Shell (NYSE:RDS-a) CEO Blasts BP (NYSE:BP) Report

Royal Dutch Shell Plc (NYSE:RDS-a) chief executive officer Peter Voser came out swinging today against the design of the well used for Macondo and the way BP (NYSE:BP) conducted the investigation into the reasons why it failed.

Voser's conclusion that BP used less expensive options in order to increase profits at the expense of safety lines up with the conclusions of lawmakers in the U.S. that in part is seemed part of the BP practices at this particular oil well.

"Shell clearly would have drilled this well in a different way and would have had more options to prevent the accident," asserted Voser. He was talking about using more barriers than BP did to prevent leaks in the design of the well.

Concerning Shell's projects in the Gulf of Mexico, Voser said they would be more selective in who they worked with, making sure the companies had the expertise and ability to help pay for the costs if an accident were to occur.

That was and is a major problem for BP, which is struggling to get some of their smaller partners to pay. And even if and when they pay, there will be limitations on how much they will be able to pay.

BP (NYSE:BP) Well to be Sealed Permanently Saturday

BP (NYSE:BP) said today the well which failed on April 20 will be permanently sealed on Saturday, ending that part of the story that has plagued the oil giant.

Late on Thursday BP intersected the Macondo well, whereby they can now prepare the final stage pouring in cement for what is called the "bottom kill."

BP reiterated once the well is cemented, it will be completed abandoned and no more oil or gas extracted from it by them.

The well has been temporarily plugged since July 15, when BP placed a cap on the well.

Now that this will be behind them, the legal actions against them have increased, as Judge Carl Barbier, who is overseeing the hundreds of lawsuits, is beginning the process of organizing them all in able to go forward.

Transocean (NYSE:RIG) Issue with Blowout Preventer Resolved with Government

A battle had been heating up between Transocean (NYSE:RIG) and other oil companies over the major piece of evidence in the Macondo oil well disaster.

The blowout preventer was the center of the dispute, where concerns over the proper care of it and the potential compromising of its condition were at issue.

For some reason the government said it wasn't going to flush seawater and other fluids out of the control pods. Transocean said if that wasn't done, corrosion could easily set in, causing problems which could lead to malfunction as a result.

To settle the issue, the government did a turnaround and said they'll flush the control pods on the blowout preventer to keep it from corroding before it's examined to see why it failed.

Judge Barbier consequently denied a motion by Transocean to compel the government to protect the device while it was the target of the investigation because of the problem being resolved.

BP (NYSE:BP) Relief Well Finally Intersects Macondo

The "bottom kill" is close to being on, as the National Incident Commander Admiral Thad Allen said in a statement that the relief well drilled by BP (NYSE:BP) has finally intersected the Macondo oil well.

Allen said, "The aggregate data available supports the conclusion that the two wells are joined," adding, “We intend to proceed with preparation to cement the annulus and complete the bottom kill of the well.”

Confirmation of reaching the targeted destination came from pressure and sensor tests performed by BP engineers.

The next step in the process will be to pump cement into the well, which starts with the annulus; the space between the walls of the well and the pipe.

After the cement is poured and cured, a series of tests will be performed to confirm the well has been killed.

Estimates are it will take up to four days to complete.

BP (NYSE:BP) Relief Well Probably Intercepting Macondo Well Today

Sometime today the relief well of BP (NYSE:BP), which will finally and permanently plug the Macondo well, should reach the targeted section and begin its final steps to that end.

On Wednesday they were reportedly about 30 feet away from the intersection point.

National Incident Commander Thad Allen said, “Four days from now it could be all done. We’re within a 96-hr window of killing the well."

Killing the well is different than the intersection talked about here. That will take, as Allen mentioned, up to several days.

At that time the "bottom kill" should be completed and the final injection of cement and mud finished.

FBR Capital Reiterates "Outperform" on Weatherford (NYSE:WFT)

FBR Capital was quick to jump to what appears to be the defense of Weatherford International Ltd. (NYSE:WFT), maintaining their "Outperform" on the oilfield services company.

"Weatherford is under-performing its peers today by roughly 400 bps due in large part to what we believe is an over-reaction to one of the findings of BP's (NYSE:BP) Macondo blowout investigation report. BP's report concluded that the hydrocarbon influx occurred through the casing shoe track as opposed to a failure of the casing or the wellhead. This concern has prompted some investors to sell or short WFT shares assuming the company may have some liability for the blowout. We believe this concern is baseless...As such, we believe the sell-off in WFT today is not warranted by the facts presented in BP's report," said FBR Capital analyst Robert MacKenzie.

Weatherford closed Wednesday's trading session at $15.47, down $0.08, or 0.51 percent. The trading volume soared during the sell-off, rising to 27,891,983 shares, way up from the 3-month average of 12,922,000.

Fitch Raises BP's (NYSE:BP) Rating Up Three Notches

After gaining control of the oil spill in the Gulf of Mexico, Fitch has raised the credit rating of BP (NYSE:BP) up three notches.

Both the senior unsecured rating and long-term issuer default rating were raised from BBB to A, said Fitch in a statement. They also said their outlook on the oil giant is stable.

Fitch said, their increase of the ratings and outlook “reflect an end to the threat of leaks from the Macondo well." They added it “also reflects both the improved visibility of potential liability scenarios” and “substantial progress that BP has made to date in building up liquidity to address potential financial payments.”

In the midst of the oil spill, on June 15, Fitch has slashed BP's rating by six levels to BBB. That's only two levels above junk. That was related to the uncertainty of the costs and level of debt that may have had to incur in order to pay for the accident.

While BP does have credit available in case of emergencies, they've chosen to primarily raise funds by divesting of assets, which also helps strengthen the credit outlook for the company now that the well has been plugged.

BP (NYSE:BP) Ready to Resume Relief Well Drilling

Drilling on the relief well which will be used to perform the final step to permanently plug the Macondo oil well in the Gulf of Mexico, is ready to be resumed by BP (NYSE:BP).

After the final step of removing the failed blowout preventer and replacing it with a new one, the way is cleared for the drilling to begin to reach the annulus of the well where cement and mud will be injected into the well to perform the "bottom kill," which will be the final step in the overall ordeal, which began April 20 when the Deepwater Horizon oil rig exploded and spewed oil into the Gulf.

Anadarko Petroleum (NYSE:APC) and Mitsui were also partners in the project, with Anadarko owning a 25 percent stake and Mitsui (Nasdaq:MITSY) a 10 percent stake through their majority-owned MOEX company.

Government lead man in the Gulf cleanup, Thad Allen, says the damaged well is now "secured," preparing the way for the resumption of drilling of the relief well, which is a short distance from its destination.

BP (NYSE:BP) CEO Says Cap will be Permanent

For the first time since the oil spill in the Gulf of Mexico, BP (NYSE:BP) has publicly stated they won't attempt to extract any more oil from the Macondo oil well, and the capping of the well will be permanent.

Speaking at the Southern Governors’ Association’s 2010 Annual Meeting, incoming BP CEO Bob Dudley said the oil giant has no intention or plans in place to use the Macondo well again.

Dudley said, “The well will be capped, and nobody will ever want to go near that well again, and there are no plans to develop that Macondo structure field.”

Up till this time, when asked if they planned on tapping into the large amount of oil left in the well, officials from the company hadn't committed either way, implying the final decision hadn't been made yet.

With Dudley publicly committing to a permanent solution, that ends the speculation and conjecture over the uncertainty of the situation.

BP (NYSE:BP) Libya Drilling May Not Produce Much

The hope of a lucrative find in Libyan waters seems to be diminishing for companies drilling offshore, including BP (NYSE:BP), which is prepared to begin exploration in the region this year.

By the end of 2010, BP says they're planning on drilling five deep-water wells in the Gulf of Sirte. The fields in the Gulf haven't been explored as a lot of other areas have.

Talking to the Financial Times, Wood Mackenzie analyst Ross Cassidy said prospects for oil in Libya could be hyped.

"We are coming up to the end of a 5-year period where there has not been a lot of notable exploration success to point to," said Cassidy. "Results have been poor when you compare with what was expected and hoped for."

The waters being drilled in off of Libya are close to 600 feed deeper than the Macondo well in the Gulf.

BP (NYSE:BP) Venue for Lawsuits Will be in New Orleans

In what some are disturbingly hailing as a victory for plaintiffs, BP (NYSE:BP) will have to defend itself in charges related to the Macondo oil spill in New Orleans.

I say disturbingly above, because the implication is the court will side with plaintiffs in the cases before they're even tried, casting a dark shadow over the process if the venue is what decides the outcomes of the cases, and not the facts involved.

BP had been hoping for the cases to be tried in Texas, but when you consider the refinery problems faced by the oil giant there now, it shouldn't have been considered a venue which would have favored BP, even with a lot of oil companies having a presence in Texas.

Either way, the venue will be New Orleans, and nothing will change that going forward.

A panel of judges made the decision, saying, “Without discounting the spill’s effects on other states, if there is a geographic and psychological ‘center of gravity’ in this docket, then the Eastern District of Louisiana is closest to it.

Referring to U.S. District Judge Carl Barbier, who will preside over 300 plus suits, the panel said he already has “considerable” experience with litigating across numerous districts, and “has been already actively managing dozens of cases in this docket.”

There will be a few exceptions to the venue being in New Orleans, as BP investors will put forth their case before U.S. District Judge Keith P. Ellison in Houston, where it'll be decided if they can receive damages from the share price of BP falling because of the accident.

According to the court order, the parameters of the other cases Ellison will preside over include those concerning civil securities fraud claims, shareholder derivative actions, and claims by employees over losses in company retirement savings plans.

BP's (NYSE:BP) Permanent/Temporary Plugging of Gulf Oil Well

It can no longer be taken seriously that BP (NYSE:BP) is permanently plugging the Macondo oil well in the Gulf of Mexico, in the sense that it will never be accessed again.

That doesn't mean the leak won't be permanently sealed, just that the ability to extract oil and gas from it again surely has been taken into consideration during the entire process.

Even the second relief well, always from the beginning touted as a backup if the first relief well didn't work, had to be considered another way to tap into the oil and gas once the cleanup is well under way and media coverage and public anger had subsided.

It's impossible to know when BP may end up tapping into the well again, or if they decide to sell it off to a competitor who could do the work without the type of reaction BP would have to endure.

Whatever the eventual outcome of the oil well, one thing is sure, that much oil can't be allowed to go to waste, and it isn't just business interests that are at stake, but consumer and political as well, even though there will be a very low key approach and a significant length of time which goes by before we hear talk and trial balloons thrown out to see the reaction and test the waters.

We'll probably be through a lot of the claims process at that time and the cleanup, which will help defuse the emotion related to the Gulf spill and its effects.

In the end, BP will stop the leak permanently, but the Macondo well will live on, and the stoppage there will only be temporary.

BP (NYSE:BP) Confirms Suspicions They May Drill in Same Oil Well Again

With BP (NYSE:BP) backing off its original strategy of performing a bottom kill on the Macondo oil well, it has raised questions as to whether or not they're thinking of making money off the well again, and that has been confirmed as a very strong likelihood by COO Doug Suttles.

Suttles said at a press briefing, "There's lots of oil and gas here. We're going to have to think about what to do with that at some point."

The recent success of the "top kill" offered the option to BP, and it looks like it is definitely part of their goals going forward.

There is approximately 45,000 barrels of oil still in the well, estimated to be valued at just under $4 billion, depending on the price of oil per barrel at the time it's being calculated.

Government point man Thad Allen said this about it, "I would assume that's a policy issue related to the management of the lease. Frankly, it hasn't been raised to my level at this point. I'm not sure I can comment on it."

While it may be true of Allen, it can almost be counted on that the U.S. government isn't surprised at the comments of Suttles, and have more than likely been talking privately with the company about it.

The Interior Department does refute that idea, with spokeswoman Kendra Barkoff saying, "The well is almost dead. Under no circumstances are we going to allow them to reopen the well to extract oil and gas."

That remains to be seen. But the operative word here is "them," as far as Barkoff's comments. It could easily be interpreted that another company besides BP could come in and extract the oil, if BP sold the asset to them.

Either way, this part of the story isn't over, and the relief wells could be used to plug the well, but also could be used to access the oil as well.

It does confirm what we've been talking about the last couple of days at Commodity Surge that it looks like this is what BP has been planning, and now we know it is.

BP's (NYSE:BP) Static Kill Successful, Final Kill Coming Soon

The first step to permanently plug the Macondo well in the Gulf of Mexico has been achieved by BP (NYSE:BP), as they said the well has reached "static condition," meaning "The well pressure is now being controlled by the hydrostatic pressure of the drilling mud, the desired outcome of the static kill procedure," according to the oil company.

BP began the process at about 4:00 PM EDT Tuesday, and pumped mud in the top of the well for close to eight hours.

The next step in the process will be to perform a "bottom kill," where mud and cement will be injected into the well almost 2 1/2 miles underneath the bottom of the Gulf. That will ensure a complete and permanent solution to the problem.

Sometime in the next 10 to 14 days the final procedure will begin. That period of time could be extended if any bad weather arises. The time frame is a best-case scenario.

BP (NYSE:BP) Static Kill Begins, Fixes Hydraulic Leak

With the official beginning of the static kill by BP (NYSE:BP), whereby they're attempting to permanently plug the oil from the Macondo well from leaking into the Gulf of Mexico, BP had to put things temporarily on hold until they fixed a leak in their hydraulic system.

That has been completed, and at about 4:00 PM EDT Tuesday, BP began the operations of pumping heavy drilling mud into the top of the well to see if that will do the job.

They of course still have the other means of plugging the well through the relief well far below the surface and far below the top of the well, where they're beginning to pump mud.

That bottom kill should start in about two weeks or so, assuming the weather conditions cooperate.

Expectations for the "static kill" have been being managed from the beginning, as it's not nearly as guaranteed as the bottom kill will be, as there are possibilities oil will escape from parts of the casing of the well or the annulus, which would increase the difficulty and chances of complete success.

BP (NYSE:BP) Sends Mitsui (Nasdaq:MITSY) Bill for $480 Million

Mitsui (Nasdaq:MITSY), which has refused to comment for the duration of the BP (NYSE:BP) oil spill, especially when it has been noted they've received bills from BP in connection with the disaster, reported it has received a bill from BP of $480 million.

The reason for the bill is Mitsui is a 10 percent partner in the project. Also being billed during the cleanup efforts has been Anadarko (NYSE:APC), which has also been billed.

Anadarko has been very verbal about not paying the bills, saying it was the reckless behavior of BP which led to the catastrophe. Mitsui, on the other hand, has refused to comment and has been on the sidelines watching until the appropriate moment. Anadarko has a 25 percent stake in the Macondo well.

Terms of their partnership include an arbitration clause, which the companies could enter into if BP continues to press the matter, as they seem to be more than willing to do.

Government Scientists Estimate BP (NYSE:BP) Spill at 4.1 Million Barrels

If they were honest they would admit they really have no idea how much oil spewed into the ocean, but government scientist have guessed the amount to be at 4.1 million barrels that spilled into the Gulf of Mexico.

How did the "scientists" come to the amount? They used the pressure readings of the current containment cap on the oil well, and the other on the extremely unreliable modeling; in this case of the oil reservoir.

The immediate problem is the readings related to the pressure readings is the damage to the oil well had kept the oil from spilling into the Gulf unhindered, and once removed to prepare for the final cap, it was proven a lot more oil gushed into the ocean when that happened.

U.S. Energy Secretary Steven Chu's statement about the matter didn't make sense. He said, “The revised estimates are part of this administration’s ongoing commitment to ensuring that we have the most accurate information possible.”

The reason it makes no sense is the methodology is extremely flawed. But more importantly, the ability of the Gulf to repair itself, including the 40 percent of the oil gone through evaporation, and the microbes munching on the oil, make the amount of oil (other than loss for use by people), largely irrelevant.

What matters is how much oil is damaging the area, not how much oil left the well; even if the amount could really be accurately measured.

Some are already in hysterics about it being close to 16 times the oil leaked into the ocean by the Exxon Valdez, but that's like comparing apples to oranges.

The Exxon Valdez oil spill did about 100 times (literally) the damage to wildlife the Macondo oil spill has done, if that. And the amount of oil on the coasts and marshlands are far less than feared or guessed at.

This type of guesswork is used because the government would look bad if they couldn't come up with some type of number. After all, how can they administer fines if a number isn't grabbed out of thin air and applied to the situation?

All of this underscores the need to change this dubious law which has an energy company pay a fine based on the amount of barrels of oil released into the ocean, rather than the amount of damage.

After the incredible amount of coverage of the "environmental disaster," a growing number of scientists have concluded it's doubtful it can even be described in that manner, as the harm to the animals and environment are minimal.

Of course the loss of human life is the real tragedy, along with the inability of people in the Gulf region to work at the busiest time of the year for them.

Media outlets don't know how to cover this any longer, now that it has been discovered to be a non-event, and even the last-ditch effort of saying we can't be sure of how bad it is is unconvincing and dishonest, as it's very clear that it doesn't even come close to the made up and imagined disaster most of them wanted it to be.

Finally, BP did end up capturing an estimated 800,000 barrels of oil once they put things in place, allegedly making the amount of oil escaping the well about 4.9 million barrels.

Incoming BP (NYSE:BP) CEO Bob Dudley Says Company Will "Make this Right"

In an interview Wednesday, incoming BP (NYSE:BP) CEO Bob Dudley said he has been getting the impression from people that once the oil well is successfully capped, the company will pick up and leave the region.

He said that's far from the truth, and he and BP will "make this right in America."

"The only way you can build a reputation is not just by words, but by action," Dudley said. "I picked up that people think that, well, once we cap this well, we're somehow going to pack up and disappear. That is certainly not the case. We've got a lot of cleanup to do. We've got claims facilities. We've got 35 of those around the Gulf coast."

Dudley, who will take over as CEO from Tony Hayward on October 1, said the top priority of BP is to focus on and take care of the crisis surrounding the consequences of the Macondo oil well.

BP (NYSE:BP) Falls on Continued Uncertainty and Fear

BP (NYSE:BP) share price fell Tuesday after the earnings of the company took a $17.15 billion hit, as the company took a pre-tax $32.2 billion dollars loss from costs related to the Macondo oil spill in the Gulf of Mexico.

Even the expected news Tony Hayward would step down on October 1 to make way for newly crowned CEO Robert Dudley wasn't enough to move the company into the positive, as it was already factored into the price.

What's more important for shareholders of BP and potential investors, is how they can somehow get their minds around the liabilities and lawsuits the company may have to pay out going forward, and what they will be after divesting up to $30 billion in assets to help pay for those expenses.

There are so many variables that it will be largely be a guess, and with leadership more palatable to most now being the face of the company, it does nothing to help with the uncertainties of the future of BP.

This had to happen, as the well, once plugged, and now a new CEO to step in soon, will reslt in all the focus, from an investors standpoint, being on the cost associated with the Gulf of Mexico oil spill.

Now that the smoke is clearing and people and institutions are getting a look, it's simply overwhelming as to where to even begin to figure out what this will cost BP over the years, and how to factor that into the share price of the oil giant.

How to discount an unknown is impossible, and this is far beyond the unknowns any company will have under normal circumstances, or even volatile ones.

The Gulf oil spill is unprecedented in history, and there are no guidelines to follow or stepping stones to walk on to show the way.

In the short term we could see shares in BP rise, as the permanent sealing of the well is announced, but again, where does one go from there?

There can be no doubt BP will be a speculative play for some time, and possibly once we see the percentage of individuals and businesses accepting the decisions of those presiding over the escrow fund we'll be able to at least get some clarity there.

Cleanup costs should eventually be clearer as well, once investigations into what it'll take to clean up the damage, and more importantly, what the actual damage is.

After that, most of the focus will fall on the lawsuits against the company and how they determine to deal with them.

Will they fight what appears to be frivolous and unwarranted lawsuits, or will they settle the vast majority of them to move things along fast so they can eventually start to restore confidence in the company once again?

The history of BP doesn't lend a lot of confidence either, as far as safety and accident issues go, so that will continue to be a factor in the back of the minds of anyone thinking about investing in the company.

Appearances things are settling down will probably give BP another shot in the arm as far as share prices rising, as they have throughout July, especially when the well is permanently sealed.

Then the job of factoring in all the variables begins, and I don't see how that could be done quickly in any way in order to discount potential and probable future liabilities.

More than likely we'll see a lot of movement with BP, and speculators could thrive in those circumstances based on every bit of news, which will gravitate toward claims and lawsuits as the narrative changes.

BP closed Tuesday at $38.00, down only $0.65, or 1.65 percent.

BP's (NYSE:BP) Time to Kill Oil Well Approaching

Former Coast Guard Adm. Thad Allen, who retired the the middle of the
BP (NYSE:BP) Gulf oil crisis, but still represents the U.S. government in managing the cleanup process, said the process to begin killing the Macondo oil well should begin on August 2.

The well kill will be performed in two stages, with the first being called a "static kill," referring to cement and mud being shot into the well via the top. That will be the procedure on the second of August.

Assuming that is successful, the second stage, which is tentatively scheduled for August 7, would be to shoot mud and cement in from the relief well, which has reached its desired position and is ready to take the next step. The relief well is far below the top of the oil well and deep underground. That is called a bottom kill, and depending on the outcome of the static kill, could take several days or several weeks to complete.

The time frames could easily change if tropical storms enter the region and operations have to be shut down.