 to 80,000 barrels a day and should be ready by the end of the month.

But capping the well and collecting the oil is not going to solve the problem in the long-term. Actually halting the flow of oil relies upon two relief wells that BP has been digging since May and are designed to join up with the original well, about 18,000ft under the sea floor.

The first relief well reached a depth of 17,810ft on 11 July, while the second well is at 16,000ft. The plan is to intercept the original well and kill the flow of oil and gas from the reservoir by pumping specialised heavy fluids down the relief well. If all goes to plan, the process will begin in the first half of August.

Meanwhile, BP has been collecting oil on the surface of the Gulf of Mexico in a process that currently involves 46,000 people, more than 6,400 vessels and dozens of aircraft.

In total, about 720,238 barrels (30.25m gallons) of oily liquid have been collected. In addition, a total of 286 controlled burns have been carried out, removing an estimated 238,095 barrels of oil from the sea's surface. The total length of containment booms currently deployed as part of efforts to prevent oil from reaching the coast is now more than 3.1m ft (587.12 miles).

BP added that as of 10 July, almost 105,000 claims for damages had been submitted and more than 52,000 payments had been made, totalling almost $165m.

The total cost of the clean-up exercise is currently $3.5bn, up from the $3.12bn announced on 5 July. That figure covers the cost of the spill response, containment, relief well drilling, grants to the gulf states, claims paid and federal costs.

http://www.guardian.co.uk/business/2010/...er-repairs