WRAPUP 6-BP set to install bigger cap on leaking Gulf well

* Oil could be contained soon but not leak, Allen says

* Diamond moving rig from Gulf of Mexico to Egypt

* New moratorium plan in “next several days”

* Transocean shares rise up more than 5 percent

* BP shares up slightly
(Recasts, adds Allen quotes)

By Dan Whitcomb and Jeff Mason

MALIBU, Calif./NEW ORLEANS, July 9 (BestGrowthStock) – BP
(BP.L: )(BP.N: ) was set on Friday to install a bigger cap that
could contain almost all the oil leaking from its blown-out
Gulf of Mexico well, a top U.S. official said.

The Obama administration has been pressing the British
energy giant to install the new cap, which could capture up to
80,000 barrels (3,360,000 gallons/12,700,00 litres) of oil a
day, versus the 25,000 barrels currently being contained.

The U.S. government has estimated the well is leaking a
maximum of 60,000 barrels a day, although independent estimates
have been as high as 100,000 barrels a day.

Retired retired Coast Guard Admiral Thad Allen, who is
overseeing the response to the spill, told a news conference
that the well could be contained — but not plugged — by
Sunday or Monday, when the cap was installed on top of it.

“When we have the cap on, and it’s sealed and we know that
we’ve got a seal, yes” (it will be contained), Allen said.

BP has been under enormous pressure to halt the oil, which
has polluted coastlines on all five U.S. Gulf states,
threatened multi-billion dollar fishing and tourism industries
and killed birds, sea turtles and dolphins.

It is the worst offshore oil spill in U.S. history.

The company’s costs for the spill likely will be tied to
the amount of oil that ultimately flows out of the well.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage http://link.reuters.com/hed87k BREAKINGVIEWS-BP should focus on governance [ID:nLDE6640I8] Special Report: Should BP nuke well? [ID:nLDE6610K6] Insider TV http://link.reuters.com/qyk76m Graphics http://link.reuters.com/fuc76m Graphic on deepwater rigs:

http://graphics.thomsonreuters.com/RNGS/2010/JULY/EUOIL.jpg
Graphic on spill’s coastal impact:

http://graphics.thomsonreuters.com/RNGS/2010/JULY/OIL2.jpg
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Allen, however, reiterated that the well will not be
plugged until two relief wells were completed, expected to be
in mid-August. He said later BP had responded to a government
request to lay out a timeline for installing the new cap.

“We’re reviewing it right now,” Allen told Reuters. “If
there are no problems with it, we’ll probably authorize them to
move ahead later on this evening.”

“It looks like it’s achievable at this point if we remain
on schedule,” Allen said. “If we approve the timeline, we would
start tomorrow to remove the current cap and to start the
sequence of events.”

MORATORIUM UNCERTAINTY

The spill has complicated the U.S. relationship with
Britain, while subjecting Obama to fierce criticism that his
handling of the disaster has been too slow.

The administration reiterated on Friday that it would
announce a new deepwater oil drilling moratorium, a pledge that
came after a U.S. appeals court refused to reinstate a
six-month ban on drilling below 500 feet (152.5 metres).

“In the next several days we’ll be making an announcement
about keeping the moratorium in place,” Interior Secretary Ken
Salazar said during a visit to California.

“It will be a new moratorium,” he said.

The government imposed the ban in response to the BP spill,
but a federal judge last month blocked the move. In refusing to
stay that decision on Thursday, the 5th U.S. Circuit Court of
Appeals said the government failed to show how it would be
irreparably harmed if it were not granted.

The administration said it did not consider the ruling a
major setback because the Interior Department had the power to
apply to stop any deepwater drilling project in the Gulf.

“Our view on the moratorium is that it was right when it
was issued and it’s right today,” Salazar said.

Companies and other critics of the administration’s ban
have warned that it is too broad and could push oil drillers to
abandon U.S. waters, spurring job losses at a time of economic
hardship, particularly in Gulf states.

U.S.-based Diamond Offshore Drilling (DO.N: ) said on Friday
it was moving its Ocean Endeavor rig to Egypt from the Gulf of
Mexico, becoming the first U.S. company to do so because of
uncertainty surrounding the ban.

The court ruling pushed shares of Transocean Ltd (RIGN.VX: ),
the owner of the rig that exploded on April 20, triggering the
spill, up more than 5 percent on the Zurich stock exchange on
Friday.

They had lost almost half their value since April.

BP, which has seen its share price plummet by about half
during the crisis, closed fractionally higher, after rallying
to gain about 25 percent from a low over the past two weeks.

Investors have been cheered by reports that BP is seeking
new investors and speculation that the worst of the spill might
be over.

(Additional reporting by Kristen Hays in Houston, Braden
Reddell in San Francisco, Ayesha Rascoe and Steve Holland in
Washington; Writing by Ed Stoddard and Patricia Zengerle;
Editing by Paul Simao)

WRAPUP 6-BP set to install bigger cap on leaking Gulf well