5 Sep 2010

Damaged device now replaced by BP

6:00 am on 5 September 2010

BP has replaced a damaged blowout preventer that failed to stop oil from leaking into the Gulf of Mexico when a drilling rig exploded in April.

The 300-ton device will be examined as part of an inquiry into the leak of an estimated 206 million gallons of oil into the Gulf.

The company said it has spent $US8 billion in clean-up costs and compensation to Gulf residents.

Meanwhile, the company said plans to seal the well permanently were progressing well.

The BBC reports the final sealing of the well is now expected to be completed later this month.

On Friday, retired Coast Guard Admiral Thad Allen said the damaged blowout preventer had been successfully replaced by a new one and there had been "no observable release of hydrocarbons from the well head" during the operation.

The damaged machinery is being raised to the surface slowly, so as not to damage it further.

BP has pledged $US20 billion to compensate Gulf residents harmed by the spill, and has pledged millions more to study the spill's environmental impact and to promote tourism in the Gulf Coast states affected by the spill.

Cash flow damaged

But company officials have said a moratorium on offshore oil drilling, put into place by the Obama administration, had harmed its cash flow.

BP America executive vice-president David Nagel told The New York Times:

"If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow."

The moratorium "makes it harder for us to fund things, fund these programmes," he said.

The leak began after an explosion and fire on the Deepwater Explorer drilling rig on 20 April. It was finally stopped on 15 July.