3rd UPDATE: BP Shares Fall On Worries Over Well Cap Test

19th Jul 2010 12:16

(Adds analyst comment, detail.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--BP PLC (BP) said tests on a well cap that has halted the flow of oil into the Gulf of Mexico for several days continue to behave as expected, but the company's shares dropped more than 7% in London Monday morning after U.S. authorities raised concerns that hydrocarbons may be leaking from the sea bed near the Macondo well. The stock rebounded later and at 1114 GMT BP shares were down just 1.9%, or 8 pence, at 400 pence, lagging London's blue-chip FTSE 100 index. BP shares have risen almost a third from their low point on June 29 as the company has made progress containing the spill. The pressure in the capped well is 6,792 pounds per square inch and continues to rise slowly, BP said. Rising pressure at the well head should indicate that there are no hydrocarbon leaks from other locations on the well bore. However, the top U.S. government official overseeing the oil spill response effort asked BP late Sunday to closely monitor hydrocarbons seeping from the sea bed some distance from the Macondo well to ensure that the well bore has not ruptured. "Given the current observations from the test, including the detected seep a distance from the well and undetermined anomalies at the well head, monitoring of the seabed is of paramount importance during the test period," U.S. Coast Guard Admiral Thad Allen said in a letter to BP Chief Managing Director Bob Dudley. If a leak is found, it would lead to the well being reopened, but, "the new cap appears to be working well with pressure in the system building up steadily," said Evolution Securities analyst Richard Griffith. "The testing of the system may continue for some time longer though before BP and the U.S. authorities are satisfied that it is working properly." Allen asked BP to have in place a plan to reopen the well cap as quickly as possible in case the well bore is shown to be damaged. BP said it should have two vessels, the Q4000 and the Helix Producer, in place to capture between 28,000 and 33,000 barrels a day of oil from the well if the cap has to be reopened. "Plans continue for additional containment capacity and flexibility that are expected to ultimately increase recoverable oil volumes to 60,000-80,000 barrels a day," BP said. The final solution to the problem of the oil leak--the drilling of a relief well--remains on track to be complete in the first half of August, BP said. The well has reached the point where it will lay its final metal casing before engineers guide the drill bit to intercept the leaking well. The oil spill has cost BP $3.95 billion to date, the company said. Separately, BP got a badly need vote of confidence in its ability to continue tapping resources in deep water after signing a new $9 billion deal in Egypt to develop offshore gas fields. "BP and the Egyptian General Petroleum Corporation have a long-standing and successful partnership, and the agreement we signed today takes that to a new level in developing these deep water resources, as well as creating an important source of future growth for BP," said BP Chief Executive Tony Hayward. Production from the West Nile Delta development is projected to reach up to 1 billion cubic feet per day, with first gas delivered in 2014, BP said. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires July 19, 2010 07:16 ET (11:16 GMT)