Seepage detected near BP well

 

Investors fretted about possible seepage from BP's capped Gulf of Mexico well today and speculation grew about assets the company may sell to pay multibillion-dollar costs for its oil spill.

BP shares, which have rallied over the past three weeks, dropped as much as 5 per cent after the top US government spill official said engineers had detected seepage on the floor of the Gulf after the well was capped on Thursday.

The seepage could signal that the April 20th blowout that preceded the leak damaged the wellbore, which could allow oil and gas to leak out the sides and possibly breach the seabed.

Officials are monitoring the pressure in the well to gauge whether it is structurally sound. An intact well would help when a relief well intercepts and tries to plug the leak, but damage could complicate that effort.

BP shares in New York were down 5.2 per cent in midday trade and had dropped 4.75 per cent in late London trade.

The worst oil spill in US history has caused an economic and environmental disaster in five states along the Gulf Coast, hurt President Barack Obama's approval ratings and complicated traditionally close ties with Britain.

A BP spokesman said the seep was detected by its engineers but it was unclear whether the source was the blown-out well, adding that seeps were a natural phenomenon in the Gulf.

The company said in a statement that it had spent $3.95 billion (€3.05 billion) so far on efforts to tackle the well and clean up the millions of barrels of spilled oil.

It has also impacted finances of BP, which has begun canvassing shareholders about a restructuring that could include a breakup of its businesses, the Sunday Times reported.

As part of a test of the well, BP choked off the flow 1.6km under the water's surface with a cap last Thursday, marking the first time oil has not spewed since the April 20th explosion on an offshore rig killed 11 workers.

The company was extending the test in 24-hour intervals, pending US government approval. The latest extension is until this afternoon.

Investors were concerned about reports of the seepage and confusion over how significant it might be.

National Incident Commander Admiral Thad Allen, who has final say on whether the test can continue, sent a letter to BP over the weekend demanding answers to unanswered questions about monitoring systems on the well.

Mr Allen mentioned the seep in a statement issued early today and has said government scientists "got the answers they were seeking."

But he offered no further details on where the seepage was in relation to the stricken well.

The BP spokesman said that if a seep is confirmed from the well, a valve on the cap will be reopened, allowing crude to flow into the ocean again.

BP's role in the disaster and speculation about any influence the British oil giant may have had over the release of the Lockerbie bomber from a Scottish prison last year are sure to be discussed when British prime minister David Cameron meets Mr Obama in Washington this week.

BP has confirmed that it lobbied the UK government in late 2007 over a prisoner transfer agreement with Libya but said it was not involved in talks on the release of Abdel Basset al-Megrahi, convicted of the 1988 bombing of a Pan Am flight.

The British government said it had no plans to re-examine a prisoner transfer agreement with Libya, despite demands by US lawmakers for an investigation.

Cameron's visit comes as US lawmakers are considering a range of new rules that could require tougher safety regulations on offshore drilling or bar companies like BP from new offshore exploration leases.

BP is also trying to figure out a possible restructuring of its business.

Reuters