Oil alert halts BP shares revival
Jul 20 2010 by Iain Laing, The Journal
A REVIVAL for BP shares after the placing of a cap on its ruptured well ended yesterday amid fears that oil may be seeping from the seabed.
The energy giant had wanted to test its cap until it could open relief wells to stop the flow of oil, but the discovery of seepage and possible methane gas near the site in the Gulf of Mexico means there could still be leaks.
The US government has asked BP to submit a plan to reopen the capped well and pipe oil to the surface, which would ease pressure on the well but would require up to three more days of oil spilling into the Gulf.
BP shares fell by as much as 5% yesterday as investors reacted to the latest developments in the disaster, which began when the Deepwater Horizon rig exploded on April 20, killing 11 workers.
Shares dipped below 300p at one stage last month – the lowest point since August 1996 – but last week recovered to around 425p on signs that it is closer to tackling the crisis, which BP said today has now cost £2.6bn in spillage and clean-up.
Retired Coast Guard Admiral Thad Allen, who is in charge of the White House’s response to the spill, has ordered BP to provide a plan for reopening the well.
In a letter to BP managing director Bob Dudley, he said: “When seeps are detected, you are directed to marshal resources, quickly investigate, and report findings to the government in no more than four hours.
“I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed.”
Doug Suttles, BP’s chief operating officer, said: “No one associated with this whole activity... wants to see any more oil flow into the Gulf of Mexico.
“Right now, we don’t have a target to return the well to flow.”
Meanwhile, there is speculation that BP is considering selling off its petrol stations. Directors at the beleaguered oil group are understood to have held discussions with its major shareholders over restructuring the company.
Options under consideration are thought to include splitting up the group by selling off its refineries and petrol stations, scaling back its US operations and doing more engineering in-house rather than outsourcing it.
The restructuring will come on top of the sale of around 10% of the group’s assets, which will be needed to meet the cost of the oil spill.
