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BP successfully places cap on oil well

By Channel 4 News

Updated on 13 July 2010

BP prepares to test a newly installed cap on a leaking oil well which has cost the company over $3 billion so far.

BP containment cap being installed (Reuters)

The oil giant confirmed on Monday that it had installed the cap and if its tests later today go according to plan and show the cap is a success, it will be the first time the firm has managed to stop oil spewing from its ruptured well since the crisis in the Gulf of Mexico began in April.

The breakthrough came on the 84th day of the crisis, amid news that the US Interior Department had unveiled a second moratorium on deep-water oil drilling in the Gulf.

The department's first moratorium was thrown out by the courts because it was not specific enough. However the Interior Department now believes its new moratorium will stand up to the legal challenges.

Any prospect of protected court battles with Barack Obama's administration's bid to limit offshore energy exploration has already caused worry within the industry. Tens of thousands of jobs could be at risk, according to officials and analysts.

Channel 4 News Jon Snow writes in his blog "BP: If the cap fits...": "The more we learn about ‘deep sea, off shore’ drilling, the more miraculous the entire saga becomes.
"Miraculous that man, without line of sight and with the vicissitudes of currents and ocean swirls, can so direct remote robotic actions that a seventy ton cap can be dropped upon so active a volcano of oil, secured and sealed to a flexible outflow to conduct the gush in a controlled flush to boats anchored on the surface.

"Yet it is today’s ‘miraculous’ engineering capacity that got BP into trouble in the first place – a conviction that they had a fail-safe mechanism to explore and retrieve oil from depths never plumbed before.

"As America struggles to break its previously unquenchable dependence upon countries with questionable regimes in the Middle East, let’s make no mistake, BP represented to the archangel of hope."

Cap test
BP hopes tests today will show that the larger, tighter-fitting 40-ton containment cap will fully contain the deep-sea oil gusher a mile beneath the Gulf's surface.

Crude oil has spilled out into the sea continuously since April 20 when the Deepwater Horizon drilling rig exploded, killing 11 crewmen.

BP will test the cap and the internal pressure of the well in a technique that closes off valves of the device to constrict the flow of oil. If it is successful, the cap will halt anymore oil from spewing out into the sea, causing further environmental damage. If it does not fully contain the oil, it should allow it to be safely captured and funneled to the surface.

However, BP is cautious and warned success is not a certainty.

In a statement, the firm said: "It is expected, although cannot be assured, that no oil will be released to the ocean for the duration of the test. This will not, however, be an indication that flow from the wellbore has been permanently stopped."

To "permanently" stop the oil from leaking, BP is relying on two relief wells which are being drilled to intercept the rupture point. Only one of these drills is currently being drilled at the moment and it will not be until August until both are complete, meaning a halt to the oil spillage is only temporary.

Former US coastguard Admiral Thad Allen is overseeing the US government's spill response. He says that if the cap does prove a success today, it will be used to resume the siphoning of oil to ships on the surface until the ruptured well can be permanently plugged.

The new cap-and-seal stack is much larger than the one which was removed on Friday. It is bolted over the wellhead, rather than just clamped like the previous cap. This design means that it should capture three times more leaking oil that the previous cap, or better still, virtually stem the entire flow altogether.

Testing the integrity of the well and the new containment device will take anything from six to 48 hours.

More from Channel 4 News on the BP oil spill
BP oil spill: the story so far
BP oil spill live feeds: watch them all
- Rivals, white knights and Libya: who wants BP?
- Who Knows Who: Tony Hayward
- The pension fund victims of the BP oil spill

BP shares
The potentially good news about the cap came amid news that BP's share price had surged after it was revealed the British oil giant is in talks to sell assets worth around $10 billion to US energy company Apache Corp and other potential bidders.

In London BP shares climbed more than 9 per cent and in New York nearly 8 per cent on Monday, driven by potential asset sales and hopes for the new system to capture the escaping oil.

Ted Parrish, a co-portfolio manager at Henssler Equity Fund in Georgia said: "It's probably worth more than what it's trading for right now if they can ever get this well capped and get the clean-up effort really going."

The asset sale talks are at an exploratory stage and it was uncertain whether any plans would be advanced enough to be disclosed before BP announces second-quarter earnings later this month.

BP owns a 26 per cent stake in Alaska's Prudhoe Bay, the largest oilfield in North America and one of the 20 largest ever discovered. BP and Apache have declined to comment on reports of the talks.

The US administration's fight for a moratorium to be put in place in the Gulf will cause BP concern.

Interior Secretary Ken Salazar says a new deep-water oil exploration moratorium plan is worded differently from an earlier ban struck down by the US appeals court last week.

He said: "I am basing my decision on evidence that grows every day of the industry's inability in the deep water to contain a catastrophic blowout, respond to an oil spill and to operate safely."

The new ban will run until November 30 and it applies to the same oil and gas rigs as before. The difference is it is now defined by the types of drilling technologies used rather than the depth of the offshore operations, as the original plan was.

President Barack Obama, who has hit out hard on BP throughout the crisis, is under huge amounts of pressure to make offshore drilling a safer industry and to hold BP fully accountable as the spill continues to devastate the multi-billion dollar tourism and fishing industries across all five states along the Gulf of Mexico.

However, oil industry officials claim the new ban will make matters worse.

Chief Executive of American Petroleum Institute, Jack Gerard said: "It is unnecessary and shortsighted to shut down a major part of the nation's energy lifeline while working to enhance offshore safety.

"It places the jobs of tens of thousands of workers in serious and immediate jeopardy and promises a substantial reduction in domestic energy production."

Legal battle
Analysts say the oil industry is likely to contest the new ban in court, but deep-water exploratory drilling is unlikely to resume any time soon given the prospect of legthy legal battles.

Some analysts think the hesitation could last at least six months.

Barack Obama's independent oil spill commission, based in New Orleans, has held its first hearings on the impacts of the spill and the drilling ban.

The panel is made up of seven engineers, environmentalists and former politicians. They are investigating decisions made by oil companies and government regulators, assessing if they may have led to the disaster. Its findings will be crucial to any new regulations put in place and an eventual relaxation of the drilling ban.

Michael Hecht, from development agency Greater New Orleans Inc, claimed the ban will threaten 24,000 jobs in Louisiana alone.

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