BP says test shuts off oil leak from Gulf well

HOUSTON,  (Reuters) – BP Plc said yesterday it stopped the flow of oil into the Gulf of Mexico from its deep-sea well for the first time since it ruptured in  April, prompting hope that the leak can be plugged for good.

BP conducted a test in which it closed valves and vents on a tight-sealing containment cap installed atop its the well  earlier this week. BP said results early in the test showed the  cap had completely contained the flow of oil.

“It’s a great sight but it’s far from the finish line,” Doug Suttles, a senior BP executive, told reporters.

President Barack Obama, who has seen his U.S. public approval ratings drop as the crisis dragged on, called it a “positive sign” but noted that the latest effort was still in  the testing phase. BP’s huge oil spill has caused an economic  and environmental disaster along the U.S. Gulf Coast. The British energy giant’s U.S. shares initially jumped 10  percent on the news and posted strong gains for the day.

The Coast Guard said BP likely will release the flow of oil  again after the test is done — siphoning it to ships on the  ocean surface in an improved system able to handle up to 80,000  barrels a day until a relief well seals the well permanently.

As the company pushed ahead on the spill-control effort,  U.S. energy company Apache Corp <APA.N> was moving forward on a  possible $10 billion deal for some BP properties, including  major assets in Alaska, CNBC reported.

After a delay to fix a leak, BP began the test yesterday  afternoon on the cap that could stop all or most of the flow of  crude that has been polluting the ocean and coastline since  April 20 in the worst offshore oil spill in U.S. history.

The test, which could last up to 48 hours, gauges pressure  in the well — which extends 2.5 miles (4 km) under the seabed  — to assess its condition. Officials said it will show whether  the cap can safely shut off the flow from the well if  oil-capture vessels at the surface must disconnect.

The Coast Guard calls the containment cap at best a  temporary fix to the leak while BP finishes two relief wells it  is drilling. BP intends for a relief well to intersect the  blown-out well and permanently seal it next month.

The test is intended to determine whether the structure of  the lengthy well is damaged or intact. Retired Coast Guard  Admiral Thad Allen, the U.S. government’s point man on the  spill, compared the test to placing one’s thumb over the end of  a garden hose — if the pressure does not increase that means  there is a leak somewhere.

Regarding the BP well, a build-up of pressure would signal  that the well is intact, which would make it easier to seal it  with the relief wells.

The cap is a crucial step toward a multi-vessel oil-capture  system that is hurricane-ready and can collect up to 80,000  barrels per day.

That should be more than enough to capture the whole well  output, as estimates put the spill rate between 35,000 barrels  (1.47 million gallons/5.56 million liters) and 60,000 barrels  (2.5 million gallons/9.5 million liters) a day.

There appeared to be fresh hope in Gulf Coast communities  reeling from the spill. “It’s a great thing, it’s a wonderful  thing,” said Jerome DeGree in Larose, Louisiana when he heard  that BP had at least temporarily stopped the flow.

“This has been hurting this whole area,” the shallow-water  oil driller said. “I couldn’t buy my shrimp, I couldn’t buy my  oysters, I couldn’t take my boat out.”

BP STOCK

Reports that Apache was seeking $6 billion to $7 billion  for the purchase helped boost BP’s U.S. shares from midday. The  shares then rose further on the initial test results and ended  up 7.6 percent at $38.92.

“It’s been one of those headline things we’ve heard for 87  days, lots of people waiting for some good news,” said John  Massey, portfolio manager at Sunamerica Asset Management in  Jersey City, New Jersey.

Analysts surveyed by Reuters Insider predict that BP will  spend between $63 billion to $100 billion over the next 15  years in fines, cleanup costs and legal costs.

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