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BP goes ahead with oil well test despite fears

US Fed urges local banks to help oil spill recovery
Washington (AFP) July 14, 2010 - The US Federal Reserve on Wednesday urged banks to open their checkbooks to victims of the Gulf Coast oil spill, in a bid to ease the massive economic fallout from the disaster. "Financial institutions are encouraged to work with their customers and consider measures to assist creditworthy borrowers affected by the Gulf oil spill," the Fed said in a joint letter with five other financial regulators. "Such measures can help customers recover financially and be better positioned to honor their obligations."

BP's oil rig sank April 22, sending crude oil spewing into the Gulf of Mexico and onto the beaches and estuaries of coastal US states. The sheer scale and length of the crisis has prompted fears that the Gulf coast economy could be damaged for decades to come. Gulf residents have seen an estimated 35,000 to 60,000 barrels of oil flowing into the sea daily since an explosion destroyed a BP-leased drilling platform off Louisiana. Tar balls and ribbons of crude have washed up along all five Gulf states, from Texas to Florida, shutting down key fishing grounds and scaring away tourists key to local economic health.

In Louisiana alone officials estimate the spill could cost 120,000 jobs. The Fed and fellow watchdogs said easier-to-access loans would "contribute to the health of local communities and the long-term interests of institutions and their customers." In return, the central bank offered more regulatory flexibility, promising to "consider the unusual circumstances of banks and credit unions" in the effected areas. "The regulators are committed to working with the industry to respond to issues that arise in the aftermath of the Gulf oil spill and to minimize disruption and the burden on banks and credit unions in affected areas," it said.
by Staff Writers
New Orleans, Louisiana (AFP) July 14, 2010
BP received the green light Wednesday from the US government and began a crucial test that could allow the leaking Gulf of Mexico oil well to be sealed once and for all.

After days of painstaking deliberations, Admiral Thad Allen announced he had given the British energy giant the go-ahead after overcoming fears the test could lead to "irreversible leakage" below the seabed.

"At this time we will be releasing an order to BP to proceed with the well integrity test," said Allen, the former US Coast Guard chief leading the government's response to the 85-day disaster.

"This test will run for a maximum of 48 hours at which time we will stand down, assess where we're at, and assess the next steps."

The test involves shutting off the valves on a 75-tonne cap installed on Monday to evaluate the integrity of the well bore, which stretches down 2.5 miles (four kilometers) below the seabed.

High pressure readings would allow the three valves to remain shut and the well would effectively be sealed, but low ones could mean there is a hole somewhere in the casing of the well where oil is escaping.

"It will be terrific news if we can shut in the well but I don't think we can say that," Allen said. "I don't want to get anybody's hopes up that we can shut this well in until we get the empirical readings we need."

Allen on Tuesday delayed the high-stakes procedure for 24 hours for further analysis to be conducted, and only made the decision to proceed after meetings with top oil industry experts and US officials, including Energy Secretary Steven Chu, a Nobel Prize-winning physicist.

The White House said President Barack Obama was being kept up-to-date at this pivotal time, and sought to reassure the US public that the administration was putting safety first.

"Based on new information and analysis, Secretary Chu and other scientists concluded that the test should now proceed with several modifications and safety requirements," the White House statement said.

"The directive will require additional seismic testing and monitoring from ROV's (Remotely Operated Vehicles) as well as acoustic and temperature monitoring throughout the duration of the well integrity test."

After months of environmental and economic ruin, the final deliberations were a further agonizing delay for anxious Gulf residents whose livelihoods depend on the oil being stopped and the huge surface mess being cleared up.

Once the valves on the cap are closed, no oil will be streaming into the Gulf for the first time since the Deepwater Horizon rig sank 83 days ago.

The process will be done gradually in six-hour intervals as a massive pressure shift could send oil shooting up through a new leak on the sea floor, further aggravating the worst oil spill in US history.

"If the pressure readings stay low, that will tell us that the oil is probably going some place else and we need to consider the fact we may have a breach in the well bore or in one of the casings," Allen said.

"If that is the case and we have very low pressure readings for about three hours we will probably stop at that point."

Although containment operations would have to then resume, officials say the new cap gives them the ability to capture all the leaking oil in a matter of days.

Drilling on a relief well that is now only four feet (1.2 meters) away from the leaking well will be suspended when the integrity test starts.

Even if the well is found to be secure and the cap is left on, the relief well will be drilled to completion so the oil reservoir can be permanently plugged with cement in a "kill" operation expected in mid-August.

Gulf residents have seen an estimated 35,000 to 60,000 barrels of oil spewing from the well daily since an explosion destroyed the BP-leased drilling platform 50 miles (80 kilometers) off the coast of Louisiana in April.

An estimated two million to four million barrels of crude have gushed into the sea since the Deepwater Horizon sank on April 22, two days after the blast which killed 11 workers.

Tar balls and ribbons of crude have washed up along all five Gulf states, from Texas to Florida, shutting down key fishing grounds and scaring away tourists key to local economic health.

The Gulf disaster has cost BP some 3.5 billion dollars (2.78 billion euros) and compensation could mean it ends up forking out 10 times that figure.



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