BP Removes Well Cap, Oil Flows Freely

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It is a risky move that could backfire. BP plc (NYSE: BP) will replace the current cap on its leaking well with a new one which could collect more crude. The cap which has been in place collects roughly 25,000 barrels of oil per day. The one that will replace it could  capture as much as 80,000. That would mean that no more oil would flow into the Gulf, if successful

The oil from the leak flows freely now as the cap replacement is in progress and there is no guarantee that it will work. After receiving approval from National Incident Commander Admiral Thad Allen, BP began its “capping stack” procedure—designed to capture even greater quantities of oil than the current “top hat” system, the NOAA said.

“After reviewing Bob Dudley’s response to my July 8 letter outlining BP’s proposed plan of action for oil containment efforts, and consulting top government scientists and engineers including Secretary Chu, I approved BP’s plan to simultaneously install the Helix Producer and “capping stack” containment mechanisms, which will require temporary suspension of the current top hat containment system. I validated this plan because the capacity for oil containment when these installations are complete will be far greater than the capabilities we have achieved using current systems. In addition, favorable weather expected over the coming days will provide the working conditions necessary for these transitions to be successfully completed without delays. The transition to this new containment infrastructure could begin in the next days but will take seven to ten days to complete. I have also directed BP to provide daily briefings and regular informational updates to the media throughout this capping process.”

The risk of the move is much more with BP than the US government, at least in terms of financial consequence. Should the move fail, the UK-based company would have to rely on relief wells which are in the process of being drilled and should be in place in several weeks. The drill could miss their mark which would mean that some portion of well leak could continue for months, as BP’s financial liability grows.

Douglas A. McIntyre