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Obama: more work to do on BP oil spill

By Kris Jepson

Updated on 16 July 2010

BP's oil well in the Gulf of Mexico showed no sign of leaking today, but President Obama cautioned that there was more work to be done. Global oil supply expert, Chris Skrebowski tells Channel 4 News that legislation to ban deepwater drilling would have serious implications for the company.

BP containment cap in place over the spill in the Gulf of Mexico. (Reuters)

Obama, speaking at the White House, cautiously welcomed the news that the oil leak had been temporarily stopped.

"We won't be done until we actually know that we've killed the well and that we have a permanent solution in place," he said. "We're moving in that direction, but I don't want us to get too far ahead of ourselves."

The president is under fire to push BP to permanently plug the leak and clean up the mess as it harms the environment and economy across five states of the Gulf of Mexico.

BP's new containment cap has managed to stem the flow of oil spewing out from a leaking oil well for the first time since 20 April when the Deepwater Horizon rig exploded, killing 11 crewmen.

BP said it was good news, but it is only a "temporary" solution to the ruptured well which has caused the worst offshore spill in US history.

The oil giant installed the tight-sealing containment cap three days ago and has been carrying out various tests to see if it will work. Later the company will find out the results of the tests and whether the well can remain intact until drilling of two relief wells is complete.

The firm will seak to plug the leak permanently with the relief well, which extends 2.5 miles under the sea bed, and seal it with mud and cement next month.

More Channel 4 News coverage of the BP oil spill
BP: no oil leaking from well
Rivals, white knights or Libya: who wants BP?
Who Know Who: BP boss Tony Hayward
BP oil spill: timeline


Kent Wells, BP's senior vice president said at a news briefing in Houston that the leak was found on the side of the towering, 75-ton capping stack and it was fixed by replacing the assembly, called a "choke line" and said he is very "excited" by the news.

He said "It is very good to see no oil go into the Gulf of Mexico."

BP chief operating officer Doug Suttles urged caution: "We have to manage our expectations because, depending what the results are, could depend on what happens next.

"It's possible, if the pressure is low, that we will have to reinitiate the flow and capture it. And, I want to tell you, we are fully prepared to do that."

"It's an encouraging sign. In a couple more days it may be even more encouraging. But, no celebrations.


"You know, if you go talk to the people that live here, that 'celebration' is a wrong word. But, it could be, we could be very close, whether it's through this activity or through the relief wells, to the point where everyone feels like we've begun to turn a corner. And an important corner but, no, it is not the time to celebrate."

BP was finally given the go-ahead by US authorities to test its new containment cap on Wednesday night, after waiting 24-hours for scientists to assess fears that tests might result in further damage to the well.

The danger is that sealing the well could cause pressures that could lead to cracks deeper down inside the well bore, causing a much more difficult breach in the well that would make the situation much worse.

BP shares
The news was welcomed by BP shareholders as the company's shares closed up 7.6 per cent on Thursday in the US, and opened up 5 per cent in early trading on the London FTSE 100.

Oil has spurted out of the well a mile below the ocean surface for more than three months, causing a massive spill that has led to economic and environmental damage along the US Gulf coast.

BP has failed several times to end the leak, but during the tests which included closing valves and vents on the containment cap, it proved successful in stopping the leak.

Channel 4 News Business Producer Ben King says: "Anyone wondering whether this cap will bring an end to BP's woes need only look at the share price. It rose in morning trading, but only by 5 per cent. Shares were changing hands at £4.17 at time of writing - that's still a long way off the £6.55 which they reached in April, before the spill.
 
"The company faces a clean-up bill which could reach as high as $65bn. And the cap - if it works - only provides a temporary fix, not a permanent solution to the geyser of oil in the gulf of Mexico.

"Until the relief wells cut off the flow of oil below the seabed, which is expected to happen next month, then a giant uncertainty hangs over the future of the company - and that will continue to be reflected in BP's share price."

Pressure test
The test, which lasts up to 48 hours, guages pressure in the well to assess its condition. The test will show whether the cap can safely shut off the flow from the well if oil-capture vessels at the surface disconnect, for example in a hurricane.

Coast Guard Admiral Thad Allen, in charge of the clean-up operation in Louisiana, said: "We're encouraged by this development, but this isn't over."

The coast guard said BP would likely release the flow of oil again after the pressure test is complete, and oil capture ships would restart again while seismic tests are carried out.

Why the next 48-hours are vital
The next 48 hours are crucial in BP's attempts to stem the flow of oil, writes Channel 4 News Science Correspondent Julian Rush.They are proceeding very slowly and carefully for very good reason.  The worst case scenario would be a well blow-out - a rupture in the sections of metal drill pipe that go down the hole for thousands of feet to the oil-bearing rocks.  That could lead to oil surging up the hole uncontrollably and a gusher of unconstrained oil and gas that would dwarf the current disaster.
Read more...

BP has a two-day window to test the cap, during which the results are fed up to the surface on electrical wires from transducers fitted to the new cap and analysed.

Tests will involve increasing the pressure in the capping stack at six-hour intervals. At each interval the pressure data will be collected by remote robots.

Yesterday, Thad Allen said: "Two of the very positive aspects that can come out of this, depending on the pressure readings that we find, are an assessment of whether or not we can just cap the well at this point and the pressures can be maintained without damaging the wellbore or the casings. 

"We are also in the process of building out an enhanced containment strategy, which includes redundancy so if one part of the system is not working we can continue to produce and capacity."

As the Gulf region heads on into the hurricane season, Admiral Allen said: "We have good weather right now and we’ll try to take advantage of that, as you know, but if we have to leave the site, we need to know whether or not we can just cap the well and leave."

Admiral Allen said the government's delay to the test may have been "an overabundance of caution".

The new cap, a 75-ton metal stack of pipes and valves, was lowered onto the leaking well on Monday, but the government stepped in before BP could test it.

BP has also suspended drilling for 48 hours on the two relief wells that are nearing completion – the wells that are intended to permanently plug the leak.

More from Channel 4 News on the BP oil spill
- US senators target BP over Lockerbie link

- Rivals, white knights and Libya: who wants BP?
- Who Knows Who: Tony Hayward
- The pension fund victims of the BP oil spill
- BP oil spill: timeline of events

Deep water drilling
Meanwhile, a government House Committee in the US has proposed banning oil and gas companies that have suffered 10 fatalities or more from securing new exploration leases in the Gulf of Mexico for up to seven years.

This could see the end of new operations in the Gulf for BP, if the oil group is found to be criminally negligent in the accident that blew up the Deepwater Horizon costing 11 lives.

While Democrat George Miller's amendment did not mention BP directly, his office wrote in an email: "The Miller amendment would prohibit BP or any other company with an egregious worker and environmental safety record from new offshore oil and gas drilling".

Chris Skrebowski is the founding Director of Peak Oil Consulting and the Consulting Editor of Petroleum Review. He has over 38 years experience in the oil industry, starting work in 1970 as a long-term planner for BP. He is an expert on global oil supply.

Chris Skrebowski told Channel 4 News: "I think it's a semi-hysteria in the States where some senators and politicians think, saying something outrageous can win them votes and support from the electorate. I think cooler heads need to prevail.

"There is nothing wrong with safety based legislation, but it appears that this is very specifically targeted. You could argue that BP has a less than perfect record (bearing in mind the 11 crewmen who died on Deepwater Horizon), but there are no tabulated statistics into health and safety and accidents at other firms.

"If the legislation specifically targets one company, then that company will have to make sure its safety measures are up to standard. However, I think that if it affects other businesses it would recieve legal challenges from other firms."

Asked about how BP will be affected if the ban is implemented for seven years, he said: "If the ban does prevent BP from deep sea drilling for several years then there will be serious concerns for the future of the company.

"Having said that, BP already has a large number of existing deep sea drilling leases in the Gulf which won't be subject to the ban, so as long as they are extremely careful in the future they should be ok.

"If the industry raises concerns I suspect it (ban) will probably be dropped at a later stage as it has to go through the Senate and the President would have a veto etc.

"If the ban became more widespread and affected other firms in the Gulf then there would be an affect. At times when supplies get tight, anything you thought you had and now you don't have, can become problematic. The quoted companies are heavily dependent on deep water oil, so it's bound to have an affect.

Asked how important the Gulf of Mexico is to the deep water drilling industry, he said: "Deep water oil is a recent phenomena - we've got less than a million barrels a day distributed around the world from deep water drilling, and some of that isn't that deep.

"The projections say that we should have around five million barrels per day by 2015. A third of that will be from the Gulf of Mexico, so whatever the Americans do with respect to BP and other firms, isn't necessarily what the rest of the world will do."

Lockerbie
As if the Miller amendment was not enough for BP, the US Senate foreign relations committee has scheduled a July 29 hearing into last year's release of Libyan Abdel Basset al-Megrahi, who was convicted for the 1988 bombing of a plane over Lockerbie, Scotland, and related actions by BP.

The committee said yesterday that it will ask officials of BP to testify after the UK-based oil firm acknowledged that it had expressed concern to the British government in 2007 over the "slow progress" of a prisoner transfer agreement between the UK and Libya.

However, the firm also stated that it had taken no part in the discussions that led to the decision to release Megrahi. The Scottish government has also denied it had any contact with BP before its decision last year. It maintained the transfer of Megrahi to Tripoli was purely on compassionate grounds due to his terminal prostate cancer.

The 1988 bombing of Pan Am flight 103 killed 270 people, most of which were Americans. Megrahi was convicted for the terror act, but was freed last year by Scottish Justice Secretary Kenny MacAskill on compassionate grounds because he had contracted terminal prostate cancer.

He was eventually controversially released and sent back to Tripoli in August last year after serving eight years in prison.

Chairman of the Senate committee John Kerry, who had opposed Megrahi's release, said: "details that have emerged in recent days in the press have raised new concerns."

The UK ambassador to Washington Sir Nigel Sheinwald wrote a letter to Mr Kerry "to explain the facts" surrounding the circumstances behind Megrahi's release.

In the letter he said: "Under Scottish law, Megrahi was entitled to be considered for release on compassionate grounds. Whilst we disagreed with the decision to release him, we have to respect the independence of the process.

"I am troubled by the claims made in the press that Megrahi was released because of an oil deal involving BP, and that the medical evidence supporting his release was paid for by the Libyan government. Both of these allegations are untrue."

Sir Nigel said he hoped the letter would help set the record straight and currect inaccuracies that he says are harmful to the UK.

Under the UK political system, the Scottish parliament has broad legal powers. It was advised that Megrahi was likely to die within three months due to advanced prostate cancer. However, nearly a year on he is still alive in Tripoli.

Prime Minister David Cameron is to meet Barack Obama next Tuesday, but it is not clear whether the issue will be brought up.

Meanwhile the Senate panel says it will ask "government experts" to testify in the hearing and Secretary of State Hillary Clinton has said she will look into a request by several senators to investigate the allegations.

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