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BP Says 'Desired Outcome' Reached in Static Kill

Sylvia Pfeifer and Michael Peel, Financial Times

BP on Wednesday said its “static kill” operation to stem the leak at its Macondo well in the Gulf of Mexico appeared to have succeeded, a step the UK energy group described as a “significant milestone”.

Booms laid for protection at Breton National Wildlife Refuge, near Venice, LA.

The “static kill” – which involved pumping heavy drilling “mud” from the top of the well slowly down, pushing the oil back down into the reservoir – began on Tuesday and was stopped after about eight hours of pumping, BP said in a statement.

The news came as it emerged that BP faces penalties of more than $20 billion for the Gulf of Mexico oil spill under the US Clean Water Act if the UK group is found liable for gross negligence, based on the latest estimates of the leak’s size.

US government scientists estimate that 4.9 million barrels of oil have gushed from the Macondo well since it ruptured on April 20, killing 11 workers. The new estimates, which confirm the leak as the largest accident of its kind, will be a part of the calculation for any potential BP fines under the act, an official at the Department of Energy said last night.

Fines range from $1,100 a barrel spilt to as high as $4,300 a barrel if gross negligence is proved. BP could therefore face a total fine of $21 billion. If the company is able to argue that the 800,000 barrels it managed to contain should be excluded, that figure drops to $17.6 billion.

Jane Barrett, director of the Environmental Law Clinic at the University of Maryland School of Law, said that while penalties in a case of this magnitude would normally be the subject of a settlement there was a wide range of large potential fines the authorities could try to impose on the companies involved.

She said: “Given the political and economic ramifications of this spill, the loss of life and extensive damage to the Gulf ecosystem, the government is going to seek the highest fine possible.”

BP has insisted it can rebut the charge of gross negligence.

The company said last week that it had made a $32.2 billion provision in its second-quarter results for the costs of cleaning up the spill and compensation, although it warned that this might not cover all the costs it faced.

BP’s calculation for penalties under the act was based on its belief that it had not been grossly negligent.

On Tuesday it said it saw “no reason to change the provision” in light of the new spill estimates.

Government scientists said that the estimates were accurate to within 10 percent. At its peak the well was spewing out 62,000 barrels of oil a day, dropping to 53,000 a day by the end. Before the announcement, federal teams had estimated the spill in a range from 35,000 to 60,000 barrels a day – against initial estimates of 1,000 barrels a day.

The new estimates came as BP announced that it had agreed to sell its Colombian assets to a consortium of Canada’s Talisman Energy and Colombia’s state-run Ecopetrol for $1.9 billion.