2nd UPDATE: BP Temporarily Halts Containment Operation After Fire

15th Jun 2010 22:13

(Adds details on oil recovery efforts, congressional panel) By Susan Daker Of DOW JONES NEWSWIRES BP PLC (BP, BP.LN) on Tuesday shut down its oil containment and recovery operation in the U.S. Gulf of Mexico as a safety precaution following a fire aboard the vessel that has been processing the oil. Tuesday's shutdown, though expected to be only temporary, marks the latest snag in the company's two-month effort to contain oil spewing from the broken Macondo well at rates estimated by scientists at 20,000 to 40,000 barrels a day. The company, which has come under increasing pressure as the growing spill threatens to cause massive environmental and economic damage, said in a press release that a small fire on the Discoverer Enterprise was discovered at about 10:30 a.m. EDT and was quickly extinguished. BP said the fire was likely caused by a lightning strike and that no one was injured. BP said late Tuesday that the containment operation, which was implemented 11 days ago and has been collecting and processing about 15,000 barrels a day of oil, was back up and running Tuesday afternoon following the completion of safety checks. The London-based oil giant's statement didn't say how the fire would affect the ship's collection rate on Tuesday. Officials from BP and the government-led response team weren't immediately available for further comment Tuesday afternoon. U.S. Coast Guard Admiral Thad Allen, the government's front man in the response effort, has repeatedly warned that severe weather conditions from lightening to hurricanes could postpone containment efforts at any time. News of the temporary halt in the containment procedures comes amid heightened scrutiny of the actions of BP, the broader oil industry and the federal government. On Tuesday, executives from several major oil companies, including BP, Exxon Mobil (XOM), and Chevron Corp. (CVX), were criticized during a U.S. congressional hearing for their apparent safety shortcomings. Rep. Henry Waxman (D., Calif.) said that the spill response plans of the companies were impressive on paper but "cookie cutter," and factually flawed. Four of the company's plans included mention of protecting walruses, but "there are no walruses in the Gulf of Mexico," he said. Rep. Cliff Stearns (R., Fla.) asked Lamar McKay, the president of BP's North American operations, to resign, while executives from the other oil majors sought to distance themselves from BP by saying their companies wouldn't have encountered the same problems. Later Tuesday, U.S. President Barack Obama will address the nation from the oval office, outlining his plans for cleaning up the spill, compensating victims, getting tough on the offshore oil industry and enacting policies to reduce the country's oil dependence. Obama will meet with top BP executives on Wednesday and Tony Hayward, BP's CEO, is slated to testify at a hearing in Washington on Thursday. The criticism of BP has increased as the company has failed in various attempts to stop or contain the leak and as oil affects an increasingly wide area of the Gulf Coast. The latest containment effort has been the first strategy to show success in capturing large quantities of oil, though significant amounts continue to gush into the Gulf. Live video feeds from the well site, a mile beneath the water's surface, provide vivid reminders to the public that BP hasn't yet stemmed the flow. Early this week, BP had planned to ramp up the use of another ship, the Q4000, in an effort to increase its capture rate to between 20,000 and 28,000 barrels a day. The vessel has been retrofitted to burn off about 5,000 to 10,000 barrels of oil a day. There was no word Tuesday on whether BP's Q4000 plans have come to fruition. Eventually, the Discoverer Enterprise and Q4000 will be disconnected from the well and a system with more capacity and one that can withstand harsher weather, like high winds and strong currents, will be put in place. BP plans to implement enhancements to the system that the company says would increase collection capacity to more than 50,000 barrels a day by the end of June. By mid-July, BP hopes to have in place the capacity to collect 80,000 barrels a day, the company outlined in a plan to the government. -By Susan Daker, Dow Jones Newswires, 713-547-9208; [email protected] (Cassandra Sweet and Siobhan Hughes contributed to this article) (END) Dow Jones Newswires June 15, 2010 17:13 ET (21:13 GMT)