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Allen optimistic next steps will plug Gulf leak

July 30, 2010 By vani 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)

Filed Under: International News Tagged With: Admiral Thad Allen, Bp Plc, chief executive officer, Drilling Mud, Gulf Of Mexico, Gulf Of Mexico Oil, Gulf Of Mexico Oil Spill, Hays, hundred days, Louisiana Parish, Macondo, novel technology, Officer Bob, open discussions, Parish Officials, reuters, shorelines, southern Louisiana, Spill Response, Zargham

Analysis: Oil companies more cautious on storms after Gulf spill

July 30, 2010 By vani Leave a Comment

(Reuters) – Heightened caution following the BP oil spill is prompting oil and gas producers in the Gulf of Mexico to shut more production faster as storms threaten, exacerbating energy price volatility this hurricane season.

Comparing producers’ precautions ahead of storms this year with preparations for more severe storms in previous years indicates that companies are taking tropical threats more seriously, even though predictions of a harsh hurricane season have yet to be borne out.

“Companies operating in the Gulf are much more risk-averse than they have been historically,” Hussein Allidina, Morgan Stanley’s head of Commodity Research in New York, told Reuters.

While interruptions have been temporary, the volumes of production cut have been high and can have a big impact on energy prices. Gulf production accounts for a third of U.S. oil output and more than 10 percent of U.S. natural gas output.

Interruptions from Tropical Storm Bonnie last week helped push oil to 11-week highs near $80 a barrel.

Bonnie cut nearly 52 percent of total Gulf production at its peak, even though it had weakened from a tropical storm to a tropical depression by the time it entered the Gulf and never restrengthened as forecast.

Last year, Hurricane Ida threatened the same area with 100 mph (160 kmh) winds and the maximum oil production shut was 43 percent as a result of that storm.

Total output lost to Bonnie was 2.7 million barrels of oil and more than 4.6 Bcf of gas through Tuesday. By comparison, Ida in 2009 – crossing the same key Gulf production area – cost the market 1.4 million barrels of oil and 4.6 Bcf of gas.

“It appears companies drilling for oil in the U.S. Gulf are taking additional precautionary steps ahead of approaching storms, resulting in sizable supply disruptions,” J.P. Morgan said in a research note.

Both the U.S. Coast Guard and the Bureau of Ocean Energy Management said that regulations on drilling have tightened because of the spill, but the government has made no changes in storm-preparation requirements because of it.

The U.S. government has, however, expressed concern about the availability of containment equipment to contain any new spill as most of it is currently deployed to contain the BP spill.

WORKING FARTHER OFFSHORE IN DEEPER WATER A FACTOR?

Operating farther offshore in deeper water than in the past also could contribute to increased caution and raise shut-in oil and gas totals, experts said.

Companies contacted by Reuters said only that they always prepare carefully for storms in the Gulf. They already had tightened up tropical weather preparedness at government direction after disastrous storms Katrina and Rita in 2005.

The spill began April 20 when a BP Plc well blew out, killing 11 workers, sinking a drilling rig and spewing millions of gallons of crude.

BP on Tuesday said it was taking a $32 billion charge against earnings to cover anticipated costs for stopping the leak and Gulf clean up.

“It is not surprising that companies should wish to go the extra mile in the wake of Deepwater Horizon,” said Antoine Halff of NewEdge Group in New York. “BP itself cannot afford another disaster. The others are keen to distance themselves from BP’s troubles.”

EXTRA CAUTION EXHIBITED EARLY IN SEASON

A similarly cautious approach could be seen with Hurricane Alex, which earlier this month took a more southerly route across the Gulf than Bonnie.

At peak, Alex triggered evacuation of 11.7 percent of manned production platforms and 15.7 percent of drilling rigs. Production lost totaled 1.4 million barrels of oil and 3.2 bcf of gas.

By contrast, Dolly, a July 2008 hurricane, which took a similar southerly path, caused 8.6 percent of manned platforms and 6.5 percent of drilling rigs to evacuate and kept 136,790 barrels of oil and 1.4 Bcf of gas off the market.

Although this season has started slowly despite forecasts of a severe hurricane year, activity typically picks up in August and September and the season does not end until November 30. One weak hurricane and one tropical depression in July could be just the beginning for the Gulf oil patch this year.

The table below compares evacuations and shut-ins from a sample of past storms.

Storm Strength Year Platforms Rigs Oil lost Gas lost

(/total) (/working) (bbls) (MMcf)

Alex Cat 2 2010 74/634 8/51 1,382,654 3,223

Bonnie TS/TD 2010 106/634 15/39 2,696,009 4,618

Ida Cat 2 2009 158/694 10/66 1,374,850 4,600

Dolly Cat 2 2008 62/717 8/123 136,790 1,421

Emily Cat 5 2005 88/819 24/137 240,024 1,583

(Additional reporting by Joshua Schneyer and Jeanine Prezioso in New York; Editing by Alden Bentley)

Filed Under: International News Tagged With: Bcf, Bp Oil Spill, Commodity Research, Energy Price, Energy Prices, Gas Producers, Gulf Of Mexico, Hurricane Season, Market 1, morgan stanley, Ocean Energy, oil output, Precautionary Steps, Price Volatility, Production Accounts, severe storms, Tropical Depression, Tropical Storm Bonnie, U S Coast Guard, Week Highs

European shares rise; UBS rally on strong earnings

July 28, 2010 By vani 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)

Filed Under: International News Tagged With: barc, barclays, Biggest Gainers, Bnp Paribas, bnpp, chief strategist, Currency Revenues, european shares, Gulf Of Mexico, Gulf Of Mexico Oil, Gulf Of Mexico Oil Spill, net profit, Pan European, Quarter Loss, reuters, Robert Dudley, Societe Generale, Sogn, UBS, UBSN

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

July 28, 2010 By vani 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.

Filed Under: International News Tagged With: bln, bp, Bp Plc, Carl Henric Svanberg, Debt Level, Different Company, Dividend Payments, Dudley News, Environmental Damage, Gulf Of Mexico, Gulf Of Mexico Oil, Gulf Of Mexico Oil Spill, hayward, Henric, Lamar, Oil Giant, Quarter Loss, Quarter Results, reuters poll, Robert Dudley

BP’s Hayward to be offered role at TNK-BP: report

July 28, 2010 By vani Leave a Comment

(Reuters) – BP Plc Chief Executive Tony Hayward is to be nominated for a board position at its Russian venture TNK-BP when he steps down from his current role, Sky News reported, citing sources.

TNK-BP declined to comment on the Sky News report on Monday when contacted by Reuters.

BP is expected to install American Bob Dudley as CEO, sources close to the company said, replacing Hayward who has come under fire for his gaffe-prone handling of the worst oil spill in U.S. history.

Dudley, the U.S. executive managing the response operation to the spill in the Gulf of Mexico, is poised to get the top job in the next 24 hours, a move that could soften U.S. criticism of the British oil major.

Shares in BP closed up 4.6 percent at 417 pence, valuing the business at about 80 billion pounds ($123.6 billion).

(Reporting by Rhys Jones; Additional reporting by Vladimir Soldatkin; Editing by David Holmes)

Filed Under: International News Tagged With: Board Position, bp, Bp Plc, British Oil, ceo, chief executive, Citing Sources, david holmes, dudley, Gulf Of Mexico, hayward, news report, Oil Spill, pence, reuters, Rhys Jones, sky news, Tnk Bp, top job, vladimir

Hayward should still testify, Senator Menendez says

July 28, 2010 By vani Leave a Comment

(Reuters) – U.S. Senator Robert Menendez said on Monday he wants BP Chief Executive Tony Hayward to testify at congressional hearings examining if the British energy giant influenced the release of the convicted Lockerbie bomber to further its business interests.

“A new CEO won’t be useful to me because Tony Hayward is the person,” Menendez said at a press conference in New York when asked if he still wanted Hayward to testify in light of expectations that he will step in the next 24 hours.

Menendez will chair Thursday’s scheduled hearings at the U.S. Senate Foreign Relations Committee. U.S. politicians have expressed outrage at the release of convicted bomber and Libyan intelligence officer Abdel Basset al-Megrahi last year on grounds of compassion and want to know if BP played a role in the bomber’s release.

The case has become even more volatile since the oil spill in the Gulf of Mexico increased U.S. anger at BP. The four senators from New York and New Jersey have demanded the British government and the State Department investigate the circumstances under which Megrahi was freed on compassionate grounds but has not subsequently died, as was predicted.

(Reporting by Daniel Trotta, writing by Mark Egan, Editing by Sandra Maler)

Filed Under: International News Tagged With: basset, British Energy, British government, business interests, compassionate grounds, Congressional Hearings, Daniel Trotta, Energy Giant, Foreign Relations Committee, Gulf Of Mexico, intelligence officer, lockerbie, Mark Egan, Oil Spill, Robert Menendez, senate foreign relations, senate foreign relations committee, Senator Menendez, Senator Robert Menendez, u s senate

Analysis: New BP boss should boost safety, asset sales

July 28, 2010 By vani 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)

Filed Under: International News Tagged With: asset sales, Buccaneering, Democratic Representative, Division Managers, early show, energy independence, gaffes, Gulf Of Mexico, Gulf Of Mexico Oil, Gulf Of Mexico Oil Spill, Jason Kenney, lapses, Oil Analyst, Oil Giant, Public Relations Strategy, Representative Ed Markey, Response Effort, s board, safety record, Spill Response

BP’s diplomat Dudley in line to become CEO

July 28, 2010 By vani Leave a Comment

(Reuters) – BP Plc is expected to announce in the next 24 hours that Chief Executive Tony Hayward will step down and be replaced by Bob Dudley, a soft-spoken American unlikely to repeat the gaffes which have come to define Hayward in many Americans’ minds.

Dudley now heads BP’s oil spill response effort. Just over a week ago, BP installed a temporary cap on the Macondo well, which had been spewing up to 60,000 barrels per day of oil into the Gulf of Mexico since April.

Hayward has described Dudley — dispatched to Houston with just a small suitcase in the days after the rig explosion to help run efforts to cap the well — as “the management team’s Foreign Secretary — or perhaps Secretary of State in American terms.”

Before the spill, Dudley was managing director with responsibility for oversight of the Americas and Asia, a role which involved criss-crossing the globe, “making connections for BP,” he said in an interview with the company’s internal magazine late last year.

However Dudley was better known for his previous job as head of BP’s Russian joint venture, TNK-BP.

After BP and its partners fell out over control of the business in 2008, he was forced to flee Russia, blaming a campaign of harassment by BP-TNK’s billionaire oligarch co-owners.

Dudley had been boss from TNK-BP’s formation in 2003 and under him the venture increased oil output 33 percent to 1.6 million barrels per day.

Supporters see this as evidence he has the skill to manage a big oil company. Last year BP pumped more oil and gas than any other non-government-controlled oil producer.

The Russian dispute was also highly charged, with BP accusing the Russian side of calling in the security services to target staff seen as aligned to BP.

Yet Dudley talks about this time without any trace of bitterness or even emotion, suggesting he has the personality to withstand the attacks he will doubtless soon attract in his new role.

MISSISSIPPI BOY

BP sees rebuilding its reputation in the United States, on which it relies for future growth, as its most important goal after capping the Macondo well.

Dudley, born in New York, would be the company’s first non-British CEO.

Directors hope his nationality will help offset some of the anti-British sentiment that has stuck to the company many U.S. politicians now insist on calling “British Petroleum,” the name the company ditched over a decade ago.

The son of a naval officer, Dudley was raised in Mississippi, whose coast is now being spoiled with oil escaping from BP’s blown-out well.

Dudley started in the oil industry with Amoco as a field engineer in Texas. He later had roles in Scotland — which he cites as the place where he most enjoyed living — as well as in Russia and China.

He joined BP through its takeover of Amoco, after which he was made head of renewable and solar energy.

With his thinning, grey-blonde hair and calm manner, Dudley seems a little older than his 54 years.

He is married with two university-age children. His wife, whom he met at university, still travels to Russia regularly to help run a disabled children’s charity she founded there.

Like Hayward, Dudley enjoys recreational sailing. Unlike his boss, he has not been spotted enjoying his hobby during the spill.

(Editing by Andrew Callus, David Holmes and Michael Shields)

Filed Under: International News Tagged With: Billionaire, bitterness, Bp Oil, Bp Plc, Bp Tnk, dudley, gaffes, Gulf Of Mexico, hayward, Macondo, Mississippi Boy, oil company, oil output, oil producer, Oil Spill Response, Response Effort, reuters, russian side, small suitcase, Tnk Bp

Factbox: BP’s next steps on killing Gulf leak

July 28, 2010 By vani Leave a Comment

(Reuters) – BP Plc was working to ready the first of two relief wells to bore into its blown-out Gulf of Mexico well about 13,000 feet under the seabed and permanently plug and seal the leak.

Along the way, the company aims to begin the kill process with a “static kill,” which involves pumping heavy drilling mud and cement in the well from the top.

The well remains capped, having shut in all oil flow since July 15.

Here is an explanation of BP’s next steps, according to retired Coast Guard Admiral Thad Allen, the top official overseeing the spill response, and Kent Wells, BP’s senior vice president of exploration and production:

THE RELIEF WELLS

* On July 25 a rig that had been drilling the first of two relief wells was reconnecting its riser and drillpipe after shutting down operations to move out of the path of bad weather.

* Once reconnected, a plug that had been placed in the well to keep it stable will be removed, and the well will be cleaned.

* BP will then insert and cement in place the last piece of pipe, called casing, at the bottom of the relief well prior to boring into the Macondo well.

* After the casing is in place but before drilling resumes, BP aims to begin a static kill.

* The relief well has drilled 12,864 feet beneath the seabed and remains on target to intercept and kill the leak in August. The weather-related shutdown has likely pushed the finish date to the second half of August from the middle of the month.

* The finish date depends on how well the static kill works, how deep the relief well must bore into the stricken well, and how many times BP must pump in heavy drilling fluid and cement.

* The second relief well, a backup to the first, bored 10,961 feet beneath the seabed by July 12, when drilling was suspended to avoid disturbing the first relief well’s use of sensors to find its right intercept target.

THE STATIC KILL:

* The static kill resembles BP’s failed “top kill” in May, except that the well is capped and sealed.

* The top kill failed because heavy mud shot out the top of the leak along with crude and couldn’t smother the leak.

* As with the top kill, heavy mud will be pumped into the well from surface vessels through pipes and hoses connected to a failed blowout preventer at the seabed.

* Because oil no longer has an escape route, the mud is expected to push it back down to the reservoir.

* Cement can then be pumped into the well to plug and kill the leak at the bottom.

* The first relief well will then drill into the space between the well’s pipe and the strata, called the annulus. If oil is flowing there, more mud and cement will be pumped in through the relief well.

* Once that cement dries, the relief well will bore into the well pipe to ensure that the static kill plugged it. If not, more mud and cement will be pumped in at the bottom to finish the job.

* The static kill could accelerate the entire kill process if it works as intended.

WELL PRESSURE

* BP has monitored pressure in the well since it was sealed shut on July 15 for signs of leaks or problems.

* Pressure has slowly risen from 6,700 pounds per square inch on July 16 to 6,904 psi on July 25.

* Rising pressure indicates the pipe and cement in the well remain intact after the April 20 blowout. Lower or falling pressure would be a sign the well is damaged, allowing oil to leak out the sides and possibly breach the seafloor.

* Pressure above 7,500 psi would show the well is intact, while pressure that falls or fails to rise above 6,000 psi would indicate a problem. The slowly rising pressure could be a sign that the reservoir is largely depleted from the leak.

BACKUP OIL-CAPTURE VESSELS

* BP still aims to assemble a surface oil-capture system of four vessels that can siphon up to 80,000 barrels a day from the wellhead.

* That system will include a rig, the Helix Producer; a well-testing ship, the Toisa Pisces; and two Transocean Ltd. drillships, the Discoverer Enterprise and the Discoverer Clear Leader.

* Each would be connected to wellhead equipment via hoses and pipes that allow for a quick disconnect if a hurricane approaches.

* The system remains on tap as a backup if any problems arise with the static kill and the first relief well.

(Reporting by Kristen Hays in Houston; Editing by Paul Simao)

Filed Under: International News Tagged With: Admiral Thad Allen, bad weather, bp, Bp Plc, Cement, Drilling Fluid, Drilling Mud, Exploration And Production, Factbox, Gulf Of Mexico, Intercept Target, Kent Wells, Macondo, Oil Flow, Relief Wells, reuters, rig, seabed, senior vice president, Spill Response

BP says relief well rig back at Gulf spill site

July 28, 2010 By vani 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)

Filed Under: International News Tagged With: Admiral Thad Allen, bp, Bp Oil, Bp Plc, casing, Drilling Mud, Gulf Of Mexico, Gulf Of Mexico Oil, jessie, Live Feeds, Oil Leak, Relief Wells, reuters, rig, Spill Response, spokeswoman, Transocean, Tropical Storm Bonnie, underwater robots, wellhead

Spill puts Obama’s oil fund chief on hostile turf

July 28, 2010 By vani Leave a Comment

Alabama (Reuters) – The man who acquired a solid gold reputation for fixing sticky situations for the U.S. government is facing one of his toughest challenges yet: running BP Plc’s $20 billion compensation fund.

Kenneth Feinberg, lawyer extraordinaire, was in charge of compensating victims’ families after the September 11, 2001 attacks and presided over executive pay at bailed-out Wall Street firms.

But the job President Barack Obama has asked him to do — deciding who will be compensated from BP’s catastrophic oil spill in the Gulf of Mexico — is placing Feinberg in hostile territory where residents are still reeling from the federal government’s bungled response to Hurricane Katrina.

Many areas in Louisiana and Mississippi never recovered from the 2005 hurricane. Buildings are gutted. Broken boats lie in marshes.

Now many of the same residents who were left to fend for themselves after Katrina are seeing their fishing and tourism industries fall apart from the oil spill.

“Feinberg is full of baloney. He is a lawyer and that is how lawyers talk. I do not believe a word he says,” Delane Seaman said after attending one of Feinberg’s town hall meetings in Bayou La Batre on Sunday.

“BP is telling us we will be compensated for 100 percent loss of our oyster processing business, too. It will not happen,” Seaman said.

‘I AM YOUR LAWYER’

In Bayou La Batre, a small fishing community in south Alabama, Feinberg convened an early-morning session on Saturday to listen to residents’ concerns and answer questions on the claims process.

“I learned today the depth of frustration in people here on the coast,” a visibly-tired looking Feinberg said. “I am your lawyer. I do not work for BP. I do not work for the White House. I work and answer to the residents of the Gulf.”

Feinberg’s compensation for running the fund — which has not been disclosed — is being paid by BP.

BP’s blown-out well is capped. The energy giant had been expected to permanently stop the leak by mid-August, but a storm in the region slowed efforts.

Thousands of fishermen, oyster processors and other seafood industry workers have lost work because of the oil spill.

Feinberg must decide how much they get paid as well as how to compensate businesses related to the fishing and tourism industries and whether real estate brokers and bankers should be included.

As of mid-July $201 million was dispensed to workers and businesses in the region from the fund that so far has been run by BP. Feinberg expects to assume complete control of the fund by August 10.

He has said claims can be filed over lost wages and profits, business interruption as well as personal injuries.

Coastal tourism from Louisiana to Miami accounts for $100 billion per year, according to the New Orleans Metropolitan Convention and Visitors Bureau. The fishing industry accounts for $2.4 billion a year in Louisiana.

If most of the waters remain closed, the fishing industry could be wiped out. Tourism losses are just as dire. One study suggests that the tourism industry in the Gulf of Mexico could lose $22.7 billion in revenues over the next three years.

DEEP ANGER

In Venice, Louisiana, home to a popular North American fishing destination, workers had little faith in the Obama administration and Feinberg.

“Look at what happened with Katrina,” said Bill Butler, co-owner of the Venice Marina, which was ravaged by the 2005 hurricane.

Butler’s marina has been rebuilt. But the oil spill has transformed it from a haven for commercial and sports fishing to a staging area for the cleanup.

In the fishing town of Lafitte, Louisiana, locals cast sideways glances at each other when asked about Feinberg and refused to comment.

Instead they talked about help they had received from BP, which residents say has hired a good bulk of the small community. “Overall there is trust in BP,” said Lafitte resident Barbara Martin. “At least they’ve done more than the federal government.”

Residents in Mississippi and Alabama were similarly dubious about the fund’s chief.

“Feinberg says he is thinking about some issues but I just want to know who is paying him. That is where the truth will be concerning the fairness of claims being paid,” said Wu Lin, an out of work fisherman from Biloxi, Mississippi.

Another Biloxi resident, Curtis Fournier, said: “Can I trust him? He is a lawyer. What do you think?”

(Younglai reported from Venice, Louisiana, editing by Chris Baltimore and Vicki Allen)

Filed Under: International News Tagged With: baloney, Barack Obama, Bayou La Batre, Bp Plc, Compensation Fund, Delane, Energy Giant, Fishing Community, Gulf Of Mexico, Hostile Territory, Kenneth Feinberg, morning session, Oil Spill, Response To Hurricane Katrina, reuters, september 11 2001, South Alabama, sticky situations, Tourism Industries, town hall meetings

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

July 28, 2010 By vani 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

Filed Under: International News Tagged With: 23 July, Anadarko, Atlantic Hurricane Season, bpd, Company Asset, Crude Oil Production, Crude Production, Factbox, Forecasters, Gulf Of Mexico, Gulf Of Mexico Oil, Management Regulation, Ocean Energy, Offshore Production, Oil And Gas Production, oil output, Oil Rigs, Refinery Capacity, Refinery Production, Tropical Depression

BREAKINGVIEWS-Hayward’s exit would not bring BP catharthis

July 26, 2010 By vani Leave a Comment

LONDON, July 25 (Reuters Breakingviews) – BP’s (BP.L) (BP.N) chief executive looks set to pay the appropriate price for mishandling the Gulf of Mexico disaster. But Tony Hayward’s impending departure should not be seen as providing redemption for the rest of the UK oil major’s board, let alone for its chairman, Carl-Henric Svanberg.

Whether through tiredness, bad luck or poor media experience, Hayward said the wrong thing on too many occasions after BP’s well blew out on April 20. One such slip, saying he “wanted his life back” just weeks after the fatal accident, has now become prophetic. Hayward became a global hate figure. It has for weeks been evident that his continuing presence at the helm of BP would obstruct the group’s rehabilitation in the United States, potentially saddling the shares with a discount. While going would be the right thing, it would have been better to say weeks ago that he would step down once the well was capped and when a successor could be found.

Some will see Hayward’s anticipated exit as evidence that Svanberg is belatedly showing strong leadership. But it is questionable whether the chairman’s own weakened authority can be restored. He should have publicly helped Hayward fight the fallout from the disaster sooner than he did. Worse, Svanberg allowed the board to dither over the dividend even when it was clear that continuing with the payout was both politically foolish and financially irresponsible. Ideally, Svanberg would have been the first to leave, with his successor finding a new CEO.

Hayward’s short tenure at the top — he has lasted less than four years — carries lessons for all bosses. The ability to handle a hostile media in a crisis is clearly as vital a skill in a boss as management or technical capability. A constructive relationship with a supportive and weighty chairman is also critical. And the episode has shown that new brooms cannot help but inherit some of the baggage of previous management. Hayward was vulnerable largely because of BP’s safety failings under his predecessor John Browne — even though he was appointed on a manifesto to fix them. It may now be for Bob Dudley, the U.S. BP executive tipped to succeed Hayward, to grapple with these challenges.

CONTEXT NEWS

– BP has decided chief executive Tony Hayward should step down over his handling of the Gulf of Mexico oil spill and his departure could be announced in the coming days, Reuters reported on July 25. [ID:nN25157641]

– For previous columns by the author, Reuters customers can click on [HUGHES/]

(Editing by Hugo Dixon and David Evans)

Filed Under: International News Tagged With: Bad Luck, bp, Breakingviews, Brooms, Constructive Relationship, dividend, fallout, Gulf Of Mexico, hayward, helm, Henric, Hostile Media, Impending Departure, media experience, Redemption, reuters, s board, Technical Capability, Tiredness, Uk Oil

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

July 26, 2010 By vani 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)

Filed Under: International News Tagged With: Crude Oil Production, energy companies, Energy Management, erwin, Gulf Coast, Gulf Of Mexico, Gulf Of Mexico Oil, Gulf Of Mexico Oil Production, gulf oil, National Natural Gas, Natural Gas Production, Ocean Energy, Production Areas, reuters, Seba, Tropical Depression

BP says relief well rig back at Gulf spill site

July 26, 2010 By vani 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.

“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.

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.

“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)

Filed Under: International News Tagged With: Admiral Thad Allen, bp, Bp Oil, Bp Plc, casing, Drilling Mud, Gulf Of Mexico, Gulf Of Mexico Oil, Live Feeds, Oil Leak, Relief Wells, reuters, rig, Rign, Spill Response, Transocean, Tropical Storm Bonnie, underwater robots, Vx, wellhead

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