BP puts containment cap on gushing Gulf well pipe

After failing days ago to plug the well, BP Plc managed to shear away the gushing well pipe a mile (1.6 km) below the ocean surface, then lowered a containment cap over the jagged hole left atop the crippled wellhead assembly in its latest bid to curtail the oil flow.

Pressure is building on BP to suspend dividend payments, which total $10.5bn a year, and divert cash to dealing with the spill and clean-up.

Two Democratic US senators have called on BP to suspend shareholder dividends until the full cost of the cleanup is known. London-based investment bank Evolution Securities said in a research note, “We believe BP will bow to political pressure in the US and suspend dividend payments for the remainder of 2010.”

The placement of the cylindrical containment cap was confirmed by the US disaster response chief, Coast Guard Admiral Thad Allen, in a statement describing the move as a “positive development” but “only a temporary and partial fix.”

“It will be some time before we can confirm that this method will work and to what extent it will mitigate the release of oil into the environment,” Allen said.

Once the containment cap is firmly in place over the wellhead, the plan is to start funneling at least some of the escaping oil and gas into a large hose that would carry it from the bottom of the Gulf of Mexico to the surface, where it would be collected in ships and safely removed.

Confronting one of the biggest tests of his presidency as his party girds for tough congressional elections in November, Obama called off a trip to Australia and Indonesia set for this month to focus more on the oil spill and other matters.

The White House said in a statement that Obama spoke to Australian Prime Minister Kevin Rudd and Indonesian President Susilo Bambang Yudhoyono to inform them of his decision. The trip had been scheduled for June 13-19.

Crude oil has been pouring unchecked into the Gulf of Mexico at up to 19,000 barrels (800,000 gallons/3 million litres) a day since an explosion April 20 that demolished a BP-contracted drilling platform off the coast of Louisiana, killing 11 crewmen and unleashing an environmental disaster of epic proportions.

Business model
BP CEO Hayward wrote in a column published in the Wall Street Journal that the latest approach “should enable us to contain and collect the majority of the oil and gas flowing from the well.”

Hayward added that he expected to have the new containment system in place “in the next few days.” He also suggested that the oil industry “evaluate its business model,” noting that production companies have for decades “relied on outsourcing work to specialised contractors.”

Such was the case with the doomed Deepwater Horizon exploration rig, which was owned by Transocean Ltd, while Halliburton Co was working to seal the well when the blowout occurred.

The company’s latest bid to curb its undersea gusher offers the most immediate hope of gaining control over the worst oil spill in US history. But BP has said it does not expect to be able to fully halt the oil flow until August, when two relief wells are due for completion.

A live video feed of BP’s underwater robots working at the blowout site showed dark clouds of material belching from around the containment cap.

With television news footage increasingly filled with images of toxic black goo lapping into fragile marshlands and coating sea birds, Obama has come under growing political pressure to take more decisive action on the crisis.

Obama’s trip to the Gulf Coast, his third to the region since the rig explosion, will include discussions with “real people,” including residents and business owners affected by the calamity, the White House said.

“His attention needs to be here,” said Windsor Semexant, a New Orleans church pastor visiting a BP office in Venice, Louisiana to seek cleanup work for members of his congregation. “The whole world is watching the oil spill.”

Louisiana is the state hardest hit so far by oil, although the spill also has fouled beaches in Mississippi and Alabama. Government fishing restrictions across much of the region have idled many thousands of fisherman, shrimpers and other seafood workers. Tourism also has suffered.

Birds coated in oil
In a vivid sign of the spill’s impact on wildlife, oil driven ashore by strong winds tarred an island nesting site for brown pelicans in Louisiana’s seafood-rich but ecologically fragile Barataria Bay.

Wildlife officials said 60 birds at the Queen Bess Island Pelican Rookery, including 41 pelicans, were found coated in oil before being caught and taken to a rehabilitation centre.

The brown pelican, Louisiana’s state bird, was removed from the federal endangered species list last year. A bird that feeds by plunge-diving for fish in the open surf, the brown pelican has been among the hardest hit birds by the spill.

Government forecasters said part of the far-flung oil sheen had crept within 6 miles (10 km) of Florida’s Gulf Coast panhandle and could reach the white, sandy shores in days.

The US National Centre for Atmospheric Research projected that the oil slick would be driven by wind and currents around the Florida peninsula by early summer and up the East Coast, possibly as far as North Carolina.