U.S. doubles Gulf oil spill estimate

HOUSTON Fri Jun 11, 2010 12:32am BST

1 of 22. Skimmer boats pull booms through the oil from the Deepwater Horizon wellhead that sits on top of the water in Barataria Bay, Louisiana just off the Gulf of Mexico June 8, 2010.

Credit: Reuters/Jose-Luis Magana/Greenpeace/Handout

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HOUSTON (Reuters) - U.S. government scientists on Thursday doubled their estimate of the amount of oil gushing out of a ruptured Gulf of Mexico oil well as British energy giant BP scrambled to stem the leak.

The news that the flow rate may be as high 40,000 barrels (1.68 million gallons/6.36 million litters) per day came after U.S. markets closed.

BP shares closed 6.65 percent down in London at 365.50 pence while in New York they rebounded from 14-year lows to end 12.3 percent higher at $32.78.

On Thursday the White House said that President Barack Obama and senior administration officials would meet BP Chairman Carl-Henric Svanberg next Wednesday.

BP has come under increased pressure from the Obama administration in recent days and on Thursday Prime Minister David Cameron said Britain stood ready to help the company deal with the spill.

Speaking during a visit to Afghanistan, Cameron said he would take up the matter Obama when they speak in the next few days.

Neighbouring Mexico also entered the fray on Thursday. It expects oil from BP Plc's damaged Gulf of Mexico well to reach its shores by December, and is considering how to sue the company for any environmental damage, Mexico's environment minister told Reuters.

Environment Minister Juan Elvira said Mexico is trying to stock up on oil booms and netting, a tough task because the United States has used up most of the gear available to protect its coastline, to try to capture oil that will start drifting south when sea currents change in October.

The spill, already the worst in U.S. history, may well be much bigger than many had thought.

U.S. scientists said on Thursday that between 20,000 and 40,000 barrels (840,000 and 1.7 million gallons/3.2 million and 6.4 million litres) of oil flowed from the well before June 3, when BP's remotely operated robots sawed through an underwater pipe to clear the way for a capping procedure.

The cutting of the pipe likely increased the flow, but BP says it has collected 73,324 barrels (3.1 million gallons/11,7 million litres) of oil since installing the capping system.

The well's average flow rate was 25,000-30,000 bpd, according to the findings of the so-called Flow Rate Technical Group announced by U.S. Geological Survey Director Marcia McNutt.

BP had no input into the team's findings.

The wide variation in the estimates points to the difficulty in estimating flow of a well that is 1 mile (1.6 km) beneath the surface and reachable only by remotely operated robots.

BP said it was capturing more of the torrent of oil that has spewed relentlessly from the sea bottom since the April 20 rig explosion that killed 11 workers and set the disaster in motion.

But the almost 16,000 barrels it said on Thursday it had collected in the previous 24 hours is triple its initial estimates of the leak's flow rate, a point that will not be lost on critics as U.S. public and political anger mount.

In another sign the spill is spreading, heavier concentrations of oil began washing up on Florida seashores late on Wednesday. Until then, debris from the spill had been limited in the state to relatively small tar balls.

It is taking a mounting toll on sea birds and other wildlife and has devastated the commercial and recreational fishing industries in southern Louisiana.

The Obama administration has kept up the heat, saying it would make sure BP paid all damages and cleanup costs from the spill, which has soiled 120 miles (190 km) of coastline.

HIGH-LEVEL DIPLOMACY

The crisis is now on the global diplomatic agenda for allies Britain and America.

Cameron's comments in Kabul marked the first time he had spoken publicly about the catastrophe.

Cameron, who took office in May and is under pressure domestically to stand up for the British company, is due to talk to Obama by telephone this weekend.

Obama has been sharply critical of BP. The two leaders' conversation will have to seek a delicate balance between domestic pressures and long-standing U.S.-British ties.

They will also take place against a backdrop of extreme market volatility for BP.

BP was the second-most active stock on the New York Stock Exchange on Thursday after taking a 16-percent dive to a 14-year-low the previous day amid concerns over BP's ability to meet mounting costs.

"The stock is obviously volatile as investors try to wager on the outcome of the Gulf oil spill," said Jud Pyle, chief investment strategist at Options News Network, a division of option market maker PEAK6 Investments in Chicago.

Analysts said the company's improved performance was partly due to speculation that PetroChina, Asia's top oil and gas firm, was considering making a bid for BP.

(Additional reporting by Adrian Croft in Kabul, Mica Rosenberg in Mexico City, Alex Chambers in London, Matt Daily in New York, Jeremy Pelofsky and Tom Dogget in Washington, Doris Frankel in Chicago, Anna Driver in Louisiana and Michael Peltier in Pensacola Beach, Florida; writing by Ed Stoddard and Ross Colvin; Editing by Sandra Maler)

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