BP Stumbles In Containment Effort As Flow-Rate Estimates Hiked

16th Jun 2010 01:05

By Susan Daker Of DOW JONES NEWSWIRES BP PLC (BP, BP.LN) stumbled Tuesday in its oil-collection efforts in the Gulf of Mexico as a team of government and independent scientists dramatically increased their estimate of how much oil is flowing from the damaged well a mile beneath the water's surface. BP, which has come under increasing pressure as the spill touches an increasingly wide swath of the Gulf Coast, was forced to shut down its oil-containment operation for nearly five hours following a fire aboard the Discoverer Enterprise, the vessel that has been processing the oil. The company also announced that a second vessel that's designed to boost the oil-collection capacity by up to 10,000 barrels a day still isn't ready to start working, though the plan had been to have it in operation by Tuesday. The latest snags in the company's two-month effort to contain the oil spewing from the broken Macondo well raise new questions about BP's ability to deal with a spill that is apparently much larger than previously thought. The team charged with studying the spill rate said Tuesday that it now estimates that between 35,000 and 60,000 barrels a day are emanating from the well. Tuesday's estimate is the latest in a series that began with an initial estimate in April of 1,000 barrels a day. Just last week, the team of scientists said the flow rate was about 20,000 to 40,000 barrels a day. The containment system implemented 11 days ago has been the first procedure to show success in capturing large quantities of oil, collecting about 15,000 barrels a day. 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 presented to the government over the weekend. By Tuesday, BP had planned to ramp up the use of another ship, the Q4000, in an effort to increase its overall capture rate to between 20,000 and 28,000 barrels a day. However, BP spokesman Toby Odone said Tuesday afternoon that the ship continues to "ramp up" and that there was no estimate on when it will be fully operational. The fire aboard the Discoverer Enterprise caused oil-processing activities to be suspended from about 10:25 a.m. EDT until 3:15 p.m. EDT, BP said late Tuesday on its website, noting that production was also down for half an hour owing to a faulty sensor. The company collected just 5,610 barrels in the first 12 hours of Tuesday, or about 2,000 less than in recent days. News of the latest snags come as BP faces increased scrutiny in Washington and on Wall Street. Executives from several major oil companies, including BP, Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), were lambasted during a U.S. congressional hearing Tuesday for their apparent safety shortcomings. President Barack Obama was due to address the nation Tuesday evening from the Oval Office, outlining his plans for the cleanup, compensating victims, getting tough on the offshore oil industry and enacting policies to reduce the country's oil dependence. Meantime, BP's bonds slumped and the cost of insuring the company's debt soared after Fitch Ratings downgraded BP's long-term issuer default rating to a level just above junk ratings. Fitch cited the high costs that BP is likely to face as spill estimates rise and the political pressure from Washington mounts. -By Susan Daker, Dow Jones Newswires; 713-547-9208; [email protected] (Siobhan Hughes, Mark Stein and John Kell contributed to this article.) (END) Dow Jones Newswires June 15, 2010 20:05 ET (00:05 GMT)