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BP Prepares for Final Drilling Phase

NEWS
BP Prepares for Final Drilling Phase

Monday, August 9, 2010

BP today advanced on what it hopes is the final lap towards permanently killing the source of the world’s worst offshore oil spill and kicked off a $20 billion compensation fund with a first $3 billion deposit.

A relief well being drilled by BP is on track to start this week to provide a definitive “bottom kill” shutdown of the crippled Gulf of Mexico well, unless an approaching weather system disrupts the timing, the top U.S. oil spill response chief said.

The biggest environmental response operation ever launched in the United States passed a critical milestone last week by subduing the blown-out deep-water well with injections of heavy drilling mud, followed by a cement seal.

BP’s Macondo well, 1 mile down in the Gulf of Mexico, had been provisionally capped on July 15th after spewing an estimated 4.9 million barrels of oil into the Gulf, soiling marshlands, fisheries and tourist beaches along several hundreds of miles of the Gulf Coast.

But the relief well is regarded as the final solution to plug the well 2.5 miles beneath the seabed.

“They are closing in on the last 30-40 feet . . . it’s ongoing and going in segments,” response chief retired Coast Guard admiral Thad Allen said in an update on the relief well. “We expect that sometime before the end of the week we will be able to . . . commence the kill,” he told a conference call.
As the deep-water engineering operation progressed, BP said it was also moving to fulfill its public commitments to compensate for economic damage caused by the spill.

Mr. Allen said the spill response authorities were closely watching a tropical weather system moving east over the Florida peninsula, which forecasters see crossing in a few days near BP’s Deepwater Horizon spill site.

He said that depending on its strength and direction, this system could affect the timing of the relief well “bottom kill” operation. Forecasters were giving this disturbance a 30 percent chance of strengthening into a tropical cyclone.

Elsewhere, BP said it had made an initial deposit of $3 billion into a $20 billion escrow fund.

The chief executive of BP’s Gulf Coast Restoration Organization, Bob Dudley, said the $3 billion initial contribution to the escrow fund was intended to back up the company’s repeated pledge to “make good” economic losses caused by the spill to Gulf Coast fishermen, tourism operators and home owners.

“Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast,” Mr. Dudley said in a statement.

The U.S. Justice Department confirmed the contribution, saying it had completed negotiations with BP on the fund.
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