Hurricane Alex Disrupts GOM Oil Cleanup

NEW ORLEANS(Dow Jones Newswires), July 1, 2010

Choppy seas and high winds from Hurricane Alex were expected to disrupt Gulf of Mexico oil spill cleanup operations again Thursday, with large waves sweeping the oil slick into fragile marshes.

Hurricane Alex, the first of the Atlantic season, hit northeastern Mexico with torrential rain and violent winds late Wednesday as a Category 2 storm.

Alex struck land far from the area worst hit by the massive BP oil spill--the coasts of Louisiana, Mississippi, Alabama and Florida--but forecasters said that booming and skimming operations would again be canceled due to rough seas whipped up by the storm.

"The big focus of our operations right now would be on water skimming, trying to deal with the oil off shore as much as we can," said Coast Guard Adm. Thad Allen, the U.S. point man on the cleanup effort.

However, the forecast Thursday called for waves six feet (two meters) or higher--too rough for skimming or even burning the oil in place, Allen told reporters Wednesday.

The NHC said at 0900 GMT Thursday that Alex's winds extended outward up to 25 miles (35 kilometers) from the eye, and tropical storm force winds extended out to 205 miles, well into Texas.

Efforts to permanently plug the leak by drilling relief wells were unaffected, and two containment ships were still capturing the oil at a rate of about 25,000 barrels per day despite seven-foot swells.

The rough seas delayed the deployment of a third vessel, the Helix Producer, aimed at doubling the amount of crude being contained. According to BP, the new system should be operational on July 7 or 8.

An estimated 35,000 to 60,000 barrels of oil a day has been gushing out of the ruptured well since the Deepwater Horizon drilling rig sank on April 22 some 50 miles off the coast of Louisiana.

About 423 miles of U.S. shorelines have now been oiled as crude gushes into the sea, 10 weeks into the one of the worst environmental disasters in U.S. history.

Animal welfare groups meanwhile sued BP for burning endangered sea turtles and asked a federal court to halt the "controlled burns."

"It is horrifying that these innocent creatures whose habitat has already been devastated by the oil spill are now being burned alive," Animal Welfare Institute or AWI President Cathy Liss told the court in Louisiana.

The lawsuit said BP was violating the Endangered Species Act and other laws with the controlled burns in the Gulf.

"Endangered sea turtles, including the Kemp's Ridley, one of the rarest sea turtles on Earth, are caught in the gathered oil and unable to escape when the oil is set ablaze," the animal welfare groups said.

U.S. President Barack Obama on Wednesday ordered a plan to "restore the unique beauty and bounty" of the Gulf coast to be developed.

The Long-Term Gulf Restoration Support Plan aims to "ensure economic recovery, community planning, science-based restoration of the ecosystem and environment, public health and safety efforts, and support of individuals and businesses who suffered losses due to the spill," a White House memo said.

U.S. lawyer Kenneth Feinberg, whom Obama named to administer BP's $20 billion claims fund, insisted BP would "pay every eligible claim," but cautioned that many perceived damages might not qualify.

"I use that famous example of a restaurant in Boston that says, 'I can't get shrimp from Louisiana, and my menu suffers and my business is off,'" Feinberg told the House of Representatives Committee on Small Business on Wednesday.

"Well, no law is going to recognize that claim."

Feinberg said he was still sorting out how to deal with indirect claims like hotels that lose bookings because tourists think the beaches are covered in oil, or people who see their property values decline but live several blocks away from an oiled beach.

"There's no question that the property value has diminished as a result of the spill. That doesn't mean that every property is entitled to compensation," he said.

"There's not enough money in the world to pay everybody who'd like to have money," he said.

Feinberg, who headed a compensation fund for victims of the Sept. 11 attacks, assured lawmakers the fund would be "totally independent," and said BP had agreed to top up the escrow account as needed to meet proper claims.

The U.K. energy giant has already disbursed more than $130 million in emergency payments to fishermen and others affected by the slick. Feinberg said lump sum payments would be offered to claimants once the true extent of the damage is assessed.

"It sure would help if the oil would stop," he told the committee.

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