16 May 2010

BP urges no ban on new oil drilling

11:54 am on 16 May 2010

The head of BP says the huge oil spill in the Gulf of Mexico should not lead to a ban on new deep-water drilling.

Chief executive Tony Hayward says the spill has been a transforming event for deep sea oil exploration, but it must not stop the industry from continuing with such work.

However, he acknowledged that changes would have to be made to address the risk of such drilling.

Thousands of barrels of oil per day have been gushing from a seabed well since a drilling rig exploded on 20 April, 77km off the coast of Louisiana.

President Barack Obama has accused oil companies of trying to dodge the blame for the subsequent spill.

He has also promised to end what he called a "cosy relationship" between the oil industry and its regulators.

All new drilling is stopped for the moment and some politicians want that to become permanent.

Oil is now washing up on the coast of Mississippi, Louisiana and Alabama.

The US Government has also asked for immediate clarification from BP over its commitment to pay for costs caused by the spill.

In a letter to BP, Interior Secretary Ken Salazar and Homeland Security Secretary Janet Napolitano say the public has a right to know the company's true intentions.

New setback

BP has reported a fresh setback in its attempts to contain the leak.

The company says initial efforts to insert a long tube into the broken pipe to funnel oil to the surface have failed.

Last week BP tried to cap the well with a 100 tonne box, but gave up after it became encrusted with ice crystals.

The market value of BP shares is down by $US30 billion since the oil rig fire and the company says the oil spill has cost it $US450 million so far.

BP shares dropped by more than 3% in London on Friday.