BP stock tumbles as feds announce oil-spill probes

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Work on new attempt to stop gusher begins

BP's stock plummeted and took much of the market down with it Tuesday as the federal government announced criminal and civil investigations into the Gulf of Mexico oil spill.

BP engineers, meanwhile, tried to recover from a failed attempt to stop the gusher with an effort that will initially make the leak worse.

Memorial crosses symbolizing what is lost due to the Deepwater Horizon oil rig explosion and oil spill stand in the front yard of a house in Grand Isle, La., Tuesday. Photo by The Associated Press

New Orleans -

BP's stock plummeted and took much of the market down with it Tuesday as the federal government announced criminal and civil investigations into the Gulf of Mexico oil spill.

BP engineers, meanwhile, tried to recover from a failed attempt to stop the gusher with an effort that will initially make the leak worse.

Attorney General Eric Holder, who was visiting the Gulf to survey the fragile coastline and meet with state and federal prosecutors, would not say who might be targeted in the probes into the largest oil spill in U.S. history.

"We will closely examine the actions of those involved in the spill. If we find evidence of illegal behaviour, we will be extremely forceful in our response," Holder said in New Orleans.

BP's stock nose-dived Tuesday, losing nearly 15 per cent of its value on the first trading day since the previous best option - the so-called "top kill" - failed and was aborted at the government's direction.

After six weeks of failures to block the well or divert the oil, BP was using robotic machines to carve into the twisted appendages of the crippled well. The latest attempt involved using tools resembling an oversized deli slicer and garden shears to break away the broken riser pipe so engineers can then position a cap over the well's opening.

Even if it succeeds, it will temporarily increase the flow of an already massive leak by 20 per cent - at least 380,000 litres more a day. And it is far from certain BP will be able to cap a well that one expert compared to an out-of-control fire hydrant.

"It is an engineer's nightmare," said Ed Overton, a Louisiana State University professor of environmental sciences. "They're trying to fit a 21-inch cap over a 20-inch pipe a mile away. That's just horrendously hard to do. It's not like you and I standing on the ground pushing - they're using little robots to do this."

The operation has never been performed in such deep water, and is similar to an earlier failed attempt that used a larger cap that quickly froze up. BP PLC officials said they were applying lessons learned from the earlier effort.

"If all goes as planned, within about 24 hours we could have this contained," BP's Doug Suttles said Tuesday after touring a temporary housing facility set up for cleanup workers in Grand Isle, Louisiana. "But we can't guarantee success."

Since the Deepwater Horizon rig exploded April 20, killing 11 workers and eventually collapsing into the Gulf of Mexico, an estimated 75 million to 150 million litres of oil has spewed, eclipsing the 41.6 million litres that leaked from the Exxon Valdez.

Oil has fouled many fishing areas and miles of ecologically sensitive coastline. Mississippi Gov. Haley Barbour said oil from the spill was found in his state for the first time, on a barrier island, and newly expanded federal restrictions mean that nearly a third of federal waters are closed to fishing.

Meanwhile, an oil sheen was confirmed about 14.5 kilometres off the Florida coast, and officials said it could hit the white sands of Pensacola Beach as soon as today. Escambia County officials started putting out boom Tuesday and making other plans for the arrival of the oil.

U.S. President Barack Obama on Tuesday ordered the co-chairmen of an independent commission investigating the spill to thoroughly examine the disaster, "to follow the facts wherever they lead, without fear or favour." The commission is led by Bob Graham, a former Florida governor and U.S. senator, and William K. Reilly, a former head of the Environmental Protection Agency.

Holder said the laws under review for the criminal and civil probes include the Clean Water Act, the Oil Pollution Act of 1990, the Migratory Bird Treaty Act and the Endangered Species Act. He said the government would pursue criminal charges "if warranted," a caveat he did not include for civil action.

"We will ensure that every cent, every cent of taxpayer money, will be repaid and that damage to the environment and wildlife will be reimbursed," he said.

Washington lawyer Stan Brand said two likely criminal law theories the Justice Department would pursue are false statements to the Interior Department's Minerals Management Service and obstruction by failing to produce evidence to investigators.

But Brand and longtime Washington lawyer Stephen Ryan, a former federal prosecutor and ex-congressional investigator, predicted it will be difficult to prove criminality.

"Bad business judgment isn't a crime," said Ryan.

BP is part owner of the blown well. Other companies involved include rig operator Transocean; oil services company Halliburton, which handled the cementing of the well; and Cameron Inc., which made the blowout preventer that apparently failed.

BP engineers began putting underwater robots and equipment in place this week after an attempt to plug the well by force-feeding it heavy mud and cement - called a "top kill" - was aborted over the weekend. Crews pumped thousands of gallons of the mud into the well but were unable to overcome the pressure of the oil.

The next plan has BP engineers placing a cap-like containment valve over the well. Not all the gushing oil will be captured through the "cut and cap" method, but the company said it could siphon most of the crude to a vessel on the surface.

Experts warned this effort to siphon the oil could be riskier than earlier attempts because slicing open the 51-centimetre riser could unleash more oil if there is a kink in the pipe.

BP's best chance to actually plug the leak rests with a pair of relief wells that likely won't be completed until August.

Organizations: BP, Louisiana State University, Exxon Valdez Environmental Protection Agency Justice Department Interior Department Minerals Management Service Halliburton Cameron

Geographic location: U.S., New Orleans, Gulf of Mexico Florida Grand Isle Louisiana Washington Mississippi Pensacola Beach Escambia County

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Recent comments

  • Taxpayer
    July 02, 2010 - 13:10

    And if they are found criminally liable what will they do fine a nearly bankrupt company. Also a knowledgable person has said that the pipe may not be the problem and that the oil is leaking from the ocean floor at the well head. If this is the case, then they may be drilling the relief wells in the wrong place.

  • newf away
    July 02, 2010 - 13:09

    Whether the leak is at or beside the wellhead won't make a difference for the relief well... the relief wells are targetting the oil source, ie at the reservoir... heavy mud and cement will be used to shut off the oil at the source...

  • Taxpayer
    July 01, 2010 - 19:46

    And if they are found criminally liable what will they do fine a nearly bankrupt company. Also a knowledgable person has said that the pipe may not be the problem and that the oil is leaking from the ocean floor at the well head. If this is the case, then they may be drilling the relief wells in the wrong place.

  • newf away
    July 01, 2010 - 19:45

    Whether the leak is at or beside the wellhead won't make a difference for the relief well... the relief wells are targetting the oil source, ie at the reservoir... heavy mud and cement will be used to shut off the oil at the source...