July 21, 2010 / 12:37 AM / 9 years ago

BP defends CEO, eyes new option for plugging well

LONDON/HOUSTON (Reuters) - BP Plc defended its embattled chief executive on Wednesday and denied a report that he would leave soon as the company prepared to launch a new approach in the next few days to ending the worst oil spill in U.S. history.

Black bubbles rise from the new containment capping stack in this image captured from a BP live video feed from the Gulf of Mexico, July 21, 2010. REUTERS/BP/Handout

CEO Tony Hayward, criticized for his handling of the Gulf of Mexico spill amid a series of public relations gaffes and failed efforts to end the disaster, has the full support of the company’s board and will remain in his job, a BP spokesman said. The spokesman dismissed a Times of London report that Hayward would step down within 10 weeks.

The Times, citing a person close to the matter, said Hayward would have to leave so the British energy giant could protect itself against a potential buyout threat by ExxonMobil or Royal Dutch Shell.

The environmental disaster caused by the April 20 oil rig explosion off the coast of Louisiana has devastated U.S. Gulf Coast tourism and fishing industries, dented President Barack Obama’s approval ratings and complicated the traditionally close U.S. relationship with Britain.

BP capped the blown-out well last week, choking off the flow of oil for the first time since the explosion. U.S. officials have given BP permission for more pressure tests on the capped well a mile (1.6 km) below the ocean surface.

BP scientists are also preparing another option — a “static kill” to help smother and plug the leak. That approach would involve pumping heavy drilling mud and possibly cement into the well, much like BP’s failed “top kill” effort in May.

The top U.S. spill official, retired Coast Guard Admiral Thad Allen, said that if he approves the plan BP could begin that “static kill” operation by this weekend — if bad weather does not force a delay.

Officials are watching a northern Caribbean weather system that could move into the Gulf and force BP to delay its work by up to 10 to 14 days if all vessels must evacuate.

“Any operations out there would have to be suspended whether it’s containment or the relief well,” Allen said of the storm. BP is drilling a relief well intended to intersect and plug the ruptured well next month.

The relief well needs one last set of piping, or casing, cemented in place to hold it open before a drill bit can bore into the Macondo well near its bottom 13,000 feet (2.4 miles) beneath the seabed, Allen said.

“Once the casing is in place, the static kill can proceed by this weekend,” Allen said.

BP’s market value has fallen around 39 percent since the oil began spewing into the Gulf, and the company worked on Tuesday to line up $7 billion in asset sales to help pay for the spill.

BP STOCK

BP shares rose on Wednesday, buoyed by its sale of oil and gas properties in the United States, Canada and Egypt to U.S. company Apache Corp, a large part of a $10 billion asset disposal plan.

BP shares were up 1.7 percent in afternoon trading in New York and closed up 3.2 percent in London earlier.

“Such a material sale, achieved so quickly, should ease if not banish any lingering concerns about BP’s liquidity position,” JP Morgan said in a note, adding the terms of the deal looked robust and underlined the mismatch between what BP could get for its assets and its battered stock price.

Dutch bank ING said that BP could afford to go beyond its $10 billion target, potentially making more than $45 billion from divestments without denting its core activities.

BP said Apache would pay a $5 billion cash deposit on July 30 as part of the deal for exploration and production facilities in North America and Egypt. The company said the deal would include assets in New Mexico, natural gas in western Canada and concessions in Egypt.

Earlier, it announced it would sell $1.7 billion worth of assets in Vietnam and Pakistan.

HAYWARD SPECULATION

The spill sparked a wave of anger at BP among the American public and U.S. lawmakers, and Hayward’s ouster has been the subject of speculation after a failure to quickly stem the flow of oil into the Gulf and a series of public relations gaffes that stoked public anger at BP.

For example, Hayward complained that he wanted his life back as the disaster unfolded, and attended a festive yacht race off the English coast while oil from the spill continued to pollute the U.S. coastline.

There was a growing expectation that Hayward would announce his departure in late August or September, with Robert Dudley, chief of BP’s Gulf Coast restoration efforts, seen as the front-runner to replace him, the Times said.

But the BP spokesman said of Hayward: “He has full support from the board and will remain in place.”

Slideshow (26 Images)

The company created a $20 billion fund to compensate victims of the disaster. Kenneth Feinberg, appointed by Obama to oversee the fund, told the House of Representatives Judiciary Committee he might be more generous with claims than a court would be.

“I may well conclude that this facility should process claims as eligible that if the claimant went to court they would not prevail,” Feinberg said.

The states of New York and Ohio asked a federal judge to appoint them lead plaintiffs in spill-related class-action lawsuits against BP. In a court filing, the states said their BP investments had lost $181 million because of the company’s alleged misleading of investors over the spill.

Additional reporting by Karolina Tagaris in London, Matt Spetalnick and Emma Ashburn in Washington, Francis Kan in Singapore, Nidhi Verma in New Delhi and Ho Binh Minh in Dalat, Vietnam; Writing by John Whitesides; Editing by Will Dunham

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