BP's Relief Well to Halt Oil Spill Will Cost $100MM

As part of the company's well intervention efforts to shut off an oil leak at the Macondo well site in the U.S. Gulf of Mexico, operator BP will drill a relief well that is estimated to cost approximately $100 million, the company's chief executive confirmed Tuesday.

Operating alongside the U.S. Coast Guard and the Minerals Management Service, BP has launched a comprehensive, pre-approved oil spill response plan following the April 22 sinking of Transocean's Deepwater Horizon semisub, roughly 130 miles southeast of New Orleans in almost 5,000 ft. of water.

Additionally, BP is pursuing other options to halt the oil leak, which includes the use of ROVs to activate the blowout preventer and the construction of a canopy over the pipeline connected to the well that would gather the 1,000 bbls/day of oil that is leaking at the source.

"The safety of the people working offshore is our top priority and the improved weather has created better conditions for our response," said BP Group Chief Executive Tony Hayward. "This, combined with the light, thin oil we are dealing with has further increased our confidence that we can tackle this spill offshore."

According to National Oceanic and Atmospheric Administration (NOAA) experts participating in the spill response, the spill is "very thin" and consists of 97 percent sheen, BP said in a statement Tuesday.

BP will soon commence drilling operations on the first relief well using Transocean's Development Driller III, which arrived on the scene late Monday. The relief well could potentially take up to three months to drill, Hayward said. BP will also drill a second relief well using Transocean's Discoverer Enterprise drillship, which is en route to Mississippi Canyon Block 252. Both relief wells will permanently secure the Macondo exploration well. 

Macondo Prospect

On location in Mississippi Canyon Block 252 in the Gulf of Mexico, the Deepwater Horizon recently concluded exploration drilling on the Macondo prospect. According to the Minerals Management Service, BP filed a permit to temporarily abandon the well, on which the Deepwater Horizon commenced drilling in February 2010. With a proposed depth of 20,000 ft, the exploration well was drilled to just over 18,000 ft.

Deepwater Horizon

According to RigLogix, the Deepwater Horizon, an RBS-8D-designed dynamically-positioned semisub, was rated to work in water depths up to 10,000' and with a rated drilling depth capacity of 30,000'. The rig was under long-term contract to BP through September 2013 with a current dayrate in the low-$500s. The Deepwater Horizon was built in Ulsan, South Korea by Hyundai Heavy Industries at a cost of approximately $365 million and entered service in 2001.