BP Leak Covered, But... What's Next?

NEW ORLEANS (AP) - The vast oil reservoir beneath BP's blown-out
well could still be worth billions of dollars even after it spewed
crude into the Gulf of Mexico for more than three months - but the
multinational company blamed for causing the disaster isn't saying
whether it plans to cash in on this potential windfall.

As BP on Thursday finished pumping cement into the blown well in
hopes of sealing it for good, it insisted it had no plans to use it
or its two relief wells to produce oil. But the company won't
comment on the possibility of drilling in the same block of sea
floor someday or selling the rights to the entire tract to another
oil company.

None of this is likely to sit well with the people who lost
their livelihoods from one of history's worst oil spills - and who
might find it distasteful for a company with revenues of $147
billion in the first half of 2010 even to consider revisiting the
scene of April's fatal rig explosion as a profit source.

Linda Kaye Randolph, 54, a real estate investor who grew up on
the coast in Pass Christian, Miss., said Thursday it disturbs her
that anyone might use the site commercially.

"People died out there on that rig," she said, her voice
cracking. "It isn't about the money. It would bother me that
they're not respecting the people who died there. There's thousands
of other wells. They can find another place. Leave that one
alone."

One question is whether a relief well BP is drilling to plug the
well for good, and its backup, could one day be used for
production.

In recent days, the company has hinted it might not be necessary
to pump mud and cement through the relief well, especially after
news this week that a preliminary step - pumping the same filler
into the top of the broken well - appeared to be working on its
own.

Since sending filler into the runaway well via the relief hole
would render it useless and unprofitable in the future, BP's
apparent reluctance to do so raises suspicions it might be thinking
about using the site later for commercial purposes, and BP isn't
talking.

"I can't speculate on what the future might bring," spokesman
Daren Beaudo said Thursday evening. "We're focused on the
response."

BP has not been approached by any other company about buying the
relief wells, spokesman Scott Dean said.

But with the company and its partners facing tens of billions of
dollars in liabilities, the incentive to exploit the wells and the
reservoir could grow.

Outgoing BP Chief Executive Tony Hayward said in June that the
reservoir feeding the busted well was believed to hold about 2.1
billion gallons of oil. Roughly 200 million gallons have leaked
out, leaving about 1.9 billion gallons, or about 45,238,000
barrels. At the current market price per barrel - $82 - that would
make the reservoir still worth $3.7 billion.

The method of plugging the well could help determine how easily
the reservoir can be tapped in the future.

In a procedure dubbed "static kill," crews this week pumped
mud down the blown-out wellhead and forced the rogue crude back
down into the reservoir for the first time since the Deepwater
Horizon rig exploded off Louisiana, killing 11 workers. On
Thursday, they finished pumping cement down the well to seal off
the oil at the source.

The next step will involve completing the relief well, which is
now only about 100 feet from intersecting the busted well just
above where it touches the reservoir.

For months, BP and government officials have said the plan was
to pump mud and cement down the relief well - or a backup one also
near completion - and stop the flow oil from the bottom, ensuring a
tight seal.

BP is now saying only that the relief wells will be used in some
fashion, while retired Adm. Thad Allen, who's overseeing the
response for the government, continued to insist the relief wells
will be completed on schedule in a procedure known as the "bottom
kill."

"The well will not be killed until we do the bottom kill and do
whatever needs to be done," Allen said Thursday, responding to
reports of differences between BP and the government over the
issue. "I am the national incident commander and I issue the
orders. This will not be done until we do the bottom kill."

Company scientists are debating different strategies on how to
use the primary relief well, BP Senior Vice President Kent Wells
said Wednesday, without elaborating.

"I wouldn't put it government versus BP," he said. "This is
just about some really smart people debating about what's the best
way to do things."

Even if BP abandons the idea of using the three wells to bring
up oil again, it still has access to a roughly 3-by-3-mile block of
sea floor that could contain multiple reservoirs, "so there is a
lot more potential" for oil production, said George Hirasaki, a
Rice University professor in chemical and biomolecular engineering
an expert on oil containment.

Industry analyst Fadel Gheit of Oppenheimer & Co. said it was
unlikely that BP would subject itself to an outcry by producing at
the site. But that, he said, doesn't apply to others.

"There are people that would pay top dollar for any reservoir
that produces 50,000 barrels of oil a day," Gheit said.

Anadarko, which is based in The Woodlands, Texas, has a minority
stake in the busted well. An Anadarko spokesman declined to say
Thursday whether the company would consider selling its rights to
it.

BP's priorities appear to have changed completely over the past
90 days, Gheit said.

"It is like bringing a blank sheet of paper and rewriting
everything you know," he said. "They don't know the assets that
will stay, what assets will go, what fines will be assessed on
them, how much they will be paying and for how long, and whether
they will be able to hold onto these leases as part of the
government punishment."

Melissa Schwartz, spokeswoman for the Bureau of Ocean Energy
Management, Regulation and Enforcement, which oversees offshore
drilling, said her agency was not aware of any plans by BP to
produce hydrocarbons at the blown-out well or to sell the lease to
another company. The energy bureau would have to approve the
assignment of the lease if it were sold or if a permit for drilling
was requested.

Asked if the energy bureau would approve production on the lease
after the well is plugged and the disaster cleaned up, Schwartz
said it was "too early to make a determination until a thorough
investigation has been completed."


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