WRAPUP 7-BP puts well cap in place; US issues new drilling ban

* BP in talks on asset sale

* White House says drill ban to survive court challenges

* Industry says thousands of jobs jeopardized

(Recasts, adds details)

By Alexandria Sage and Tom Doggett

NEW ORLEANS/WASHINGTON, July 12 (BestGrowthStock) – BP Plc said on
Monday it had installed and was ready to test a cap that, if
successful, would for the first time stop the oil spewing from
its ruptured well on the floor of the Gulf of Mexico.

The breakthrough in efforts to curb the 84-day-old gusher
was announced as the U.S. Interior Department unveiled a
revised moratorium on deep-water oil drilling in the Gulf that
it said would stand up to legal challenges.

The prospect of protected court battles over the Obama
administration’s bid to limit offshore energy exploration
already has had a chilling effect on drilling, putting tens of
thousands of jobs at risk, industry officials and analysts

But BP (BP.L: )(BP.N: ) got a lift as its share price surged on
news from sources that the British oil giant is in talks to
sell assets worth up to $10 billion to U.S. energy company
Apache Corp (APA.N: ) and other potential bidders.

BP’s shares also were buoyed by promising developments in
efforts to control the largest offshore oil spill in U.S.
history, unleashed April 20 by an explosion that demolished the
Deepwater Horizon drilling rig and killed 11 crewmen.
For full spill coverage http://link.reuters.com/hed87k
Breakingviews [ID:nN12184998]
Special Report: Should BP nuke well? [ID:nLDE6610K6]
Insider TV http://link.reuters.com/qyk76m
Graphics http://link.reuters.com/fuc76m


Hours after bringing a new oil-siphoning system online that
could capture part of the existing leak, BP said on Monday
night it had installed a 40-ton containment cap atop the
wellhead a mile (1.6 km) beneath the Gulf surface.

The company said it would test the integrity of the well
and the ability of the device to completely seal off the flow
of oil on Tuesday, but BP cautioned that success was not

“The sealing cap system never before has been deployed at
these depths or under these conditions, and its efficiency and
ability to contain the oil and gas cannot be assured,” it said
in a statement.

Tests on the device and the well itself will last anything
from six to 48 hours. If it works effectively, the cap should
either hold all the oil in or allow it to be safely captured
and funneled to the surface.

BP has said it will permanently block the oil flow in
August with a relief well being drilled deep beneath the seabed
that will intercept the original well and plug it.


Interior Secretary Ken Salazar unveiled the new deep-water
oil exploration moratorium in a plan worded differently from an
earlier drilling ban struck down by a U.S. appeals court last

“I am basing my decision on evidence that grows every day
of the industry’s inability in the deep water to contain a
catastrophic blowout, respond to an oil spill and to operate
safely,” Salazar said.

The new ban would run until Nov. 30 and applies to the same
oil and gas rigs as before, though it is defined by the types
of drilling technologies used rather than the depth of the
offshore operations, as the original plan was. [ID:nN12269656]

President Barack Obama is under pressure to make offshore
drilling safer and hold BP accountable as the spill devastates
the multibillion-dollar tourism and fishing industries across
all five states along the Gulf of Mexico.

The oil industry reacted to the new drilling ban by saying
it would make matters worse.

“It is unnecessary and shortsighted to shut down a major
part of the nation’s energy lifeline while working to enhance
offshore safety,” said American Petroleum Institute CEO Jack
Gerard. “It places the jobs of tens of thousands of workers in
serious and immediate jeopardy and promises a substantial
reduction in domestic energy production.”


Analysts said the oil industry was likely to contest the
new ban in court, but deep-water exploratory drilling was
unlikely to resume any time soon given the prospect of lengthy
legal battles. Some energy analysts have said the hesitation
could last longer than six months.

In New Orleans, Obama’s independent oil spill commission
held its first hearings on the impacts of the spill and of the
drilling ban. Michael Hecht, of the development agency Greater
New Orleans Inc, told the hearing a drilling freeze threatened
24,000 jobs in Louisiana alone.

The panel of seven engineers, environmentalists and former
politicians is investigating decisions by oil companies and
government regulators that may have led to the disaster. Its
findings will be crucial to any new regulations put in place
and an eventual relaxation of the drilling ban.

BP shares climbed more than 9 percent in London and nearly
8 percent in New York on Monday, driven by potential asset
sales and hopes for a new system to capture the escaping oil.

“It’s probably worth more than what it’s trading for right
now if they can ever get this well capped and get the clean-up
effort really going,” said Ted Parrish, a co-portfolio manager
at Henssler Equity Fund in Georgia.

The asset sale talks are at an exploratory stage and it was
uncertain whether any plans would be advanced enough to be
disclosed before BP announces second-quarter earnings this

BP owns a 26 percent stake in Alaska’s Prudhoe Bay, the
largest oilfield in North America and one of the 20 largest
ever discovered.

BP and Apache declined to comment on reports of the talks.
(Additional reporting by Kristen Hays in Houston, Alexandria
Sage in New Orleans, Jeff Mason and Richard Cowan in
Washington, Matthew Lynley and Matt Daily in New York; Writing
by Timothy Gardner; Editing by Simon Denyer and David Storey)

WRAPUP 7-BP puts well cap in place; US issues new drilling ban