2ndUPDATE:BP Shares +6% As Coast Guard Says Gulf Leak Stopped
(Adds details on oil spill volume.)
By James Herron
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Shares in BP PLC (BP) rose sharply Thursday as U.S. Coast Guard Admiral Thad Allen, who is overseeing the disaster response in the Gulf of Mexico, said the company's "top kill" maneuver had successfully prevented oil and gas leaking from the well.
But the good news was tempered by the first official acknowledgment that the amount of oil that has been gushing from the well for over a month is much larger than initially estimated.
At 1509 GMT BP shares were up 5.8%, or 28 pence, at 520p in a broadly stronger market.
Allen told a New Orleans radio station that BP's "top kill" operation to plug the leak has "stopped the hydrocarbons from coming up," the well. However, he cautioned that the operation to seal the well permanently was not complete.
The key now, Allen said, is whether the heavy drilling mud BP is injecting into the well exerts enough sustained pressure for engineers to move forward with an operation to cement and seal the wellhead.
"The goal is to put enough mud down the well bore to the point where there is no pressure exerted back by the hydrocarbons and then allow a cement plug to be put in place," Allen told the radio station.
A BP spokeswoman said "operations are continuing," but declined to comment on Allen's statement.
Offsetting the positive news, a federal team created to study the flow officially put the leak rate at 12,000 barrels to 19,000 barrels per day, U.S. Geological Survey Director Marcia McNutt said Thursday. This compares with the previous official estimate of 5,000 barrels a day of oil.
The team also calculated the amount of oil on the surface as of May 17 to range between 130,000 and 270,000 barrels. A similar volume of oil had already been burned, skimmed or evaporated, McNutt said in a conference call.
This figure is crucial for BP, which could face a maximum civil penalty of $1,100 per barrel of oil spilled. This figure can rise to a maximum of $4,300 a barrel in cases where gross negligence is proven.
Oil has been leaking from BP's damaged Macondo well since an explosion that destroyed the Deepwater Horzion rig operated by Transocean Ltd. (RIG) on April 20. Oil has contaminated Louisiana beaches and marshes and killed wildlife.
fate is a cruel bitch sometimes.