BP shares plunge, next Gulf fix underway
June 1, 2010 As the British oil giant turned to yet another unproven
technology to try and contain the gusher, its share price, which
has fallen steadily since the start of the disaster, took a turn
for the worse, losing 15 percent to $6.13 in early afternoon trade
on the London Stock Exchange.
That was the lowest level in more than a year. The shares have
now lost more than a third of their value, wiping some $63 million
off BP's value, since the explosion at the Deepwater Horizon oil
rig six weeks ago.
BP said early Tuesday it had spent $990 million so far on
fighting and cleaning the spill, with multiple lawsuits for damages
yet to be tallied.
With the ambitious "top kill" having failed over the weekend
and a relief well at least two months away, BP turned to another
temporary fix, an effort to saw through the pipe leaking the oil
and cap it that could be tried as soon as Wednesday. In the
meantime, more than 125 miles of the state's coastline already have
been hit with oil, including the resort of Grand Isle near Port
Fourchon.
The cleanup, relief wells and temporary fixes were being watched
closely by President Barack Obama's administration. Obama planned
to meet for the first time Tuesday with the co-chairmen of an
independent commission investigating the spill, while Attorney
General Eric Holder was headed to the Gulf Coast to meet with state
attorneys general.
Obama's energy czar, Carol Browner, said she doesn't want to
guess the prospects for success when BP again tries to use a
containment cap to control the oil spill.
Interviewed Tuesday on ABC's "Good Morning America," Browner
said, "I don't want to put odds on it. ... We want to get this
thing contained."
Browner also said she's concerned about the effect the hurricane
season, which began Tuesday, could have on ending the environmental
crisis.
To accommodate more than 500 workers hired to clean up the worst
oil spill in U.S. history, BP and several subcontractors have set
up floating hotels, or "flotels," made up of steel boxes
resembling oversized shipping containers and stacked atop barges.
At Port Fourchon, the oil industry's hub on the Gulf , a flotel
there is the only way to station workers in a massive shipyard
surrounded by ecologically sensitive marshes and beaches.
"There are no permanent residents here on the port," said
Dennis Link, a manager from a BP refinery who's handling logistics
at the 1,300-acre site that's easily accessible by ship, but
reachable on land only by a state road that snakes through the
bayous.
On Monday afternoon, the living quarters on the flotel sat
empty. Generators pumped in cool air and powered the lights, and at
the foot of each bunk sat a towel, washcloth and individually
wrapped bar of soap. If necessary, four tents on dry land nearby
can house 500 more workers. Workers will likely be trucked in on
the two-lane state road.
The accommodations on the barge are Spartan, but comfortable -
similar to military barracks. Each pod contains 12 bunks, with a
bathroom for every four. Per Coast Guard standards, each resident
gets 30 square feet of space in the quarters. The barge has 10
washers, 10 dryers and a kitchen, although food will be served in a
tent on land. The quarters are typically floated alongside offshore
oil rigs to supplement housing on the drilling operations.
Another flotel sits about 15 miles away, off Grand Isle, and BP
plans to establish them elsewhere along the coast.
Cleanup efforts are being ramped up while BP also tries the
latest in a series of patchwork fixes, this one a cut-and-cap
process to put a lid on the leaking wellhead so oil can be siphoned
to the surface. The risky procedure could, at least temporarily,
increase the oil flowing from the busted well.
Using robot submarines, BP plans to cut away the riser pipe this
week and place a cap-like containment valve over the blowout
preventer. On Monday, live video feeds showed robot submarines
moving equipment around and using a circular saw-like device to cut
small pipes at the bottom of the Gulf.
"We are well into the operation to put this cap on the well
now," BP Managing Director Bob Dudley told NBC's "Today" show on
Tuesday.
BP failed to plug the leak Saturday with its top kill, which
shot mud and pieces of rubber into the well but couldn't beat back
the pressure of the oil.
The oil company also announced plans Monday to try attaching
another pipe to a separate opening on the blowout preventer with
some of the same equipment used to pump in mud during the top kill.
The company also wants to build a new freestanding riser to carry
oil toward the surface, which would give it more flexibility to
disconnect and then reconnect containment pipes if a hurricane
passed through.
Neither of those plans would start before mid-June and would
supplement the cut-and-cap effort.
But the best chances for sealing off the leak are two relief
wells, the first of which won't be ready until August. The spill
has already leaked between 19.7 million and 43 million gallons,
according to government estimates.
For the relief well to succeed, the bore hole must precisely
intersect the damaged well, which experts have compared to hitting
a target the size of a dinner plate more than two miles into the
earth. If it misses, BP will have to back up its drill, plug the
hole it just created, and try again.
"The probability of them hitting it on the very first shot is
virtually nil," said David Rensink, incoming president of the
American Association of Petroleum Geologists, who spent most of his
39 years in the oil industry in offshore exploration. "If they get
it on the first three or four shots they'd be very lucky."
The trial-and-error process could take weeks, but it will
eventually work, scientists and BP said. Then engineers will then
pump mud and cement through pipes to ultimately seal the well.
On the slim chance the relief well doesn't work, scientists
weren't sure exactly how much - or how long - the oil would flow.
The gusher would continue until the well bore hole collapsed or
pressure in the reservoir dropped to a point where oil was no
longer pushed to the surface, said Tad Patzek, chair of the
Petroleum and Geosystems Engineering Department at the University
of Texas-Austin.