Allen optimistic next steps will plug Gulf leak

July 30, 2010 By Leave a Comment

(Reuters) – A hundred days into BP Plc’s Gulf of Mexico oil spill, the top U.S. official overseeing the spill response said on Wednesday he was confident a relief well preceded by a so-called “static kill” would plug the leak for good.

While retired Coast Guard Admiral Thad Allen would not go so far as to say the next steps are foolproof, he said at a briefing in New Orleans, “We are optimistic that we will get this thing done.”

“This has been done before. It’s not novel technology,” he said.

Allen also said he would meet with southern Louisiana parish officials on Thursday to discuss future response staffing needs. Oil has been dissipating on the water’s surface since BP sealed the cap on the well two weeks ago, shrinking skim and boom needs, he said.

He said people made jobless by the spill who found work with BP on the response will still be needed to retrieve boom, test seafood for safety and monitor or clean shorelines.

“Sooner or later we’re going to have to size the fleet to where it matches what our requirements are,” Allen said. “We will have frank, open discussions about it.”

The static kill involves pumping drilling mud and cement into the Macondo well from the top. Allen said the procedure, on schedule for Monday, could start late Sunday if preparations go smoothly.

New BP Chief Executive Officer Bob Dudley told NPR on Wednesday that the static kill could plug the leak by Monday or Tuesday. But BP and Allen said the relief well remains a critical follow-up to ensure the job is done.

(Reporting by Kristen Hays; editing by Mohammad Zargham)

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European shares rise; UBS rally on strong earnings

July 28, 2010 By Leave a Comment

July 27 (Reuters) – European shares rose in early trade on Tuesday, adding to gains after closing at a five-week high a day earlier, with banks rallying after strong results from UBS (UBSN.VX).

By 0709 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.4 percent at 1,053.38 points, and touched its highest intraday level since June 22.

UBS rose 7.2 percent as the bank said strong equities and currency revenues drove second-quarter net profit well above forecasts. [ID:nLDE66P0CS]

Banking shares .SX7P featured among the biggest gainers, with Barclays (BARC.L), Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA) up 2.1 to 5.4 percent.

“Expectations are rising for earnings. Companies are guiding full-year forecasts up in spite of concerns about a loss of recovery momentum … and that is helping to keep these markets reasonably firm,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

Among other companies reporting earnings, BP (BP.L) said it would take a charge as a result of the Gulf of Mexico oil spill amounting to $32.2 billion, driving it to a second quarter loss of $16.97 billion, and also announced that chief executive Tony Hayward will step down on Oct. 1 and will be replaced by fellow executive Robert Dudley. The stock added 0.5 percent. [ID:nWLA9308] (Reporting by Harpreet Bhal)

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UPDATE 1-BP’s Hayward quits as spill cost put at $32 bln

July 28, 2010 By Leave a Comment

LONDON, July 27 (Reuters) – BP Plc (BP.L) chief executive Tony Hayward will step down as head of the oil giant on Oct. 1 and be replaced by fellow executive Robert Dudley.

News of Hayward’s departure came as the company announced on Tuesday it would take a charge as a result of the Gulf of Mexico oil spill amounting to $32.2 billion, driving BP to a second quarter loss of $16.97 billion. [ID:nWLA9308]

“The tragedy of the Macondo well explosion and subsequent environmental damage has been a watershed,” chairman Carl-Henric Svanberg said, announcing Hayward’s departure. “BP remains a strong business … but it will be a different company going forward.”

BP said Dudley, currently head of BP’s U.S. operations, would be based in London and hand over his present duties to Lamar McKay. [ID:nWLA9295]

Hayward will receive a year’s salary amounting to 1.045 million pounds ($1.6 million).

Excluding oil spill and other non-operating costs, BP’s replacement cost profit was $4.98 billion, in line with the average forecast from a Reuters poll of 11 analysts.

Replacement cost profit strips out gains or losses related to changes in the value of fuel inventories and as such is comparable with net income under U.S. accounting rules.

In a third statement BP said it planned to sell assets worth up to $30 billion over the next 18 months and cut its net debt level down to between $10 billion and $15 billion over the next 18 months. [ID:nWLA9296]

The company said it would consider its position on future dividend payments at the time of its fourth-quarter results.

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Analysis: New BP boss should boost safety, asset sales

July 28, 2010 By Leave a Comment

(Reuters) – Bob Dudley, who is expected to be named BP’s next CEO in the coming 24 hours, must move quickly to restore the oil giant’s battered image in its most important market, improve safety and make BP a leaner company.

BP’s board is meeting on Monday to discuss a plan for Tony Hayward to step down as Chief Executive following criticism of his handling of the Gulf of Mexico oil spill, and be replaced by Dudley, who is heading the spill response effort.

Investors hope Dudley will help repair BP’s image in the U.S, which has been damaged by a clumsy public relations strategy and a series of gaffes by Hayward. “As an American he (Dudley) may well be more acceptable to the U.S. political machine than the other alternatives for the role, which could serve to better protect value in the U.S. for BP long term,” said Jason Kenney, oil analyst at ING in Edinburgh.

The U.S. is home to 40 percent of BP’s assets and much of its growth but the public and political anger over the oil spill has led to fears BP may no longer be able to operate effectively in the U.S.

Dudley benefits from experience of navigating fractious disputes, having led BP’s Russian joint venture, TNK-BP, through a dispute between BP and its oligarchs partners over control of the company.

He will also need to improve BP’s safety record to recover the respect of U.S. lawmakers.

This could require a change to BP’s buccaneering approach, where division managers have had greater freedom than their peers in other big oil companies and top management has been willing to take greater commercial risks.

“A total change in the culture of this company is necessary,” Democratic Representative Ed Markey, chairman of the House Select Committee on Energy Independence and Global Warming, said on CBS’s “The Early Show.”

EXPENSIVE MISTAKES

In the past five years, BP has endured three of the industry’s most expensive and reputationally damaging safety and environmental lapses.

An explosion of a Texas refinery in 2005 killed 15 workers and cost the company billions, while an oil spill in Alaska in 2006 led to millions of dollars of fines and helped cement BP’s reputation in the U.S. as a reckless operator.

Regulators blamed both incidents on cost-cutting under Hayward’s predecessor John Browne.

Investors, once charmed by BP cost cutting, may now be more focused on a safer approach too from the group that pumped more oil and gas than any other non-state controlled oil concern last year.

“The company’s strategy will need to be fundamentally changed in order to rebuild future confidence in the company. Clearly, safety will need to become the centerpiece,” said Dougie Youngson, oil analyst at Arbuthnot.

Investors and analysts also predict strategic changes.

As part of a peace deal with the White House, which had been putting massive pressure on the oil giant, BP agreed to establish a $20 billion fund to compensate those affected by the spill.

It plans to sell $10 billion of none-core assets in the coming year to help finance that.

Last week the company said it had agreed the sale of $7 billion of assets and invited offers for another $1.7 billion worth of gas fields in Asia.

The company is likely to announce at its second-quarter results on Tuesday that it will increase it asset sales target, analysts at Morgan Stanley said.

The sales will hit BP’s plans to grow production, but investors and analysts said they will create a leaner, more profitable company.

“(We expect) significant asset sales and bizarrely that might prove to be the right business model for all oil majors,” said a top-15 shareholder, who asked not to be named.

“There is much greater value in the asset base of these businesses, whether it is BP or Shell, than in share prices. Actually they should think very hard at shrinking themselves down.”

However, some analysts doubt oil companies could recycle assets more quickly. The reason they are not quicker to sell off older fields, and replace them with new fields, is because they have such difficulty in making new discoveries.

BP has said its asset sale effort is focused on upstream, oil and gas production assets, but Arbuthnot’s Youngson said the oil major should also consider selling downstream assets.

“Refining is a relatively low contributor in terms of overall income and disposing of it would make a huge amount of sense, as well as generating a substantial cash injection for BP,” he said.

BP has sold refineries in recent years, but those it retains help it operate an aggressive oil trading operation that in a good year can generate over a $1 billion in profits.

(Additional reporting by Cecilia Valente in London and Eric Beech in Washington)

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BP says relief well rig back at Gulf spill site

July 28, 2010 By Leave a Comment

(Reuters) – A rig that had been drilling a relief well to plug BP Plc’s Gulf of Mexico oil leak was reconnecting equipment to resume work at the spill site on Sunday, the top official overseeing the spill response said.

Once the last bit of pipe, or casing, is cemented in place near the bottom of the relief well this week, BP will begin a “static kill” the first week of August, retired Coast Guard Admiral Thad Allen told reporters at a briefing.

“Generally the next week will be preps, making sure everything is ready to go,” he said.

The leak remains capped after what was Tropical Storm Bonnie disintegrated over the Gulf on Saturday.

Allen had said the static kill, which involves pumping heavy drilling mud and cement into the well from the top, could start three to five days after the casing is cemented in the relief well.

He said on Sunday that the timeline was “refined and revised” after consultations with BP.

The entire operation was interrupted last week when the storm was bearing down on the Gulf.

While most rigs and ships left the spill site out of caution, ships running underwater robots that provide live feeds of the wellhead stayed and continued to operate, BP spokeswoman Jessie Baker said.

Those feeds showed no problems with the cap, which has shut in all flow from the leak since July 15, BP said.

A pair of Transocean Ltd rigs had been drilling two relief wells, the second well a backup for the first. BP suspended drilling on the second relief well July 13 so it wouldn’t interfere with the first one.

BP stopped work on the first well July 20 in advance of the storm and put a plug inside to keep it stable until the last round of casing could be installed.

Allen said on Sunday that the casing work will start “sometime in the next week” once the rig reconnects to the well, removes the plug and cleans out the hole.

While the static kill can start once the casing is in place, the relief well will still bore into the blown-out Macondo well near its bottom 13,000 feet beneath the seabed, Allen said.

Kent Wells, BP’s senior vice president of exploration and production, said in an update on BP’s website that the static kill might plug the leak on its own. The relief well will confirm that or finish the job, Wells said.

“Those two work in tandem,” Wells said.

And Allen said on Sunday that BP will still move ahead with assembling a four-vessel oil-capture system that can handle up to 80,000 barrels a day if needed.

(Reporting by Kristen Hays; Editing by Eric Beech)

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Factbox: Gulf of Mexico oil, gas ops restart post-Bonnie

July 28, 2010 By Leave a Comment

but 50 percent of daily crude oil production in U.S.-regulated areas of the

Gulf of Mexico was shut as of Sunday due to Tropical Depression Bonnie, the

U.S. government said.

Tropical Depression Bonnie, the season’s second named tropical storm,

dissipated into a disorganized low-pressure system in the eastern Gulf of

Mexico on Saturday.

Forecasters said the 2010 Atlantic hurricane season could be the worst

since 2005, when Hurricanes Katrina, Rita, and Wilma caused havoc in the Gulf

Coast, damaging oil rigs and refineries and forcing sharp cuts in production.

The hurricane season runs from June 1 through November 30 and often affects the

Gulf of Mexico, home to about 30 percent of U.S. oil production, 11 percent of

natural gas production, and more than 43 percent of U.S. refinery capacity.

Oil and gas production shut as of Sunday was 746,338 barrels per day (bpd)

of crude production and 1.41 billion cubic feet per day (cfd) in gas output,

the U.S. government said.

ESTIMATED CAPACITY OFFLINE

————————————————————–

Oil output: 746,338 bpd (46.65%) Sunday vs 826,325 bpd (51.65%) Saturday

Gas output: 1,410 Mmcfd (22.03%) Sunday vs 1,506 Mmcfd (23.53%) Saturday

Refinery production: None affected.

————————————————————–

Source: U.S. Bureau of Ocean Energy Management, Regulation and Enforcement

__________________________________________________________________________

OFFSHORE PRODUCTION & PIPELINES IMPACT

————————————–

Company Asset Capacity Shut In Date Shut Date Restarted Link

——————————————————————————

OIL

——————————————————————————

Anadarko Neptune NA NA July 23 July 26

Apache NA NA 4,624 bpd July 23 NA

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Nearly half Gulf of Mexico oil production shut-U.S. Govt

July 26, 2010 By Leave a Comment

July 25 (Reuters) – Nearly half of crude oil production in U.S.-regulated areas of the Gulf of Mexico was shut as of Sunday due to Tropical Depression Bonnie, the U.S. government said.

Energy companies have been able to restore 5 percent of the oil production they had shut by Saturday as Bonnie crossed production areas off the U.S. Gulf coast, according the U.S. Bureau of Ocean Energy Management.

Nearly a quarter of natural gas production remains turned off in the Gulf of Mexico with only 1.5 percent of the production restored since Saturday, the bureau said.

The Gulf of Mexico provides about 30 percent of U.S. crude oil production and 11 percent national natural gas output. (Reporting by Erwin Seba)

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BP says relief well rig back at Gulf spill site

July 26, 2010 By Leave a Comment

HOUSTON, July 25 (Reuters) – A rig that had been drilling a relief well to plug BP Plc’s (BP.L) (BP.N) Gulf of Mexico oil leak was reconnecting equipment to resume work at the spill site on Sunday, the top official overseeing the spill response said.

Once the last bit of pipe, or casing, is cemented in place near the bottom of the relief well this week, BP will begin a “static kill” the first week of August, retired Coast Guard Admiral Thad Allen told reporters at a briefing.

“Generally the next week will be preps, making sure everything is ready to go,” he said.

The leak remains capped after what was Tropical Storm Bonnie disintegrated over the Gulf on Saturday.

Allen had said the static kill, which involves pumping heavy drilling mud and cement into the well from the top, could start three to five days after the casing is cemented in the relief well.

He said on Sunday that the timeline was “refined and revised” after consultations with BP.

The entire operation was interrupted last week when the storm was bearing down on the Gulf.

While most rigs and ships left the spill site out of caution, ships running underwater robots that provide live feeds of the wellhead stayed and continued to operate, BP spokeswoman Jessie Baker said.

Those feeds showed no problems with the cap, which has shut in all flow from the leak since July 15, BP said.

A pair of Transocean Ltd (RIGN.VX) (RIG.N) rigs had been drilling two relief wells, the second well a backup for the first. BP suspended drilling on the second relief well July 13 so it wouldn’t interfere with the first one.

BP stopped work on the first well July 20 in advance of the storm and put a plug inside to keep it stable until the last round of casing could be installed.

Allen said on Sunday that the casing work will start “sometime in the next week” once the rig reconnects to the well, removes the plug and cleans out the hole.

While the static kill can start once the casing is in place, the relief well will still bore into the blown-out Macondo well near its bottom 13,000 feet (2.5 miles/4 km) beneath the seabed, Allen said.

Kent Wells, BP’s senior vice president of exploration and production, said in an update on BP’s website that the static kill might plug the leak on its own. The relief well will confirm that or finish the job, Wells said.

“Those two work in tandem,” Wells said.

And Allen said on Sunday that BP will still move ahead with assembling a four-vessel oil-capture system that can handle up to 80,000 barrels a day if needed. (Reporting by Kristen Hays; Editing by Eric Beech)

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UPDATE 2-BP says relief well rig back at Gulf spill site

July 26, 2010 By Leave a Comment

HOUSTON, July 25 (Reuters) – A rig that had been drilling a relief well to plug BP Plc’s (BP.L) (BP.N) Gulf of Mexico oil leak was reconnecting equipment to resume work at the spill site on Sunday, the top official overseeing the spill response said.

Once the last bit of pipe, or casing, is cemented in place near the bottom of the relief well this week, BP will begin a “static kill” the first week of August, retired Coast Guard Admiral Thad Allen told reporters at a briefing.

“Generally the next week will be preps, making sure everything is ready to go,” he said.

The leak remains capped after what was Tropical Storm Bonnie disintegrated over the Gulf on Saturday.

Allen had said the static kill, which involves pumping heavy drilling mud and cement into the well from the top, could start three to five days after the casing is cemented in the relief well.

He said on Sunday that the timeline was “refined and revised” after consultations with BP.

The entire operation was interrupted last week when the storm was bearing down on the Gulf.

While most rigs and ships left the spill site out of caution, ships running underwater robots that provide live feeds of the wellhead stayed and continued to operate, BP spokeswoman Jessie Baker said.

Those feeds showed no problems with the cap, which has shut in all flow from the leak since July 15, BP said.

A pair of Transocean Ltd (RIGN.VX) (RIG.N) rigs had been drilling two relief wells, the second well a backup for the first. BP suspended drilling on the second relief well July 13 so it wouldn’t interfere with the first one.

BP stopped work on the first well July 20 in advance of the storm and put a plug inside to keep it stable until the last round of casing could be installed.

Allen said on Sunday that the casing work will start “sometime in the next week” once the rig reconnects to the well, removes the plug and cleans out the hole.

While the static kill can start once the casing is in place, the relief well will still bore into the blown-out Macondo well near its bottom 13,000 feet (2.5 miles/4 km) beneath the seabed, Allen said.

Kent Wells, BP’s senior vice president of exploration and production, said in an update on BP’s website that the static kill might plug the leak on its own. The relief well will confirm that or finish the job, Wells said.

“Those two work in tandem,” Wells said.

And Allen said on Sunday that BP will still move ahead with assembling a four-vessel oil-capture system that can handle up to 80,000 barrels a day if needed. (Reporting by Kristen Hays; Editing by Eric Beech)

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BP to place last pipe in relief well in next week-US govt

July 26, 2010 By Leave a Comment

July 25 (Reuters) – BP Plc (BP.L) (BP.N) will finish placing the last bit of pipe into a relief well intended to help kill its Gulf of Mexico oil leak “sometime in the next week,” the top official overseeing the spill response said on Sunday.

Once the pipe, or casing, is cemented in place, BP will begin the plugging process with a “static kill” the first week of August, retired Coast Guard Admiral Thad Allen told reporters at a briefing.

Allen had said the static kill could start in three to five days after the pipe was in place, but on Sunday he said that timeline had been “refined” to be more conservative after consulting with BP. (Reporting by Kristen Hays; Editing by Eric Beech)

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BP says relief well rig back at Gulf spill site

July 26, 2010 By Leave a Comment

July 25 (Reuters) – BP Plc (BP.L) (BP.N) said on Sunday that a rig that had been drilling a relief well to plug the Gulf of Mexico oil leak was back on site and reconnecting equipment to resume work.

The Transocean Ltd (RIGN.VX) (RIG.N) rig “is on location, and beginning the process of reconnecting,” BP spokeswoman Jessie Baker said.

Other vessels that also left the site late Friday in advance of what was Tropical Storm Bonnie also were returning on Sunday, she said. (Reporting by Kristen Hays; Editing by Eric Beech)

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BP to discuss CEO Hayward’s exit on Monday -sources

July 26, 2010 By Leave a Comment

July 25 (Reuters) – BP Plc’s (BP.N) board will discuss the future of Chief Executive Tony Hayward when it meets on Monday to discuss the Gulf of Mexico oil spill and the firm’s second-quarter results, sources familiar with the matter said.

They said the focus will be on the timing of Hayward’s departure, rather than whether or not he would stay with the company.

“The details are being worked out,” one source said. (Reporting by Tom Bergin, editing by James Davey; editing by Karen Foster)

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Obama, Cameron to hold talks clouded by BP concerns

July 21, 2010 By Leave a Comment

WASHINGTON, July 20 (Reuters) – U.S. President Barack Obama and British Prime Minister David Cameron will hold talks on Tuesday overshadowed by controversy over BP Plc (BP.L)(BP.N) that could test the vaunted “special relationship” between their countries.

They are expected to discuss BP’s role in the Gulf of Mexico oil spill and whether the British energy giant had influence in the release of the Lockerbie bomber from a Scottish prison last year — issues that have complicated transatlantic ties. [ID:nN19218995]

Cameron’s first visit to Washington as British prime minister comes amid a U.S. backlash against BP. With an eye to British pensioners and other investors at home, he has pledged to stand up for the embattled company.

Aides to both leaders insist the talks aim to build on a personal rapport they struck up at last month’s Group of 20 summit in Canada and that the agenda will focus more on the war in Afghanistan, the global economy and the Middle East.

But BP and its role in the worst oil spill in U.S. history loom large. Differences over BP’s treatment and over approaches to economic recovery raise fresh questions about a historic Anglo-American alliance already past its heyday.

Scoffing at “endless British preoccupation with the health of the special relationship,” Cameron wrote in the Wall Street Journal that he would be “hard-headed and realistic” about U.S. ties and said both countries must also strengthen bonds with rising powers like China and India. [ID:nLDE66I0I8]

DEMANDS FOR INQUIRY

Under heavy criticism over the Gulf disaster, BP faces demands from U.S. lawmakers for an official inquiry into whether it had a hand in the release of the Libyan convicted in the 1988 bombing of a Pan Am flight over Lockerbie, Scotland.

BP has confirmed it lobbied the British government in 2007 over a prisoner transfer deal because it was concerned a slow resolution would hurt an offshore drilling deal with Libya.

But the company said it was not involved in talks on the release of Abdel Basset al-Megrahi, sentenced to life for the deaths of 270 people, including 189 Americans.

On the eve of Cameron’s visit, the British government reiterated that BP had no role in the decision to free Megrahi and said it had no plans to re-examine the release, which took place despite fierce U.S. objections.

Scottish authorities said they freed the intelligence officer because he was terminally ill and they believed he had only three months to live. He is still alive in Libya.

U.S. Secretary of State Hillary Clinton told senators she was urging Scottish and British authorities to review the case.

Cameron’s aides have sought to play down the issue. He stressed in a BBC interview that, as opposition leader at the time, he thought the release was “utterly wrong.”

His visit also comes as U.S. lawmakers consider a range of rules that could require tougher safety standards on offshore drilling or bar companies like BP from new offshore leases.

Cameron has made clear he will defend BP, saying it must remain “strong and stable” to make good on its promise to compensate oil spill victims and for the sake of employees and people with pension funds invested in the company in both countries.

Obama, whose approval ratings have been undercut by public anger over the disaster, has taken a hard line with BP, although his rhetoric has softened recently amid criticism his administration had gone too in bashing the company.

Obama and Cameron will meet amid hopes a capping test on the blown-out well, which has largely choked off the undersea flow of oil, will pave the way for a permanent fix. [ID:nLDE66I13M]

UNITED FRONT, DIFFERENCES

Against this backdrop, they will present a united front on issues like sanctions against Iran and try to strike a balance between keeping up the fight in Afghanistan while signaling to skeptical voters they are progressing on exit strategies.

Obama and Cameron are sure to pay homage to their countries’ special relationship — in keeping with predecessors since Winston Churchill coined the phrase in 1946 — when they hold a joint news conference after they meet and have lunch.

But Cameron has indicated his new Conservative-Liberal Democrat coalition will work together pragmatically without being too slavish to U.S. interests.

Obama has also demonstrated a desire to see relations evolve, although he has been careful to avoid offending British sensibilities as he did earlier when he returned a loaned bust of Churchill on display in the Oval Office.

Cameron has led European attempts to cut budget deficits that have ballooned in the wake of the global financial crisis, while the United States has urged caution, arguing that reducing borrowing too fast could hinder the fragile recovery.

Both sides have agreed to disagree for now.

Cameron seems unwilling to be cast as America’s “poodle” — as British media dubbed former Labour Prime Minister Tony Blair to former President George W. Bush. But he has acknowledged that Britain is the “junior partner” of the United States.

With more to gain from their encounter, Cameron is also looking to benefit from sharing a stage with Obama, who is more popular in Britain and much of Europe than he is at home. (Additional reporting by Matt Falloon; Editing by John O’Callaghan)

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BP canvassing investors on possible break up: report

July 19, 2010 By Leave a Comment

(Reuters) – Under-fire oil company BP Plc (BP.L) has started canvassing shareholders about a restructuring in the wake of its Gulf of Mexico oil spill which could include a break up of the business, the Sunday Times newspaper reported.

The newspaper, citing unnamed BP insiders, said options included selling the group’s refineries and petrol stations, scaling back its U.S. operations and ramping-up in-house engineering instead of outsourcing.

These are on top of the sale of about 10 percent of its assets, including its stake in the giant Prudhoe Bay field in Alaska, the Sunday Times added.

A BP spokesman said it did not comment on rumor and speculation.

BP, which has already divested much of its downstream operations in recent years, said last month it planned to sell around $10 billion of assets to help pay for costs from the worst offshore oil spill in U.S. history, but declined to say which assets were up for grabs.

On Saturday, the oil group extended for another 24 hours a critical test of its blown-out Gulf of Mexico well that has so far shut off the huge oil leak, a top U.S. official overseeing the spill response said.

(Reporting by Mark Potter; Editing by David Holmes)

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BP canvassing investors on possible break up-paper

July 19, 2010 By Leave a Comment

July 18 (Reuters) – Under-fire oil company BP Plc (BP.L) has started canvassing shareholders about a restructuring in the wake of its Gulf of Mexico oil spill which could include a break up of the business, the Sunday Times reported.

The newspaper, citing unnamed BP insiders, said options included selling the group’s refineries and petrol stations, scaling back its U.S. operations and ramping-up in-house engineering instead of outsourcing.

These are on top of the sale of about 10 percent of its assets, including its stake in the giant Prudhoe Bay field in Alaska, the Sunday Times added.

A BP spokesman said it did not comment on rumour and speculation.

BP, which has already divested much of its downstream operations in recent years, said last month it planned to sell around $10 billion of assets to help pay for costs from the worst offshore oil spill in U.S. history, but declined to say which assets were up for grabs. [ID:nLDE66C0N7] [ID:nN12148109]

On Saturday, the oil group extended for another 24 hours a critical test of its blown-out Gulf of Mexico well that has so far shut off the huge oil leak, a top U.S. official overseeing the spill response said. [ID:nN17152937] (Reporting by Mark Potter; Editing by David Holmes)

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CORRECTED – WRAPUP 1-BP runs crucial test on Gulf oil leak

July 16, 2010 By Leave a Comment

HOUSTON, July 15 (Reuters) – BP Plc (BP.L) (BP.N) was running a crucial test on Thursday on its ruptured Gulf of Mexico oil well that could stanch the flow of crude that has polluted the ocean and shoreline since April.

BP began the process on Wednesday night, which could stretch up to 48 hours. The British energy giant began the tests after getting the green light from top U.S. government officials who had delayed the plan by 24 hours on concerns the process could irreparably damage the well.

If tests, which will be assessed every six hours, show that closing the cap might cause further damage to the well, the capping device could instead be used as part of a complex system to capture the oil and siphon it to ships on the surface.

Kent Wells, BP’s senior vice president of exploration and production, said undersea robots working a mile (1.6 km) below the surface had started shutting a series of three valves designed to ultimately stop the oil flow completely.

Critically, BP has closed the main valve in the middle of the cap, “and we no longer have flow out the top,” Wells said.

BP said late on Wednesday it had isolated a leak it detected in a line connected to one of the valves and was repairing it before proceeding with the test.

The developments will be watched by investors on Thursday as BP’s ultimate costs may hinge on how much oil is judged to have flown freely into the Gulf. The disaster is the largest offshore oil spill in U.S. history.

On Wednesday, shares in BP ended 2.3 percent down in London in slow trading and were off about 1.9 percent in New York, with some analysts saying investors were likely cashing in profits ahead of further news on the new cap.

After losing over half of its market value at one point in the wake of the April 20 rig explosion that killed 11 workers and unleashed a flow of crude, its share price had been staging a rally, spurred by talk that company executives were seeking investors and optimism of a turning point in the spill. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage link.reuters.com/hed87k Breakingviews [ID:nN14132617] Insider TV link.reuters.com/qyk76m Graphics link.reuters.com/dyp37m Graphic on BP shares r.reuters.com/dez27m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The decision to go ahead with the tests was taken after a day of intense deliberation that reached the level of President Barack Obama and his Cabinet, reflecting the stakes involved.

Retired Coast Guard Admiral Thad Allen, who is overseeing the U.S. response to the spill, has said if tests show the well can withstand certain pressures, odds are good it could be “shut in” indefinitely.

The disaster has soiled hundreds of miles (km) of shoreline, shut down about a third of Gulf fisheries, put BP on the hook for billions of dollars in cleanup costs and legal liabilities and prompted Obama to temporarily halt deepwater drilling.

ANGER OVER SPILL

Anger among Americans over the failure to halt the spill added to Obama’s political problems, distracting him from his legislative agenda and denting his popularity as his Democratic Party faces tough congressional elections in November.

In Buras, Louisiana, crabber Larry Tew said he was hopeful about the cap tests. “I think it’s going to work. … I mean, they don’t have any other choice,” he said.

At least some of the oil from the well has been siphoned off to ships in the past few weeks, but that operation was halted while the tests are undertaken. BP has said by the end of July four vessels can be hooked up and collect up to 80,000 barrels (3.34 million gallons/12.7 million liters) per day.

That should be more than enough to capture the whole well output, as estimates put the spill rate between 35,000 barrels and 60,000 barrels a day.

The only proven way to kill the leak lies in the drilling of relief wells to intercept the ruptured one. The first of two such wells started in May is expected to intercept it by the end of July and plug by mid-August. (Additional reporting by Alexandria Sage in Buras, Louisiana, Chris Baltimore in Houston and Matthew Lynley in New York; Writing by Ed Stoddard; Editing by Todd Eastham)

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BP runs crucial test on Gulf oil leak

July 16, 2010 By Leave a Comment

HOUSTON, July 15 (Reuters) – BP Plc (BP.L) (BP.N) was running a crucial test on Thursday on its ruptured Gulf of Mexico oil well that could stanch the flow of crude that has polluted the ocean and shoreline since April.

BP began the process on Wednesday night, which could stretch up to 48 hours. The British energy giant began the tests after getting the green light from top U.S. government officials who had delayed the plan by 24 hours on concerns the process could irreparably damage the well.

If tests, which will be assessed every six hours, show that closing the cap might cause further damage to the well, the capping device could instead be used as part of a complex system to capture the oil and siphon it to ships on the surface.

Kent Wells, BP’s senior vice president of exploration and production, said undersea robots working a mile (1.6 km) below the surface had started shutting a series of three valves designed to ultimately stop the oil flow completely.

Critically, BP has closed the main valve in the middle of the cap, “and we no longer have flow out the top,” Wells said.

BP said late on Wednesday it had isolated a leak it detected in a line connected to one of the valves and was repairing it before proceeding with the test.

The developments will be watched by investors on Thursday as BP’s ultimate costs may hinge on how much oil is judged to have flown freely into the Gulf. The disaster is the largest offshore oil spill in U.S. history.

On Wednesday, shares in BP ended 2.3 percent down in London in slow trading and were off about 1.9 percent in New York, with some analysts saying investors were likely cashing in profits ahead of further news on the new cap.

After losing over half of its market value at one point in the wake of the April 20 rig explosion that killed 11 workers and unleashed a flow of crude, its share price had been staging a rally, spurred by talk that company executives were seeking investors and optimism of a turning point in the spill. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage link.reuters.com/hed87k Breakingviews [ID:nN14132617] Insider TV link.reuters.com/qyk76m Graphics link.reuters.com/dyp37m Graphic on BP shares r.reuters.com/dez27m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The decision to go ahead with the tests was taken after a day of intense deliberation that reached the level of President Barack Obama and his Cabinet, reflecting the stakes involved.

Retired Coast Guard Admiral Thad Allen, who is overseeing the U.S. response to the spill, has said if tests show the well can withstand certain pressures, odds are good it could be “shut in” indefinitely.

The disaster has soiled hundreds of miles (km) of shoreline, shut down about a third of Gulf fisheries, put BP on the hook for billions of dollars in cleanup costs and legal liabilities and prompted Obama to temporarily halt deepwater drilling.

ANGER OVER SPILL

Anger among Americans over the failure to halt the spill added to Obama’s political problems, distracting him from his legislative agenda and denting his popularity as his Democratic Party faces tough congressional elections in November.

In Buras, Louisiana, crabber Larry Tew said he was hopeful about the cap tests. “I think it’s going to work. … I mean, they don’t have any other choice,” he said.

At least some of the oil from the well has been siphoned off to ships in the past few weeks, but that operation was halted while the tests are undertaken. BP has said by the end of July four vessels can be hooked up and collect up to 80,000 barrels (3.34 million gallons/12.7 million liters) per day.

That should be more than enough to capture the whole well output, as estimates put the spill rate between 35,000 barrels and 60,000 barrels a day.

The only proven way to kill the leak lies in the drilling of relief wells to intercept the ruptured one. The first of two such wells started in May is expected to intercept it by the end of July and plug by mid-August. (Additional reporting by Alexandria Sage in Buras, Louisiana, Chris Baltimore in Houston and Matthew Lynley in New York; Writing by Ed Stoddard; Editing by Todd Eastham)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

BP in talks with Apache and others on assets: source

July 13, 2010 By Leave a Comment

(Reuters) – Under-pressure BP Plc (BP.L)(BP.N) is in talks with U.S. oil and gas company Apache Corp (APA.N) and other companies over potential asset sales, a source familiar with the situation said on Sunday, as it weighs how to pay costs related to the Gulf of Mexico oil spill.

BP, the British energy major, said in June it wanted to raise $10 billion from sell-offs to boost a $20 billion fund to clean up the worst oil spill in U.S. history.

Talks over any potential asset sales are at an exploratory stage, the source said. It is uncertain any plans will be advanced enough to be disclosed before BP announces second-quarter earnings later this month.

The Sunday Times earlier reported that BP is in talks to sell up to $12 billion in assets to Apache. The paper said Houston-based Apache approached BP with a plan a few weeks ago and negotiations were under way on the structure of an agreement.

The Wall Street Journal said on Sunday a deal with Apache could be up to $10 billion and could include stakes in BP’s Alaskan oil fields. The paper also said BP is moving along two tracks — it is in talks with Apache on a package deal worth $10 billion and in talks with a number of companies on a spectrum of assets.

A BP spokesman declined to comment on market rumors or speculation. Apache also declined comment.

The Sunday Times reported the Obama administration had told Exxon Mobil Corp (XOM.N) and another group — which it said was thought to be Chevron Corp (CVX.N) — it would not block a bid for BP, citing oil industry sources.

Exxon had sought clearance from Washington although there was no certainty it would make a move, the newspaper said.

Separately, the Independent newspaper reported on Sunday that Standard Chartered PLC (STAN.L) was believed to be one of the banks behind a $5.25 billion crisis fund set up for BP in May.

The bank contributed $2 billion to the fund, with Credit Suisse (CSGN.VX), Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) said to be among those providing the balance, the newspaper said.

Standard Chartered was named in media reports in June as one of the banks advising on BP’s asset sales.

Both Standard Chartered and BP declined to comment to the Independent on Sunday.

Separately, the National Commission on the BP Deepwater Horizon Spill and Offshore Drilling said in a statement it will hold its first public meeting in New Orleans on July 12-13.

It will include testimony from Gulf Coast citizens, BP, and leading U.S. officials, the commission said.

(Reporting by Megan Davies and Paul Sandle; additional reporting by Anna Driver in Houston editing by Hans Peters and Jeffrey Benkoe)

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BP preparing to switch seabed oil-capture caps

July 11, 2010 By Leave a Comment

HOUSTON, July 10 (Reuters) – BP Plc (BP.L) (BP.N) prepared on Saturday to remove a containment cap atop its gushing Gulf of Mexico oil leak and replace it with a bigger cap and seal that could fully contain the crude, the company said.

BP said in a statement that the process would take four to seven days. In the time between the current cap’s removal and before the new cap is bolted on, crude will gush unchecked from the leak, BP said.

But once the new cap is installed, it could ensure no more crude leaks from the seabed. Oil captured by the cap would be funneled to vessels on the surface.

At the same time, the company was hooking up and testing a third vessel in hopes that it could begin siphoning crude late on Sunday.

The two procedures are part of BP’s overall effort to set up an upgraded oil-capture system with four vessels that can handle up to 80,000 barrels a day and disconnect and move quickly if a hurricane approaches.

Kent Wells, BP’s senior vice president of exploration and production, was slated to explain the complicated processes later on Saturday.

The cap switch is a critical step in increasing BP’s oil-collection capability with a hurricane-ready system until a relief well intercepts the blown-out Macondo well and kills the leak by early to mid-August.

Retired Coast Guard Admiral Thad Allen, the top U.S. official overseeing the oil spill response, approved the cap switch late on Friday.

The current cap is on the jagged remnant of a pipe atop failed blowout preventer equipment. It has a seal that doesn’t capture all the crude, and a live video feet of the seabed shows oil billowing out from under it and from open vents on top.

That remnant will be removed along with the current cap, so the new cap and seal will be bolted on a larger surface with no jagged edges. That is expected to ensure all or most leaking crude is captured, Allen has said.

BP’s current oil containment system involves two vessels, Transocean Ltd’s (RIG.N) RIGN.S Discoverer Enterprise drillship, and Helix Energy Solutions’ (HLX.N) Q4000 rig.

The Enterprise is connected to the current containment cap by a fixed pipe, and needs at least five days’ lead time to disconnect and get out of a hurricane’s path. Its collected oil is processed and shipped to shore by a tanker.

The Q4000 is connected to a failed blowout preventer at the seabed via a hose and pipe. It cannot process oil, so the rig burns off collected crude.

The combined system can handle up to 28,000 barrels a day of oil. On Friday, the system collected or burned off 24,790 barrels.

BP originally intended to add the third vessel, a rig called the Helix Producer, by June 30 but rough seas caused by Hurricane Alex delayed its hookup. The Producer can handle up to 25,000 barrels a day, and was hooked up to the blowout preventer by a second hose and pipe.

An eight-day window of good weather prompted BP to hook up the Producer this week and begin the cap switch, the company said.

Once the new cap is installed, BP will be able to move toward the 80,000 barrel-per-day collection system later in July. The Producer will stay in place, but another vessel will replace the Q4000. A pair of drillships will be hooked up to the new cap by drillpipes, according to BP’s plan. (Reporting by Kristen Hays, editing by Vicki Allen)

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European shares edge up on banks; G20 awaited

June 26, 2010 By Leave a Comment

June 25 (Reuters) – European shares edged higher on Friday after three-sessions of losses though gains were limited as investors took caution ahead of the weekend G20 meeting and concerns over tougher financial regulation.

Stocks | European Markets | Global Markets

Banks provided the index with some support following sharp falls in the previous session. U.S. lawmakers on Friday neared a breakthrough in their historic rewrite of financial regulations as they agreed to tough new limits on banks’ trading activity.

HSBC (HSBA.L), Standard Chartered (STAN.L) and Societe Generale (SOGN.PA) rose 0.9 to 1.1 percent.

By 0723 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.1 percent at 1,020.86 points, but trading was choppy. “A nervous morning ahead of the G20, no one is really wanting to take any big positions ahead of the G20,” said Justin Urquhart Stewart, director at Seven Investment Management. “There are little reasons for the market to drive higher today.”

Energy stocks featured among the worst performers, with BP (BP.L) slipping 0.6 percent. The Gulf of Mexico oil spill has entered its 67th day on Friday and with bad weather looming, clean-up and containment efforts could be hampered.

(Reporting by Joanne Frearson)

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