2nd UPDATE: BP Starts Collecting Oil With Second Containment System

16th Jun 2010 17:22

(Adds details throughout) By Susan Daker and Jeffrey Sparshott Of DOW JONES NEWSWIRES BP PLC (BP, BP.LN) put a second containment vessel into operation in the early morning hours Wednesday, a long-awaited move that the company says will allow for increased collection of oil from the massive spill in the Gulf of Mexico. The ramp-up of the Q4000 ship had been stalled by at least a day, adding to ongoing concerns about BP's ability to contain a growing spill that is causing environmental and economic devastation along the U.S. Gulf Coast. BP's primary containment vessel, the Discoverer Enterprise, hit a snag Tuesday when a fire caused it to shut down for five hours. As a result, BP only collected 10,440 barrels of oil for the day, down from typical collection rates of about 15,000 barrels a day over the previous week. In a release Wednesday, the company didn't provide a figure on the volume of oil and gas passing through the Q4000 system. Officials have said previously the Q4000 should be able to collect and burn off 5,000 to 10,000 barrels of oil a day. Even with the added capacity, large amounts of crude continue spewing from the damaged Macondo well a mile beneath the water's surface. The challenge facing the company appeared to increase Tuesday when a team of government and independent scientists evaluating the spill revised their estimate for the flow rate to 35,000 to 60,000 barrels a day, up from the 20,000 to 40,000 barrels a day estimate announced just last week. Eventually, the Discoverer Enterprise and Q4000 will be disconnected from the well and a stronger containment cap will be put in place. The government and BP believe that this system will add more capacity and will be better able to withstand harsher sea conditions, which could be critical as the Gulf moves into the height of the hurricane season. By the end of June, BP hopes to implement further enhancements to its oil-containment strategy that will enable it to capture more than 50,000 barrels a day from the well. By mid-July, BP hopes to have at the ready a system that could collect up to 80,000 barrels a day. Those systems are a stop-gap until relief wells, which are designed to ultimately stanch the flow from the damaged Macondo well, are completed in August. While BP carries on the difficult engineering work, it is also forced to contend with mounting scrutiny in Washington and on Wall Street. On Tuesday night, President Barack Obama made his first Oval Office address of his tenure and demanded BP "set aside whatever resource required to clean-up," the Gulf. Obama was meeting at the White House Wednesday with BP's chairman, Carl-Henric Svanberg, and Chief Executive Tony Hayward. As the political heat intensifies and uncertainty about the ultimate costs lingers, BP's stocks and bonds have taken a beating. Fitch Ratings on Tuesday downgraded the company's long-term issuer default rating to just above junk, adding to investor's concerns about BP's future. The company's stock has lost about $90 billion in value since the spill started in late April. -By Susan Daker, Dow Jones Newswires; 713-547-9208; [email protected] -By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347; [email protected] (END) Dow Jones Newswires June 16, 2010 12:22 ET (16:22 GMT)