WRAPUP 6-BP Gulf well cap works so far, Obama cautious

* Coast Guard allows pressure tests to continue

* Obama says more work to be done to plug leak for good

* BP likely to move back to oil siphoning after test

* Shares down nearly 5 percent in New York
(Adds Coast Guard allowing more tests)

By Kristen Hays and Ross Colvin

HOUSTON/WASHINGTON, July 16 (BestGrowthStock) – BP Plc’s (BP.N: )
(BP.L: ) stricken Gulf of Mexico oil well showed no signs of
leaking on Friday after a new cap stopped the flowing crude,
but President Barack Obama warned that more needed to be done
before it was fixed.

BP began pressure tests on the well after choking it off on
Thursday for the first time since the April 20 rig explosion
that triggered the leak. Underwater robots scanned the sea
floor for signs the undersea well was damaged.

“We’ve seen no negative evidence of any breaching there,”
said Kent Wells, BP’s senior vice president of exploration and
production.

The tests showed the cap was building pressure in the well,
meaning it was strong enough to contain the oil without
leaking. The Coast Guard confirmed pressure was high enough to
allow BP to test through Friday evening.

Obama, speaking at the White House, cautiously welcomed the
news. “We won’t be done until we actually know that we’ve
killed the well and that we have a permanent solution in place.
We’re moving in that direction, but I don’t want us to get too
far ahead of ourselves.”

The U.S. leader is under fire to push BP to permanently
plug the leak and clean up an environmental and economic mess
across five U.S. Gulf states. The spill has cut into
multi-billion dollar fishing, tourism and drilling industries.

The offshore spill, the worst in U.S. history, has spewed
millions of gallons of oil into the Gulf.
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For full spill coverage http://link.reuters.com/hed87k
Breakingviews [ID:nN15261343]
Insider TV http://link.reuters.com/hyr57m
Graphic on BP shares http://r.reuters.com/dez27m

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Several previous attempts to plug the leak did not work,
and investors remained cautious on BP’s latest effort.

The British energy giant’s shares, which fell about 50
percent in the first two months of the crisis but have gained
40 percent since late June, fell nearly 5 percent as part of a
broader sell-off on the New York Stock Exchange.

They inched higher in London.

BP began pressure tests on the well Thursday afternoon and
expected them to last up to 48 hours. It then aims to siphon up
to 80,000 barrels of oil a day using a seal installed earlier
this week and send it a mile (1.6 km) up to waiting ships.

Estimates had put the spill rate at between 35,000 barrels
(1.47 million gallons/5.56 million liters) and 60,000 barrels
(2.5 million gallons/9.5 million liters) a day.

The tests will show whether the cap is strong enough to
contain the oil if the ships must disconnect from the well
during a hurricane or other emergency.

BP still expects to complete drilling a new well by early
August to intersect the ruptured well and seal it with mud and
cement.

TOTAL COSTS

The capping of the well came nearly three months after an
oil rig explosion ruptured the well and killed 11 men.

But some residents in battered coastal communities remained
skeptical. “This is only the second day. I am not celebrating
anything yet,” Cindy Nelson of Biloxi said.

Under pressure from Obama, BP has established a $20-billion
fund to cover the costs of the spill.

Three analysts surveyed by Reuters Insider television
forecast the company will pay between $63 billion to $100
billion over the next 15 years in fines and cleanup and legal
costs. Peter Hutton, an analyst at NCB Securities in London,
pegged the total cost at $40 billion.

“It’s relief all around to see that (undersea) camera with
no oil coming out,” said Hutton. “But people recognize that
they’re not completely out of the woods.”

Investors welcomed reports that BP was moving closer to
sealing the first deal in its planned $10 billion of non-core
divestments to help pay cleanup costs.

The company and bankers were finalizing details of the
asset sales, including some U.S. interests to Apache Corp
(APA.N: ), said CNBC and the Financial Times. [ID:nN15217650]

POLITICAL ENVIRONMENT

The crisis has complicated U.S. relations with close ally
Britain. Many Britons believe Washington is treating BP too
harshly, to the detriment of British pension funds and other
investors who have big stakes in the company.

The U.S. Senate Foreign Relations Committee plans to ask BP
officials to testify after the company said it had lobbied the
British government in 2007 over a prisoner transfer agreement
with Libya.

U.S. Secretary of State Hillary Clinton told Britain’s
foreign minister in a phone call on Friday that Britain may
want to communicate with the U.S. Congress about Libyan
intelligence officer Abdel Basset al-Megrahi release.

The Scottish government denied on Friday it had any contact
with BP before its decision last year to release the Libyan.
[ID:nLDE66F1OB]

U.S. lawmakers also are considering a range of new rules
that could impose tougher safety regulations on offshore
drilling or bar companies like BP from new offshore exploration
leases. [ID:nN15210454]

The Obama administration issued a revised offshore drilling
moratorium this week after a previous six-month ban was struck
down by the courts.

(Additional reporting by Jeff Mason in Washington, Eric
Onstad in London, Matthew Lynley in New York, Chris Baltimore
in Houston and Alexandria Sage in Louisiana and Leigh Coleman
in Mississippi; Writing by Timothy Gardner; Editing by Paul
Simao)

WRAPUP 6-BP Gulf well cap works so far, Obama cautious