MNN - Mother Nature Network

 

The British oil major and U.S. authorities postponed a critical test on Tuesday to determine if a new cap can successfully stem the flow of oil that has killed wildlife and hammered local businesses for nearly three months.

 

Officials said they planned to run more analysis on the cap before trying to close the wellhead after a previous effort to halt the worst offshore spill in U.S. history — the complex "top kill" maneuver — ended in failure about six weeks ago.

 

"BP don't want to mess it up. It's better to be safe than sorry, they've already learnt that," said analyst Peter Hitchens at Panmure Gordon in London.

 

"The last thing you want to do is try to start capping it and find out you're causing damage to the well and the whole containment system gets broken down."

 

In response, shares in BP shed 1.6 percent to 404 pence in London, with investors likely cashing in profits ahead of further news on the new cap, Hitchens said.

 

Volumes were light, however, with nearly 30 million shares changed hands by midday, compared with a daily average of 112 million shares in the past 30 days, according to Reuters data.

 

"If we come in and we find out the containment cap works, expect the shares to rally further. I think there's plenty more upside from here," said the analyst, who has a "buy" rating and a 600-pence 12-month price target.

 

BP stock, at Tuesday's peak, had risen about 40 percent since touching a low in late June. At its low, the firm had lost more than half its market value, with some investors wondering if BP might even go out of business.

 

The tests, which could mark a turning point in the massive environmental disaster, were due to last between six and 48 hours and had been scheduled for late Tuesday. Neither the coast guard nor BP gave any indication when the tests might now begin.

 

"We decided that the process may benefit from additional analysis that will be performed tonight and tomorrow," retired Coast Guard Admiral Thad Allen, who is overseeing the U.S. response to the spill, said in a statement on Tuesday.

 

Another vote of confidence in BP's future came from British Foreign Secretary William Hague, who said it had a healthy future as a stand-alone company.

 

Hague made the comments during a visit to Beijing while responding to speculation that China may buy assets from BP.

 

"We haven't had that raised in these talks. Our position is BP has got to do what it's doing in the Gulf of Mexico, but it's still in a strong position as an independent company. I've not had any approach from China to do with BP at all."

 

Rumors have swirled recently about BP's plan to sell $10 billion in non-core, upstream assets to help fund clean-up costs.

 

The group announced one small downstream divestment on Tuesday, but it had been planned before the spill and was not part of the current asset sales programme.

 

BP sold Magellan Midstream Partners L.P. its crude oil storage tanks in Cushing, Oklahoma and related petroleum pipelines for $289 million.

 

If tests progress as hoped, BP said no oil would flow from the well for the first time since a rig being drilled for BP by Transocean Ltd sank days after the explosion on April 20 that killed 11 workers.

 

During the tests, two smaller siphoning systems, including one brought online on Monday, will be turned off. But BP warned the outcome was uncertain since the system has never been tested at such depths.

 

If the cap, which was put in place on Monday, was not sealed, BP intends to contain the whole of the oil flow by mid-July by siphoning it off through pipes to ships at the surface, Allen said.

 

BP's leaking wellhead is a mile underwater. The new 160,000-pound capping stack installed on Monday was custom-designed and built for the leaking well.

 

The only proven way to permanently kill the leak lies in the drilling of relief wells to intercept the ruptured one. The first of two such wells started in May is expected to intercept it by the end of July and plug it with drilling mud and cement by mid-August.

 

U.S. Interior Secretary Ken Salazar said in a memorandum that problems were identified "in recent weeks" with blowout preventers on BP's relief wells.

 

The blowout preventers passed new tests after the problems were fixed, said Nicholas Pardi, a spokesman for the Bureau of Ocean Energy Management, Regulation and Enforcement.

 

A massive operation is underway to capture the oil at sea, prevent it from washing onto the coast and to clean up beaches, marshes and bayous already affected.

 

On the watery bayou near Myrtle Grove, Louisiana, Emile Trudeau, 69, gazed at the water outside his camp, where faint traces of oil could be seen in standing water.

 

"I'm hoping that's going to fix it," he said of the new cap. "They don't realize how much hurt they put on us. Everybody's got trouble now."

 

(Additional reporting by Ayesha Rascoe in New Orleans, Alexandria Sage in Myrtle Grove, Louisiana, Matthew Lynley in New York, Chris Baltimore and Anna Driver in Houston, Dominic Lau in London and Ben Blanchard in Beijing; Writing by Eric Onstad and Ed Stoddard; Editing by David Storey and Simon Jessop)