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For BP, a $3 billion start as end is in sight

BP, the government and an army of volunteers are fighting to contain and clean the millions of gallons of oil spewing from the site of the Deepwater Horizon explosion in the Gulf of Mexico.

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By Pascal Fletcher and Anna Driver
Tuesday, August 10, 2010

MIAMI -- BP advanced on the final lap toward permanently killing the source of the world's worst offshore oil spill and kicked off a $20 billion compensation fund with a $3 billion deposit Monday.

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A relief well being drilled by BP is on track to start a definitive "bottom kill" shutdown of the crippled Gulf of Mexico well this week, unless an approaching weather system disrupts the timing, the top U.S oil spill response official said.

Optimism has grown since the biggest U.S. environmental cleanup operation ever launched passed a critical milestone last week by subduing the blown-out deepwater well with injections of heavy drilling mud, followed by a cement seal.

"Thankfully, because of the incredibly hard work by people from all across government, we are now finally able to say that the well is contained and we can get a permanent kill of that well over the next couple of weeks," President Obama said at a Democratic fundraiser in Austin.

BP's Macondo well, a mile below the surface of the Gulf of Mexico, was provisionally capped on July 15 after spewing an estimated 4.9 million barrels of oil into the gulf, polluting marshlands, fisheries and tourist beaches along several hundreds of miles of the Gulf Coast.

Officials say no more oil has leaked from the site since then, but the relief well is regarded as the final solution to plug the well 13,000 feet beneath the seabed.

"They are closing in on the last 30-40 feet. . . . We expect that sometime before the end of the week we will be able to . . . commence the kill," the U.S. oil response chief, retired Coast Guard Adm. Thad Allen, said in a conference call.

As the deepwater engineering operation progressed, BP said it was also moving to fulfill its public commitments to compensate for economic damage caused by the spill. The company said it had made a deposit of $3 billion into a $20 billion escrow fund.

Allen said spill response authorities were closely watching a tropical weather system moving into the southeast Gulf of Mexico, which forecasters say could cross near BP's Deepwater Horizon spill site in a few days. He said that depending on its strength and direction, this system could affect the timing of the relief well "bottom kill" operation. Forecasters were giving this disturbance a medium chance of strengthening into a tropical cyclone.

The CEO of BP's Gulf Coast Restoration Organization, Bob Dudley, said the $3 billion initial contribution to the escrow fund was intended to back up the company's pledge to "make good" economic losses caused by the spill to Gulf Coast fishermen, tourism operators and homeowners.

"Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast," Dudley said in a statement.

BP, whose image has been pummeled by the disaster, has also said it would sell about $30 billion in assets.

-- Reuters

Driver reported from Houston.

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