BP cuts ruptured oil pipe, hopes to collect oil soon

VENICE, La., (Reuters) – BP  inched ahead yesterday with a painstaking attempt to cap its ruptured oil  well in the Gulf of Mexico and to safely siphon off some of the  billowing crude in a high-stakes bid to curtail the 45-day-old  deep-sea gusher.

The British energy giant’s robot submarines sheared away  the oil-spewing well pipe after two days of trying, then began  working to lower a containment cap over the jagged hole left on  top of the crippled wellhead assembly resting on the seabed.

Despite the initial success in its latest effort to curb  the flowing crude, BP’s financial outlook was further clouded  as two credit-rating agencies downgraded the company’s debt,  reflecting assessments that BP faces lasting damage.

Hours later, the Obama administration said it had sent a  preliminary bill for $69 million to BP and “other responsible  parties” to cover oil spill costs.

The U.S. disaster response chief, Coast Guard Admiral Thad  Allen, said BP hoped to begin by late yesterday bringing at  least some of the escaping oil and gas to the surface, where it  would be collected on ships and safely removed.

BP chief executive Tony Hayward said the next 12 to 24  hours would determine whether the capping operation will  succeed.

“It’s an important milestone,” Hayward said in Houston,  adding, “This is simply the beginning.”

It was the first glimmer of hope for BP after many futile  attempts to contain an oil leak that is belching 19,000 barrels  of oil per day into the Gulf of Mexico. Allen called the day’s  developments a “significant step forward.”

BP does not expect to be able to fully halt the oil flow  until August, when two relief wells are due for completion.

President Barack Obama, seeking to contain political  fallout from the disaster, planned to visit the Louisiana Gulf  coast again on Friday to view what has eclipsed the 1989 Exxon  Valdez disaster as the worst oil spill in U.S. history.

Obama told CNN’s “Larry King Live” broadcast last night that he is “furious at this entire situation” in the Gulf  because “somebody didn’t think through the consequences of  their actions.” Obama said he has not seen enough of a rapid  response from BP.

He also cited research suggesting that a powerful hurricane  could help break up the far-flung oil slick, and that a smaller  tropical storm could be worse for the spill because it might  leave the slick more intact while washing it further inland.

The U.S. National Center for Atmospheric Research projected  that the oil slick would be driven by wind and currents around  the Florida peninsula by early summer and up the East Coast,  possibly as far as North Carolina.

The Coast Guard said late yesterday that oil spill  investigators were responding to renewed reports of tar balls  and other oily debris near several islands in the Florida Keys,  which extend from the southern tip of the Florida peninsula.

But the substances will be tested to see if they originated  from the Gulf spill. Tar balls previously found in the Keys  were determined to be unrelated to the blowout.

Ratings agencies Moody’s and Fitch Ratings downgraded BP’s  credit ratings yesterday and said they might cut them further  on rising concerns over clean-up and legal costs.

Fitch, which in May admitted it had been wrong to assume  that the impact of the spill on BP’s finances would be eased by  insurance, said clean-up costs could exceed its worst-case  scenario of around $5 billion in any one year.

Shares in BP, which are traded in London and New York, had  a roller-coaster day but eventually jumped in New York by 4  about percent.

Elsewhere in the sector, shares of Halliburton Co. were  down about 0.4 percent and Cameron International dropped 0.7  percent in late trading.