BP defends CEO and eyes new option for plugging well

First Published:	22/07/2010 13:41:55
BP Plc defended its embattled chief executive on Wednesday and denied he would soon leave as the company prepared to launch within days a new approach to ending the worst oil spill in U.S. history. CEO Tony Hayward, criticized for a series of public relations gaffes and failed efforts to end the disaster, has the full support of the company's board and will remain in his job, a BP spokesman said. The spokesman dismissed a Times of London report that Hayward would step down within 10 weeks. In response to the spill, big oil companies including Exxon Mobil Corp and Royal Dutch Shell said they would spend $1 billion to develop a new spill containment system for the Gulf of Mexico. It will aim for water depths up to 10,000 feet and have an initial capacity to contain 100,000 barrels (4.2 million gallons/15.9 million liters) of oil per day. The failed BP well is a mile below the ocean surface. The environmental disaster caused by the April 20 oil rig explosion off the coast of Louisiana has devastated U.S. Gulf Coast tourism and fishing industries and dented President Barack Obama's approval ratings. BP capped the blown-out well last week, choking off the flow of oil for the first time since the explosion. U.S. officials have given BP permission for more pressure tests on the capped well to be reassured of its integrity. BP scientists are also preparing another option -- a "static kill" to help smother and plug the leak. That approach would involve pumping heavy drilling mud and possibly cement into the well, much like BP's failed "top kill" effort in May. The top U.S. spill official, retired Coast Guard Admiral Thad Allen, said that if he approves the plan, BP could begin that "static kill" operation by this weekend -- if bad weather does not force a delay. Officials are watching a northern Caribbean weather system that could move into the Gulf and force BP to delay its work by up to 10 to 14 days if all vessels must evacuate. "Any operations out there would have to be suspended whether it's containment or the relief well," Allen said of the potential storm. BP is drilling a relief well intended to intersect and plug the ruptured well next month. Gulf coast residents hard hit by the spill and hurricanes in the past hoped the weather would not turn stormy. "I hope the hurricane does not happen ... It would be another setback. For every step we take, we take two back," said Claudette Perrin, 70, who runs the local tourism office in the fishing village of Jean Lafitte, Louisiana. The relief well needs one last set of piping, or casing, cemented in place to hold it open before a drill bit can bore into the Macondo well near its bottom, 2.4 miles beneath the seabed, Allen said. "Once the casing is in place, the static kill can proceed by this weekend," Allen said. BP's market value has fallen around 39 percent since the oil began spewing into the Gulf, and the company worked on Tuesday to line up $7 billion in asset sales to help pay for the spill. BP STOCK RISES BP shares rose on Wednesday, buoyed by its sale of oil and gas properties in the United States, Canada and Egypt to U.S. company Apache Corp as part of a $10 billion asset-disposal plan. BP shares closed up 2.6 percent in New York and 3.2 percent in London. Bank of America Merrill Lynch, Citigroup, Goldman Sachs and JP Morgan are leading a $5 billion bridge loan backing Apache Corp's purchases in Texas, New Mexico and Egypt, three banking sources familiar with the deal said. "Such a material sale, achieved so quickly, should ease if not banish any lingering concerns about BP's liquidity position," JP Morgan said in a note, adding the terms of the deal looked robust and underlined the mismatch between what BP could get for its assets and its battered stock price. The spill sparked a wave of anger at BP among the American public and U.S. lawmakers, and Hayward's ouster has been the subject of speculation after a failure to quickly stem the flow of oil into the Gulf and a series of public relations gaffes that stoked public anger at BP. Hayward complained, for example, that he wanted his life back as the disaster unfolded, and attended a festive yacht race off the English coast while oil from the spill continued to pollute the U.S. coastline. He could face scrutiny again next week. A Senate panel is inviting him to testify at a hearing on the release of the Lockerbie bomber, a Senate source said. Senators want to learn whether BP influenced Scottish authorities' decision last year to release the Libyan man convicted of the 1988 airliner bombing. [nN21125442] HAYWARD SPECULATION There was a growing expectation that Hayward would announce his departure in late August or September, with Robert Dudley, chief of BP's Gulf Coast restoration efforts, seen as the front-runner to replace him, the Times said. But the BP spokesman said of Hayward: "He has full support from the board and will remain in place." The Times, citing a person close to the matter, said Hayward would have to leave so the British energy giant could protect itself against a potential buyout threat by Exxon Mobil or Royal Dutch Shell. Analysts have said a takeover by Exxon or any other oil company is unlikely because of U.S. regulatory hurdles. The company created a $20 billion fund to compensate victims of the disaster. Kenneth Feinberg, appointed by Obama to oversee the fund, told the House of Representatives Judiciary Committee he might be more generous with claims than a court would be. The states of New York and Ohio asked a federal judge to appoint them lead plaintiffs in spill-related class-action lawsuits against BP. In a court filing, the states said their BP investments had lost $181 million because of the company's alleged misleading of investors over the spill.
Source:  Reuters http://www.reuters.com

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