BP will bring in a floating production, storage and offloading vessel to handle flow from oil containment system on the Macondo well in the US Gulf, a spokesman said.
BP spokesman Robert Wine told UpstreamOnline the UK supermajor would increase its oil processing and storage capacity with an FPSO that could then be offloaded with a shuttle tanker.
"We're bringing in an FPSO and shuttle tanker," Wine said in an email response.
The system would replace the Transocean drillship Discoverer Enterprise, which can process 18,000 barrels per day.
For the shuttle tanker, BP has tapped Loch Rannoch, which normally services the Schiehallion development, west of Shetland, but Wine was unsure which FPSO BP planned to use.
Local news reports said Loch Rannoch left Wednesday and is coming across the Atlantic after a stop in Rotterdam.
The tanker is expected in the Bahamas on Friday, The Shetland Times reported.
Loch Rannoch is free because Schiehallion, which BP operates, is shut in for maintenance until mid-August.
Processed
BP is continuing to try to pull more oil through a containment dome on the Macondo well, and recently announced the latest 12-hour production rate was more than 14,000 barrels per day.
BP exec Kent Wells said Monday that the UK supermajor plans to ramp up to catch as much as 20,000 bpd in the future from the blownout well in the US Gulf.
But the oil is being processed by Discoverer Enterprise, which has a processing capacity of 18,000 barrels per day, Transocean spokesman Guy Cantwell told UpstreamOnline.
Earlier in the relief efforts, BP officials said Discoverer Enterprise could process up to 20,000 barrels per day.
Thus far BP has been reluctant to increases the flow too quickly, fearing it will draw in water, which will then freeze with natural gas molecules to form hydrate crystals, however the ability to process the amount of production coming from Macondo now appears that it could limit the effort as well.
Rate
Wells said he is “confident” BP can corral more oil with the device, but it seems that he will fall short of his 20,000 bpd goal if all the oil must go to the Discoverer Enterprise.
The head of the US government response effort to the spill admitted that BP’s plans for catch more oil could hit a snag with the Enterprise in the near future.
“Well, they’re not at a production rate yet that will tax - they potentially could be there - as they’re spooling it up,” Coast Guard Admiral Thad Allen told reporters at a White House press briefing Monday.
In the near future, BP is working on a system that will allow it to flow oil from the choke and kill valves on the BOP, through a subsea manifold to the Q4000 service platform on the surface, Wells said Monday.
But it will not immediately address BP’s processing bottleneck as that plan will not be ready until mid-June, Wells said.
It is understood that Q4000, which is currently operated by US offshore player Helix, has processing capacity for about 5000 bpd, but no storage.
Oil would have to be immediately transferred to a tanker for storage and offloading.
The BOP direct connection plan system will give BP a back-up in case the LMRP cap becomes clogged with hydrates or needs other maintenance.
It will also be used to catch some of the flow when BP puts on a more permanent cap and floating riser system in place, which is planned for the end of this month or early July, Wells said.
The more permanent system will fit more securely on top of the LMRP, while the new riser will float and only extend to about 300 feet below the surface.
The configuration will allow the Discoverer Enterprise to disconnect and reconnect quickly to the containment system if it has to move off location during a hurricane, Wells said.
Flow
BP is looking at three versions of the cap itself and is not sure which one it will install yet, Wells said.
If all goes according to schedule, that system will be in place by the end of the month.
While the ship is gone, the oil will flow into the Gulf, but BP hopes to add a subsea dispersant system treat the oil before it hits the surface, he added.
The plans to ramp up the oil containment system called into question, once again, the flow rate estimates for the Macondo well.
An independent government group gave two ranges for the well; one of 12,000 to 19,000 bpd and one of as much as 25,000 barrels per day.
But White House spokesman Robert Gibbs said those estimates did not include a possible 20% increase after BP cut the riser to install the LMRP cap, meaning the well could be flowing as much as 30,000 bpd.
Allen also said even after the well is capped, the US will be dealing with a spill for another four to six weeks.
About 120 linear miles of coast line have been affected by the oil spill, he said.
Gibbs said BP would be spending billions of dollars in penalties for the oil spill.
"They are the responsible party. They are going to bear the costs there," said Gibbs. "Those costs are likely to greatly exceed what the oil that is recouped is sold for on the market ... there will be penalties that are involved in this in the many billions of dollars."
Investigations
Meanwhile, a BP executive told delegates at a conference in Malaysia today that the UK supermajor has no plans to change its exploration and production (E&P) policy at this time.
"There is a lot of learning to come out. There is a need for that to take place first," Clive Christison, the chief executive of BP Supply & Trading, Integrated Supply & Trading, Global Oil and Eastern Hemisphere said.
"E&P is a long-term business. All the necessary investigations and learning need to come out first."
BP chief executive Tony Hayward said Friday that while the UK supermajor cannot rewrite history, it will do "all it can to make good" the damage done by the Macondo blowout.
Speaking to an investor briefing Friday afternoon, the chastened BP boss said he deeply regretted the accident and extended an apology - both personally and on behalf of the company - to all affected by the spill.
"Everyone at BP is heartbroken by this event, by the loss of life, by the damage to the environment, and the impact on the livelihoods of the people of the Gulf Coast," he said in his opening remarks.
Hayward said disaster will lead to fundamental changes in BP and throughout industry.
"The paradigm in which BP and the industry operates must change," he said. "We need to implement better safety standards."
Meanwhile, BP is setting up a new unit to oversee management of the Macondo blowout and its aftermath, which will be headed by former TNK-BP chief executive Bob Dudley.
Organisation
Dudley will get to work immediately, but the size and make-up of the new organisation has not yet been finalised, BP said.
The new unit is charged with overseeing the incident, dealing with BP's financial obligations stemming from Macondo and managing what Hayward called "the reputational impact" of the accident, as well working to "restore trust and confidence in BP in America".
Hayward brushed off suggestions that he was being used as a scapegoat for the blowout and spill, telling investors: "I personally think it is right that I should be the lightning rod because it allows everyone else to get on with doing their job.
Investors were told the company would meet all its responsibilities, including those to its shareholders who rely on its dividend.
However, Hayward but did not commit to maintaining payouts while BP grapples with the Macondo spill.
"We will meet the obligations to our employees and our other stakeholders, including hundreds of thousands of shareholders and millions more in mutual and pension funds who rely on their investment in BP as part of their financial security and in many cases their retirement income," he said.
The company also issued a statement regarding a dividend pay-out.
Payments
"Future decisions on the quarterly dividend will be made by the board, as they always have been, on the basis of the circumstances at the time,” the release states.
“All factors will be considered and the decision taken in the long term interests of the shareholders."
BP is under political pressure to suspend dividend payments - which total $10.5 billion a year - after two US Senators called on it not to pay out to shareholders until the full costs for cleaning up the massive spill are known.
US President Barack Obama stopped short of calling on BP to slash that dividend at a briefing Friday, but said he does not want BP’s “legal obligation” to its shareholders to get in the way of its “moral and legal” obligation to pay cleanup costs and damages to residents of the Gulf Coast.
Most analysts believe the company can foot the bill without cutting its dividend.
BP has lost around a third of its market value - about £40 billion ($59 billion) - in the last six weeks.
Analyst forecasts for the total cost of the spill range from $5.3 billion, an estimate from Dutch bank ING should the current effort to plug the well work, to $37 billion from investment bank Credit Suisse.
BP said Monday; the current cost for the response is about $1.25 billion.
Response
Obama noted that the US has sent the first bill for the federal spill response Thursday; a tab for $69 million.
Standard & Poors on Friday joined Moody’s and Fitch in downgrading BP’s credit rating, dropping its score to AA- from AA.
The Gulf spill response and cleanup comes first, financially, but the company still has plenty of funding to continue operations, Hayward said.
“We've got over $5 billion worth of cash today and we've got various bank facilities and standby lines behind that he said.
Hayward said BP would spend all it needed to on the spill response and cleanup but it still had enough cash to maintain its capital spending programme this year.
"As we speak we are not changing significantly the capital programme because quite simply, we are generating far and above the cash we need to satisfy all the things that we can see."
Hayward said that the supermajor expects the spill and the drilling moratorium in place in the Gulf to have an impact on production.
"Our view at the moment is that we could see an impact of up to 50,000 barrels per day in 2011 and up to perhaps 75,000 bpd in 2015," he said.
Transocean's semi-submersible was working on the Macondo well, on Mississippi Canyon Block 252 in the Gulf of Mexico, on 20 April when an explosion rocked the unit before engulfing it in flames.
The exploration well had been drilled to 18,000 feet in 5000 feet of water and was being temporarily suspended as a future producer when the blowout occurred.
11 crew died in the explosion.
