UPDATE: BP Outlines Latest Plans To Capture More Oil From Spill

14th Jun 2010 18:34

(Adds comments from Coast Guard admiral, latest share price, information on congressional investigation) By Susan Daker and James Herron Of DOW JONES NEWSWIRES BP PLC (BP, BP.LN), under pressure from U.S. authorities to devise a more-comprehensive strategy to contain the oil spill in the Gulf of Mexico, has outlined plans the company says will enable it to capture, by the end of June, all of the oil that is currently estimated to be flowing from the damaged well. In the latest iteration of its plan, revealed Sunday in a letter sent to U.S. Coast Guard Rear Admiral James Watson, BP said it expects to have the capacity to capture between 40,000 and 53,000 barrels of oil a day by the end of June. That compares with the 15,000 barrels a day that are being collected now, out of the 20,000 to 40,000 barrels that a team of scientists estimates as the daily flow rate from the Macondo well. BP, which said that further enhancements will increase the collection capacity to as high as 80,000 barrels a day by mid-July, submitted its latest plan after Watson, the federal government's second-in-command for the spill response, told the company Friday its previous plan didn't meet the bill and gave BP a 48-hour deadline to come up with a revised scheme. Watson said in a statement Monday that "BP is now stepping up its efforts to contain the leaking oil," noting that the new plan calls for collecting 50,000 barrels of oil by the end of June, two weeks earlier than the previous plan's timeline. "Their revised plan also includes methods to achieve even greater redundancy beyond the month of June, to better allow for bad weather or unforeseen circumstances," Watson said. He added that government authorities "will continue to hold them accountable and bring every possible resource and innovation to bear." The BP-owned well has been spewing oil for nearly two months, dirtying the shores of four states and threatening to cause environmental and economic devastation in the region. President Barack Obama and much of the U.S. public have expressed outrage over BP's inability to stem the disaster, which has already cost the company $1.6 billion and is likely to result in many billions more in costs associated with cleanup, covering claims and litigation. On Monday and Tuesday, Obama will be making his fourth trip to the Gulf Coast since the April 20 sinking of the BP-leased Deepwater Horizon rig. On Wednesday, Obama plans to tell BP officials in a meeting at the White House that the company should create a special reserve account to pay for damages caused by the spill. BP shares, which have lost nearly half their value since the leak began, were down 9.0% at $30.90 in early-afternoon trading in New York as political pressure on the company continues to escalate. Early Monday, Senate Democrats asked BP to set aside $20 billion in a special account to be used to pay for economic damages and cleanup costs. In addition, a House panel investigating the spill said that the probe is "raising serious questions" about the company's decisions leading up to the explosion of the rig. BP is also under pressure to suspend its dividend payment to shareholders. BP installed a containment cap over the leaking well 10 days ago. The company said Monday that it has collected 134,500 barrels of oil since the containment process began. BP acknowledged its latest plan faces numerous challenges and offered no guarantee of success. In the event of a hurricane, for instance, containment operations would cease, possibly resulting in the unfettered flow of oil from the Macondo well. The oil that's captured is being brought to a surface via a pipe connected to the Discoverer Enterprise. On Monday, a second vessel, the Q4000, will connect to the well and could increase that rate to 20,000 to 28,000 barrels a day, BP said. "The Q4000 should be ramping up to full rate on Tuesday," BP said. Most, if not all of that extra oil collected on the Q4000 will be flared off into the atmosphere. However, eventually the Discoverer Enterprise and Q4000 will disconnect so that a more permanent cap can be put over the well. By the end of a June, a third vessel, either the Helix Producer or the Toisa Pisces, will connect to a kill line on the blowout preventer atop the well head, raising the capacity of the system to between 40,000 barrels a day and 53,000 barrels a day. These ships are supposed to be better able to withstand weather conditions and could be quickly shut down and restarted in the event of a hurricane. The height of hurricane season on the U.S. Gulf Coast falls between mid-August and mid-September. After connecting the Helix Producer and Toisa Pisces, BP will connect the Clear Leader and reconnect the Discoverer Enterprise, which will increase the system's processing capacity to 60,000 to 80,000 barrels a day by mid-July. BP warned that implementation of some of the measures may temporarily decrease the amount of oil captured. The large number of vessels operating on the water above the leaking well raises the danger of an accident, BP said. "Several hundred people are working in confined space with live hydrocarbons on up to four vessels. This is significantly beyond both BP and industry practice," it said. For example, the Q4000 will eventually cease operations because it can't run concurrently with the four other vessels for safety reasons, BP said. The drive to capture more oil from the well must not be allowed to compromise safety, BP said. -By Susan Daker and James Herron, Dow Jones Newswires; 713-547-9208; [email protected] (Siobhan Hughes contributed to this article.) (END) Dow Jones Newswires June 14, 2010 13:34 ET (17:34 GMT)