BP's second oil-containment system in operation

BP's second oil-containment system began operation Wednesday, while the company's chairman agreed to suspend quarterly dividends and put 20 billion U.S. dollars into a third-party claim fund.

The London-based energy giant said in a press release Wednesday that oil and gas are flowing through a second containment system attached to the failed blow out preventer (BOP) on a blown-out well in the Gulf of Mexico.

This second system supplements the lower marine riser package (LMRP) cap containment system, which was installed early June and remains in operation, BP said.

The new system is connected directly to the BOP and carries oil and gas through a manifold and hoses to the Q4000 vessel on the surface. The vessel uses a specialised burner device to flare oil and gas captured by this second system, the company said.

Oil and gas collected from the underwater gusher reached the Q4000 at approximately 1:00 a.m. Wednesday. Operations continue to stabilise and optimise the performance of the second containment system. BP said.

BP said earlier the new burner device operational with the second containment system could flare 210,000 gallons to 420,000 gallons of crude daily once it reaches maximum capacity.

BP's first oil containment system is siphoning about 630,000 gallons of oil a day through a cap on top of the underwater well to the Discover Enterprise tanker on the Gulf's surface.

The company had expected the new system could help boost the amount of oil it captures so as to help it reach its goal of collecting 2.2 million gallons of oil a day by late June, or nearly 90 percent of the oil a team of government scientists believe is leaking from the well.

Also on Wednesday, BP's chairman Carl-Henric Svanberg said it will suspend its quarterly dividends and sell 10 billion U.S. dollars of assets to support a planned fund to pay for its Gulf of Mexico oil spill.

"The BP board decided we will not pay any further dividends this year," said Carl-Henric Svanberg, after a meeting with U.S. President Barack Obama in the White House.

Svanberg apologized to the American people for the catastrophic oil spill, and pledged to look after people affected by the spill and to repair damage to the environment.

"We have agreed today with the president a framework that should assure the American people that we mean what we say," Svanberg told reporters.

Svanberg also confirmed that his company has agreed to set aside an initial 20 billion dollars to pay the victims of the oil spill in the Gulf of Mexico.

A statement from BP said the company will initially make payments of 5 billion dollars into the new fund this year, which will be followed by a payment of 1.25 billion dollars per quarter in 2011 and beyond until a total of 20 billion dollars has been paid in.

The statement also said the company will sell 10 billion dollars of assets and cut investments.

A team of government scientists charged with studying the spill rate said Tuesday that it now estimates that between 35,000 and 60,000 barrels a day are emanating from the well.

The estimate is the latest in a series that began with an initial estimate in April of 1,000 barrels a day. Just last week, the team of scientists said the flow rate was about 20,000 to 40,000 barrels a day.

BP's bonds slumped and the cost of insuring the company's debt soared after Fitch Ratings downgraded BP's long-term issuer default rating to a level just above junk ratings, citing the high costs that BP is likely to face as spill rate rises and the political pressure from Washington mounts.

[Source: Xinhua, Houston, 16Jun10]

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