BP cements Gulf oil well and sets up for permanent kill

BP pumped cement down its blown-out Gulf of Mexico well on Thursday, sealing it off and setting up a planned permanent kill later this month of the source of the world’s worst marine spill.

The cementing operation, to continue through Friday, followed earlier injections of heavy drilling mud this week that had subdued the upward pressure of the oil and gas. The deepwater Macondo well was provisionally capped in mid-July.

“This is not the end, but it will virtually assure us that no oil will be leaking into the environment,” retired Coast Guard Admiral Thad Allen, who oversees the U.S. oil spill response operation, said at a briefing in Washington.

The so-called “static kill” from the top is due to be finished off with a “bottom kill” later in August of more mud and cement injected through a relief well that will intersect the well shaft. This will be the final solution to plug the reservoir 13,000 feet beneath the seabed.

“I will declare this well dead once we’ve intercepted the annulus (the space between the well pipe and surrounding rock) and we’ve assessed how much mud or cement we need to do from the bottom to finally kill this well,” Allen said.

Progress in shutting down the cause of an environmental disaster for the U.S. Gulf Coast is a relief for both BP, whose image and stock took a beating, and U.S. President Barack Obama, whose approval ratings also suffered over criticism of his administration’s handling of the spill.

Reflecting hopes that an end to the 108-day-old drama is now in sight, BP shares hit two-month highs in early trading in London. They later fell back, closing up 0.42 percent. BP shares were up 3 percent in afternoon trading in New York.

“We would hope the worst is indeed behind the company,” one BP shareholder, who asked not to be named, told Reuters.

BP shares have gained strongly since hitting a 14-year low on June 25. “Nobody thinks they (BP) are going to go bust in the next five years any more,” said Iain Armstrong, an analyst at Brewin Dolphin.

BP, whose market value has fallen more than a third since the Deepwater Horizon rig explosion and sinking in April that triggered the spill, has said it would sell about $30 billion in assets to cover costs related to the spill.

OFFSHORE DRILLING CONCERNS

Experts stressed the “bottom kill” to be executed by the relief well would be the critical final step.

“You want to seal the well where the pressure is. And the pressure’s at the bottom,” said Donald Van Nieuwenhuise, director of petroleum geoscience at the University of Houston.

Allen said BP would prepare to resume drilling on the relief well and this could come 24 to 36 hours after the cementing operation stops, with the initial intercept expected within five to seven days after that.

With the U.S. government announcing this week that some 75 percent of the estimated 4.9 million barrels of oil leaked by the well has either evaporated, dispersed or otherwise been contained, some environmental experts say the U.S. Gulf Coast may have dodged a nightmare scenario.

But the incident has had far-reaching oil sector repercussions from a safety point of view.

A group of investors including the two largest U.S. public pension funds asked 27 top oil and gas companies on Thursday to disclose what they have done to make their offshore drilling safer in the wake of the BP oil spill.

Mexico’s state oil company Pemex will delay the start of its Maximino exploration well until next year due to concerns about deepwater drilling, a regulator said.

WHERE’S THE OIL GONE?

Despite the encouraging announcements from BP and the Obama administration, many Gulf Coast residents, who have seen their fishing and tourism livelihoods devastated by the spill, were wary, asking where the remnants of the leaked oil had gone.

“Where is this remaining oil? It’s in the reeds, salt marshes, mangroves and on the beaches or it’s still at sea — either floating on, in or near the surface,” said Simon Rickaby, chairman of the London-based Institute of Marine Engineering, Science & Technology (IMarEST) Pollution and Salvage Special Interest Group.

BP and U.S. authorities have said that cleanup efforts, though being scaled back, would continue.

Eleven rig workers were killed in the April 20 blast and the pollution that ravaged the Gulf Coast and killed birds and sea creatures also cost the job of BP Chief Executive Tony Hayward, who was widely criticized as seeming insensitive.

Armstrong said investors still needed to tread carefully.

“Before you get too carried away yet, you’ve got a massive unknown set of liabilities,” he said. The company, which faces an avalanche of economic damage lawsuits, has said it will pay all legitimate claims for as long as is necessary.

Transocean Ltd, which operated the destroyed rig, reassured investors that BP would bear most of the liability linked to the spill.

Government officials have said it could take years to fully repair the coastal damage from the spill.

More than 1 million barrels of oil remain in the Gulf, four times the 257,000 barrels that spilled into Alaska’s Prince William Sound from the Exxon Valdez tanker in 1989.

(Additional reporting by Tom Bergin and Cecilia Valente in London, Maggie Fox and Timothy Gardner in Washington, Scott Malone in Boston, Braden Reddall in San Francisco, Chris Baltimore in Houston, Writing by Pascal Fletcher; Editing by Eric Beech)

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