BP Moves In for the ‘Static Kill’

Aug 4th, 2010 | By businessnews | Category: Business

August 03, 2010, 5:42 PM EDT

By Jim Polson and Katarzyna Klimasinska

(Updates with comments from BP’s vice president in second paragraph.)

Aug. 3 (Bloomberg) — BP Plc started plugging its Gulf of Mexico oil well with drilling mud, another step in the company’s effort to permanently seal the source of history’s worst accidental oil spill.

BP began pumping mud into the top of the well for its “static kill” operation at 3 p.m. local Houston time. The company may need “a bunch of hours to a couple of days” to complete the process, Senior Vice President Kent Wells told reporters during a conference call today. BP may pause the operation to measure pressure and determine where the mud is going, he said.

If the static kill is successful, BP would be able to plug the Macondo well from the top. The company still needs to complete a relief well to permanently kill the damaged well, National Incident Commander Thad Allen said at a Houston press conference.

Government scientists issued revised estimates yesterday that the well spewed 4.9 million barrels of oil, making it the largest accidental maritime oil spill. About 800,000 barrels of the oil was captured by BP, and some was skimmed or burned. Scientists expect to quantify within days how much oil remains in the Gulf, potentially in underwater plumes, Allen said.

“There’s still residual oil out there,” he said. “Our intention is to size our force based on the requirements — how much oil is out there and how much do we have to recover.”

BP rose 2.55 pence to 415.65 pence at 4:35 p.m. in London trading. It has fallen 37 percent since the Deepwater Horizon drilling rig exploded on April 20, killing 11 workers and triggering the spill.

Record Loss

The company, based in London, has set aside $32.2 billion to pay spill costs, is selling $30 billion of assets, and replaced its chief executive officer after reporting a record quarterly loss of $17.2 billion.

BP said today its relief well, which would inject mud and cement into Macondo from the bottom, will “most likely” intercept the damaged bore by mid-August. The company has said the relief well may complete the permanent kill by the end of the month.

Oil continues to wash ashore 19 days after BP stopped the flow by installing a new cap on the well. About 641 miles (1,031 kilometers) of the region’s coastline is oiled, according to a government operational report yesterday. About a quarter of the Gulf remains closed to fishing, the National Oceanic and Atmospheric Administration said on its website.

Storms may drive oil onto shore through hurricane season, which ends Nov. 30, Allen said.

Tallying the Oil

Scientists are trying to quantify in the next several days how much oil was skimmed from the surface or burned at sea, how much evaporated, how much was dispersed into the water and how much may yet hit shore, Allen said.

The Macondo spill exceeds the 3.3 million barrels that the Royal Swedish Academy of Sciences estimated leaked from Mexico’s Ixtoc-1 well in the Bay of Campeche in 1979. The worst spill was in the 1991 Persian Gulf War when retreating Iraqi forces opened valves, releasing 6 million barrels into the sea, according to the U.S. Environmental Protection Agency.

“As long as it has taken us to get a decent estimate to figure how much oil is coming out, it is going to take many, many times longer than that to figure out what it did to the ecosystem,” Ian MacDonald, a professor of oceanography at Florida State University in Tallahassee, said in an interview yesterday.

Speeding Up Payments

BP is accelerating damage payments, saying today it recognizes “frustration” from small-business owners as it transfers authority over claims to an independently administered fund. The company said it processed 2,600 claims during the past three days under an expedited system that eased documentation requirements.

The company has issued a total of 93,000 checks for $277 million in damage claims. Some claims will be deferred until later this month, when the $20 billion Gulf Coast Claims Facility run by Kenneth Feinberg will begin operating, BP said.

–With assistance from Mark Chediak in San Francisco. Editors: Kim Jordan, Susan Warren.

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.

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