It's Official - Another BP Failure - Efforts To End Flow From BP Well Are Over, Coast Guard Says

From Bloomberg:

BP Plc has given up trying to plug its leaking well in the Gulf of Mexico any sooner than August, laying out a series of steps to pipe the oil to the surface and ship it ashore for refining, said Thad Allen, the U.S. government’s national commander for the incident.

Undersea robots began sawing away damaged pipe today, preparing for the first of those attempts, Allen said today at a press conference in New Orleans. The new strategy, which is subject to disruption by tropical storms and hurricanes, will continue until relief wells being drilled can plug the damaged well from the bottom, he said.

That will happen no earlier than August. BP on May 30 said its “top kill” attempt to plug the well with mud and rubber scrap had failed.

BP will try to install a snug-fitting “top cap” over the gusher within 24 hours to 48 hours once the robots complete severing the pipe. To get a good seal, BP needs a clean cut at the top of the blowout preventer, a five-story stack of valves that failed to prevent an April 20 blowout that killed 11 people and started the spill, Allen said. Should the jet of oil and gas drive the cap aside, another cap designed to let more oil escape will be tried, Allen said.

“We’re talking about containing the well,” Allen said. “We don’t want to restrict the pressure or flow down that well bore because I don’t think we know the condition of it after the top kill.”

Relief Wells

The drilling of a second relief well resumed May 30, Allen said. It had been suspended for several days as BP and government officials, including Energy Secretary Steven Chu, weighed whether to use the rig that was drilling it to install a second blowout preventer atop the damaged one. BP decided not to, Allen said.

The odds of success for installing the oil-capturing system are better than the 60 percent to 70 percent chances the company gave for the top kill attempt that failed May 29, BP Managing Director Robert Dudley said on NBC’s “Today” show. Cutting the pipe may temporarily boost the flow of oil into the Gulf by as much as 20 percent, Dudley said on CBS’s “Early Show.”

BP fell the most in 18 years in London trading today after top kill failed to plug the worst oil spill in U.S. history. Top kill was an effort to pump fluids into the well to hold back the oil and gas long enough to allow a cement seal to stop the flow. BP is now trying to capture the oil, estimated by government scientists last week at 12,000 barrels to 19,000 barrels a day, while it drills two relief wells to permanently stop the leak.

‘Risks Are Lower’

“This is a lower-risk activity than what we were doing with the top kill,” Dudley said of the cap. “We’ve gone down this path because the risks are lower. The engineering, while not simple, is certainly simpler than what we were trying with the top kill.”

Video on BP’s oil-spill website showed a circular saw making preliminary cuts on a smaller pipe that’s part of the riser, the cluster of lines that once extended from the well to the drilling rig, said Jon Pack, a BP spokesman. Shears were already grasping the riser, he said.

BP fell 63.35 pence, or 12.8 percent, to 431.45 pence at 3:39 p.m. in London, the biggest drop since 1992. The company has dropped 34 percent since the Deepwater Horizon drilling rig exploded on April 20.

Disappointed Hopes

“The market had hoped they’d get it under control and they haven’t,” Peter Hitchens, an analyst for Panmure Gordon UK Ltd. in London, said today in a telephone interview. Hitchens rates the stock at “buy” and owns none. “Clearly, the damages and costs are going to go up.”

President Barack Obama will meet today with the co-chairs of his oil-spill commission and then give a statement, according to a schedule provided by the administration.

BP plans “in a couple of weeks” to reverse the system of pipes and hoses that injected mud into the well for top kill, achieving another route to storage on the surface, he said. As part of the top-kill effort, BP had to remove a tube from the riser that was capturing as much as 6,100 barrels a day from the well.

Engineers also are working on a free-standing riser pipe to be installed later this month that would allow tankers to take on oil, Dudley said. That equipment would include a quick- disconnect coupling so tankers could depart ahead of a hurricane, Dudley said on CNN today. Hurricane season starts in the Gulf today.

Changing Winds

Southwest winds predicted this week would push oil from the well to a wider area of the U.S. coast, the National Oceanic and Atmospheric Administration said in a May 31 statement on its website.

“Results indicate that oil may move north to threaten the barrier islands off Mississippi and Alabama later in the forecast period,” the agency said. As of yesterday, the Unified Area Command in Robert, Louisiana, reported oil along 100 miles (161 kilometers) of Louisiana coastline.

BP has spent $990 million on the spill response, according to a statement today. The company has paid $39.4 million in damage claims as of May 31, the unified command for the spill response reported yesterday. BP reported 30,619 claims and has denied none, it said.

BP needs the equivalent of a lottery win to succeed with its first attempt with a relief well, David Rensink, president- elect of the American Association of Petroleum Geologists, said in an interview.

Permanent Seal

The relief well aims to intercept the damaged hole at an angle thousands of feet below the seabed and permanently close it with heavy mud and cement. The method is the surest way for BP to end the largest oil spill in U.S. history, yet initial failure is “almost a certainty,” Rensink said.

“What you’re doing is trying to intersect a well bore that is probably roughly a foot across with another well that is about a foot across,” he said. “It’s a hit-or-miss sort of thing. Ultimately the relief well will work. It’s just a matter of time, of continuing to poke at it until you intersect it.”