BP Spill Costs Reach $1.25B; Cap Effort Continues

(Dow Jones Newswires), June 7, 2010

BP Monday said the cost of its response to the Gulf of Mexico oil spill had reached $1.25 billion as it continued its attempts to contain more leaking crude.

BP last week placed a containment cap on its ruptured oil well. On Monday the oil major said a second containment system would be available for deployment in mid-June, potentially increasing the amount of oil and gas that can be captured.

On Sunday BP's containment cap collected 10,500 barrels of oil. From Thursday to Sunday, a total of 16,600 barrels of oil had been collected, the company said.

"Optimization continues and improvement in oil collection is expected over the next several days. It will be a few days before an assessment can be made as to the success of this containment effort," BP said in a statement.

Scientists led by the U.S. Geological Survey have estimated 12,000 to 19,000 barrels of oil a day, at a minimum, were gushing into the Gulf from the well.

The cap is the latest in a series of procedures attempted by BP to contain the leak sprung by the explosion and sinking of the Transocean drilling rig Deepwater Horizon, which BP was leasing. The April accident killed 11 workers.

BP hopes to enhance the system lowered over the well last week by using equipment initially developed for the failed "top kill."

A second planned addition--expected to be implemented in early July--is meant to provide a more permanent containment cap by directing the oil and gas to a new free-floating riser ending about 300 feet below sea level. A flexible hose then will be attached to a containment vessel.

"This long-term containment option is designed to permit more effective disconnection and reconnection of the riser to provide the greatest flexibility for operations during a hurricane," BP said.

Two relief wells currently being drilled are considered the best bet to plug the leak. Those wells are expected to be completed in August at the earliest.

Meanwhile, costs to stem the leak are mounting, though BP cautioned that it was too early to quantify total expenses and liabilities associated with the incident. The $1.25 billion figure excludes $360 million for a Louisiana barrier islands construction project, BP said.

Copyright (c) 2010 Dow Jones & Company, Inc.