BP fine-tuned its equipment on Tuesday to deliver the first of two planned killer punches to permanently plug its ruptured Gulf of Mexico oil well that caused the world's worst accidental oil spill. The last-minute tests sought to iron out technical glitches before a "static kill" operation expected later on Tuesday, the next step to definitively subdue the unstable seabed well that was provisionally capped in mid-July.
The full magnitude of the Gulf of Mexico spill, triggered in April by a deadly rig explosion at the BP-owned deepwater well, became apparent on Monday as government scientists released revised figures showing almost 5 million barrels of oil leaked before the well was temporarily capped on July 15.
This made it the world's largest accidental release of oil, surpassing the 1979 Ixtoc well blow-out in Mexico's Bay of Campeche that gushed almost 3 million barrels. Retired Coast Guard Admiral Thad Allen, who oversees the US oil spill response, said engineers had succeeded in halting a hydraulic leak found on Monday in the cap that could have hindered the operation that will pump drilling mud, and possibly later cement, into the top of the well.
An injection test was planned to confirm whether this "static kill" could go ahead. "We should be into the static kill by this afternoon," Allen said at a briefing. The kill operation would take 33-61 hours to complete. Allen said engineers were moving cautiously so as not to damage the fractured well and cause fresh leaks. "We don't know the exact condition of the well," he said.
The static kill is the first step of a two-pronged strategy that will aim to finally seal the Macondo deposit later in August with more mud and cement injected through relief wells that will deliver a definitive "bottom kill." "This thing won't be truly sealed until those relief wells are done," Allen said.
The Macondo spill, already the worst in US history, has unleashed an environmental and economic catastrophe on the US Gulf Coast, disrupting the livelihoods of fishermen and tourism operators and triggering a barrage of damages lawsuits against BP. The company has said it will pay all legitimate claims and clean up fouled beaches and marshes. The new leak estimates spelled further bad news for BP, which also faces an investigation by US securities regulators into whether its employees profited illegally from the Gulf of Mexico spill. The revised flow numbers suggest the company had underestimated costs by at least $1 billion.
US regulators are looking into potential insider trading in shares of BP, including by BP employees, two sources familiar with the probe told Reuters on Monday. BP had estimated the well had leaked some 4 million barrels of oil and that it would be fined $1,100 per barrel under the Clean Water Act.
The company faces fines of $4,300 per barrel if gross negligence is proven, but said it saw no need to change its provision as a result of the new estimate. "Given these new figures, BP could be fined $4.5 billion if gross negligence is not proven, or up to $14 billion if it is," one dealer said.
BP, which took a $32.2 billion charge related to the spill in its results last week, has said it will sell $25 billion to $30 billion of assets to pay for the spill. Kuwait's oil minister said his state-owned Kuwait Petroleum International may be interested in buying some of the assets.
BP said on Tuesday it had agreed to sell its Colombian oil unit to a consortium of Canada's Talisman Energy and Ecopetrol, Colombia's national oil company, for $1.9 billion. BP shares initially fell around 1 percent in early trading on Tuesday, but recovered, and were trading around .60 percent up later in the day.
BP's 10 percent partner in the well, Japan's Mitsui, has yet to decide if it will shoulder any costs, helping the trading house to report a 79 percent jump in profits to 102.5 billion yen ($1.18 billion). BP's other partner in the well, Anadarko Petroleum, which owns a 25 percent share, is due to report its second quarter results later on Tuesday. Meanwhile, other oilfield services and drilling companies were counting the cost to their profits and activities from a US drilling moratorium, and permit delays, following the BP spill.
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