Recovery Effort in Gulf Expected to Continue Despite Storm

By JOSEPH BERGER

A tropical storm moving across the western Gulf of Mexico that is likely to strengthen into a hurricane is not expected to seriously disrupt efforts to capture oil gushing from the stricken BP well, officials of the Coast Guard and BP said Monday.

Adm. Thad W. Allen, of the Coast Guard, who is commanding the federal response to the disaster, said at an afternoon press conference that high seas produced by Tropical Storm Alex should not force the evacuation of rigs and other equipment from the blowout site, which is 50 miles off the Louisiana coast. Should an evacuation take place, he said, it could halt the work of collecting oil and drill relief wells for about 14 days.

“As it stands right now, absent the intervention of a hurricane, we’re still looking at mid-August," to have relief wells shut off the gusher entirely, Admiral Allen said.

However, BP officials said that what could be delayed, even by current wave heights, is an effort to prepare what is known as a “floating riser system” that will help raise the daily total of collected oil from, about 25,000 barrels to as much as 50,000 barrels. At a briefing Monday morning, Kent Wells, a senior vice president of BP who is overseeing BP’s efforts, said the storm is expected to follow a track that will take it well west of the blowout site, but it may produce waves of 10 to 12 feet, which Mr. Wells said was too high for the “very precise work” on the surface needed to prepare the floating riser system.

Mr. Wells said the containment cap and a second system that are collecting 25,000 barrels of oil a day would not need to be disconnected and the drilling of two relief wells should continue on schedule. The first relief well is supposed to pump in heavy mud and shut off the gusher sometime in August.

Tropical Storm Alex is on a course heading for northeastern Mexico and a stretch of Texas. Meteorologists at Accuweather.com said they are anticipating a landfall between Tampico, Mexico and Brownsville, Tex. Wednesday night or early Thursday.

Meanwhile Associated Press reported that BP had filed documents with the Securities and Exchange Commission that indicate the cost of capping and cleaning the spill have reached $2.65 billion. BP has lost more than $100 billion in market value since the drilling platform the company was operating blew up April 20. The costs include spill response, containment, relief well drilling, grants to gulf states, claims paid, and federal costs, but not a $20 billion fund for damages the company created this month.

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Alex may effect Gulf oil production ..

HOUSTON (Dow Jones)--Tropical Storm Alex, expected to become a hurricane Tuesday, seems to be headed on a path away from the bulk of the U.S. Gulf of Mexico's oil and gas production and refining infrastructure. But some production impact will be felt as one of the largest energy producers in the Gulf said Monday it was shutting down several platforms as a precaution.

Royal Dutch Shell PLC (RDSA) said it had pulled 700 workers from its Gulf operations, and some 835 workers remained offshore. The company is shutting in production from its Western and Central Gulf of Mexico assets to prepare for the potential full evacuation of personnel Tuesday. The company started pulling workers from the Gulf over the weekend. The company didn't specify how much production would be shut or how many platforms were being evacuated.

At 11 a.m. EDT, Alex was located about 85 miles west-northwest of Campeche, Mexico, in the western Gulf of Mexico, and was heading towards southern Texas and northern Mexico. Most U.S. offshore oil and gas platforms are located in the eastern part of the Gulf, far from Alex's forecast path.

Alex "is not likely to have a major impact on production or refining in the U.S.," Doug MacIntyre, senior analyst at the Energy Information Administration, told Dow Jones Newswires Monday. "Alex's current path appears to avoid most of the oil and gas production platforms and any of the major refining centers."

Energy markets Monday seemed to take the storm in stride. Light, sweet crude for August delivery ended 61 cents lower at $78.25 a barrel a barrel on the New York Mercantile Exchange.

Natural gas for July delivery on the New York Mercantile Exchange settled 2.96% lower at $4.717 million British thermal units.

Gulf producers Apache Corp. (APA), Exxon Mobil Corp. (XOM), and Anadarko Petroleum Corp. (APC) also said Monday they have started evacuating non-essential workers from the offshore facilities expected to be in the path of the storm but none have so far reported any impact to their production.

BP PLC (BP, BP.LN) said Monday it pulled non-essential personnel from three offshore facilities in the the Gulf, and that production was not affected. The company evacuated workers from Atlantis, Mad Dog and Holstein platforms.

Alex may delay BP PLC's plans to increase the amount of oil collected from a leaking well in the Gulf by a week, a company official said Monday.

While the storm's winds are expected to stay far to the west of the Deepwater Horizon spill, high seas are likely to become an issue this week, said Kent Wells, a senior vice president with BP, in a press briefing. Waves up to between 10 feet and 12 feet would prevent BP from hooking a third rig up to an underwater containment system, a process that needs three days of good weather, Wells said.

Two rigs, the Discoverer Enterprise and Q4000, are already collecting between 20,000 and 25,000 barrels of oil a day from the well, which has gushed ever since a rig working at the site caught fire and sank in April.

Chevron Corp. (CVX) and ConocoPhillips (COP) said that they have not evacuated workers, but that they are closely monitoring the forecast for Alex.

A hurricane watch was issued for parts of the south Texas Gulf coastline area and parts of northern Mexico, the National Hurricane Center reported Monday on its website.

The NHC, in its advisory, also said Alex likely will become a hurricane Tuesday and has increased in strength, now with winds of 60 miles per hour.

The watch area for the U.S. extends from south of Baffin Bay to the mouth of the Rio Grande in Texas, with Mexico issuing a hurricane watch from the Rio Grande to La Cruz.


-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; isabel.ordonez@dowjones.com

(Brian Baskin and Angel Gonzalez contributed to this article

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