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A brown pelican is seen on the beach at East Grand Terre Island along the Louisiana coast on Thursday, June 3, 2010. Oil from the Deepwater Horizon has affected wildlife throughout the Gulf of Mexico. (Charlie Riedel/Charlie Riedel/The Associated Press)
A brown pelican is seen on the beach at East Grand Terre Island along the Louisiana coast on Thursday, June 3, 2010. Oil from the Deepwater Horizon has affected wildlife throughout the Gulf of Mexico. (Charlie Riedel/Charlie Riedel/The Associated Press)

BP hopes to plug well, then turn focus to the corporate calamity Add to ...

Deep in the Gulf of Mexico, engineers are preparing to throttle, once and for all, the disastrous oil well known as Macondo.

The final chapter in the history of the blown-out well begins on Tuesday, when an operation to seal it for good is expected to start. For BP PLC , however, an end to the deep-sea calamity is only the beginning of the story.

Killing the well is the first move toward an uncertain future for the oil giant, which will emerge from the spill a smaller, chastened version of its previous self. The catastrophe has devastated its stock price and shattered its reputation.

Last week, London-based BP announced it would install a new CEO - the first American ever to lead the firm - and dramatically expanded a plan to sell off assets to raise money for costs related to the spill.

On Tuesday, engineers are set to start pumping thousands of barrels of heavy mud into the damaged well, followed possibly by cement, in a procedure aimed at permanently choking off the flow from a reservoir beneath the ocean floor. Since the middle of last month, a temporary cap has prevented any oil from leaking.

If the effort - known as a "static kill" - succeeds, engineers may follow up by propelling mud and cement into the reservoir through a relief well. Together they would be the last steps in the four-month battle to plug the worst oil spill in U.S. history, which has gushed as much as 700 million litres of oil into the surrounding waters.

Fire boats battle a fire at the off shore oil rig Deepwater Horizon April 21, 2010 in the Gulf of Mexico off the coast of Louisiana. Multiple Coast Guard helicopters, planes and cutters responded to rescue the Deepwater Horizons 126 person crew after an explosion and fire caused the crew to evacuate.

Even if this week's push is successful, BP's problems will continue for years. The company is under investigation on numerous fronts by U.S. authorities. The Securities and Exchange Commission is probing whether there was insider trading at the firm in the weeks and months following the spill, Reuters reported Monday. It's also looking into whether the firm properly disclosed the risks involved in its deepwater oil operations.

U.S. prosecutors investigating criminal behaviour leading up to the disaster have recommended that BP managers be compelled to testify before a panel which would evaluate potential charges. The U.S. Congress is also fashioning new oil-spill legislation, which could eliminate a cap on liability for companies involved in spills and prevent BP from receiving any further offshore leases.

Yet despite such pressures, some experts believe that BP could be in a relatively good position to pay for the myriad costs associated with the spill. Analysts at Oppenheimer & Co. estimate that the final tab for BP will be between $24-billion (U.S.) and $49-billion, which includes compensation to those affected, cleanup, litigation, settlements, and fines. The higher forecast includes additional fines that will be levied if BP is found to be guilty of gross negligence in the spill.

If BP manages to raise about $30-billion by selling off assets and continues to generate a healthy cash flow, the analysts wrote, it could pay all spill-related costs and fines over the next three or four years and even resume dividend payments in 2011.

The task of steering the company through the challenges ahead will fall to its new chief executive officer, Robert Dudley, a Mississippi native and a 12-year BP veteran. "Frankly, we are not sure whether to congratulate Dudley or send him our condolences," wrote analysts at Raymond James & Associates recently.

The man Mr. Dudley will replace, Tony Hayward, became infamous during the spill for taking time out for a yacht race and complaining that he'd like his "life back." Last week, he defended himself in an interview with the Wall Street Journal. "I became a villain for doing the right thing," Mr. Hayward said. "But I understand that people find it easier to vilify an individual more than a company."

Repairing the atmosphere that produced the disaster - a pursuit of growth at all costs and a penny-pinching approach to safety - will not be achieved simply by replacing the CEO, experts say. It will take deeper changes to reassure observers that BP is transforming itself into a fundamentally different company and not simply a smaller one.

"We think BP is in serious need of an extreme makeover to change its culture and the way it conducts business," analysts at Oppenheimer & Co., Inc. wrote last week. "In order to achieve that, many key managers may have to be replaced."

BP's struggle to stop the flow


Placed on May 7

Structure is sunk over main leak, oil is trapped and funnelled toward the riser at the top



Placed on May 13

Smaller than the cofferdam. Methanol is injected into the dome to stop hydrate formation.



Placed on May 16

Guided into riser, rubber baffles plug gaps. Oil flows up the tube to the surface.



Started on May 26

Mud is pumped through a manifold into the blowout preventer, shutting the well down. Cement plugs the leak.



Fitted on June 3

System was collecting some oil until removed to make way for current improved stack system.



Fitted on July 12

Seals the well and stops the flow of oil using three rams.


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  • BP PLC
  • Updated June 23 3:03 PM EDT. Delayed by at least 15 minutes.

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