UPDATE: BP: Rough Seas May Delay Third Oil Containment Rig

28th Jun 2010 21:14

(Updates with comments, background) By Brian Baskin and Guy Chazan NEW ORLEANS (Dow Jones)--Tropical Storm Alex may delay by a week BP PLC's (BP, BP.LN) plan to increase the amount of oil collected from the leaking well in the Gulf of Mexico, a company official said Monday. Waves of 10 to 12 feet would prevent BP from connecting a third rig to an under-water containment system, a process that needs three days of good weather, said Kent Wells, a BP senior vice president, in a press briefing. The new rig is expected to nearly double the amount of oil siphoned off of the leak, to between 40,000 and 50,000 barrels a day. The storm's winds are expected to stay far enough west of the spill to avoid any interruption to the drilling of two relief wells, either of which could completely cut off the flow of oil into the Gulf in August. BP Senior Vice President Kent Wells said he is "really confident" that the relief well will successfully plug the leak. But U.S. Coast Guard Admiral Thad Allen, the head of the federal government's oil spill response team, said he didn't think it would be possible for BP to finish before August, even though one well is within 1000 feet of its target. Oil continues to gush into the Gulf in the meantime, and is now being pushed onto Mississippi's beaches, Allen said in a press conference in New Orleans. Separately on Monday, BP was forced to deny reports out of Russia that chief executive Tony Hayward was resigning, as he has come under mounting pressure over BP's handling of the oil spill. BP also announced it had spent $2.65 billion on cleaning up the Gulf oil spill so far--meaning that the costs are now averaging out at around $100 million a day. The company has lost more than $100 billion in market value since the oil disaster began. BP is conducting tests to pinpoint the location of the leaking well in preparation for intercepting it with the first relief well. The well, already 16,770 feet below the surface, will be drilled down another 900 feet before cutting across to the original hole. Heavy drilling fluids will then be pumped in, potentially sealing the leak. However, Allen said Monday that drilling those final feet would proceed "very slowly" to avoid reaching the leaking well early. On the surface, two rigs, the Discoverer Enterprise and the Q4000, are collecting between 20,000 and 25,000 barrels of oil a day from the well, which has been leaking since a BP-contracted rig caught fire and sank in April. The addition of the third rig, the Helix Producer, is expected to raise the amount of oil siphoned off to between 40,000 and 50,000 barrels a day, BP has said. Allen said that high seas could also prevent the Discoverer Enterprise from transferring the recovered oil onto another ship. The drilling rig has enough space to continue collecting oil for eight days, Allen said. Meanwhile, prior to going into a meeting with Mr. Hayward in Moscow, Russia's Deputy Prime Minister Igor Sechin, one of Russia's top officials, said the embattled CEO was due to step down and would be introducing his successor. BP swiftly denied that, saying there was no change in his position. A spokesman later said the subject of Mr. Hayward's employment didn't come up in the meeting, which was designed to reassure the Russian authorities of BP's continued commitment to Russia. A BP spokesman said Mr. Hayward pledged to Mr. Sechin, Russia's top energy official, that BP had no intention of selling its Russian assets--principally its 50% stake in TNK-BP Ltd. (TNBP.RS), one of Russia's top oil producers--and its small stake in state-controlled oil major OAO Rosneft. Russia is one of BP's key areas. TNK-BP accounts for nearly a quarter of BP's production of oil and gas, a fifth of its reserves and about 14% of its profit. Order free Annual Report for BP plc Visit http://djnewswires.ar.wilink.com/?link=BP or call 1-888-301-0513 (END) Dow Jones Newswires June 28, 2010 16:14 ET (20:14 GMT)