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Oil hits Texas as BP dismisses money worries

Clean-up efforts in the Gulf of Mexico oil spill extended to Texas and New Orleans' doorstep but faced renewed foul weather threats today, as BP dismissed reports of deepening financial woes.

world Updated: Jul 07, 2010 14:50 IST

Clean-up efforts in the Gulf of Mexico oil spill extended to Texas and New Orleans' doorstep but faced renewed foul weather threats on Wednesday, as BP dismissed reports of deepening financial woes.

Officials said crews collected tar balls and waste from Lake Pontchartrain, the vast estuary bordering New Orleans, as rough weather continued to hamper containment and skimming efforts near the spill site.

Admiral Thad Allen said that the huge spill was now threatening all five states along the Gulf Coast from Florida to Texas and that rough seas since the passage of Hurricane Alex had hurt the effort.

The first Atlantic hurricane of the year passed through the Gulf of Mexico last week without too much alarm for the oil containment efforts, but Allen said that a storm system gathering on the Gulf's southern edge was being closely watched.

"We're watching very, very closely the swells and waves that might be generated by this current storm system," he said.

"Sometime in the next seven to 10 days we'll look for a window of opportunity to put the containment cap on at the same time we will go on and continue with the drilling of the relief well."

A BP spokeswoman in London denied the firm was planning to sell new stock to a strategic investor to raise money, amid reports the British government is working on a crisis plan if the company is sunk by the disaster.

"We are not issuing any new equity," she said.

"We welcome new shareholders to come onto the shareholder register and we welcome existing shareholders who want to take a bigger amount of shares."

The Times newspaperin London reported that officials at the Department of Business and the Treasury were considering contingencies for BP's potential collapse.

BP has forked out some 3.12 billion dollars in spill-related costs and has promised to pay another 20 billion into an escrow fund to compensate Americans affected by the spill.

The BP-leased Deepwater Horizon rig sank on April 22, two days after an explosion that killed 11 workers, unleashing the worst environmental disaster in US history.

On Sunday, tar balls from the spill arrived on beaches in Texas, more than 500 miles (800 kilometers) away, though it was unclear how the crude got there.

Tests showed they came from the ruptured well but scientists and officials were working to determine if they arrived in Texas by currents or via ships operating in the vicinity of the well head.

Some 779 kilometers (484 miles) of shoreline was now oiled, and closure of fishing grounds and tourist cancellations threaten financial ruin for residents furious over BP's failure to cap the spill.

Up to 60,000 barrels of oil a day is believed to be leaking into the Gulf, far outpacing collection efforts of a system that is capturing around 25,000 barrels a day. Officials hope to more than double that capacity to some 53,000 barrels a day by hooking up a third containment vessel to the system that captures and siphons away the crude.

"There is a partial hookup right now and they can sustain that unless they have really severe sea states," said Allen, the US official coordinating the spill response.

"We won't know for several hours whether they're able to do it. It currently is a work in progress."

Officials were also testing a mega-tanker, A Whale, which could boost efforts to skim spilled crude from the sea surface.

The ship is believed to be able to suck up to 500,000 barrels (21 million gallons) of oily water a day through a series of vents on the ship's side.

By comparison, more than 500 smaller vessels in 10 weeks have only managed to collect some 680,950 barrels, or 28.6 million gallons, of oil-water mix between them and high waves forced most of the boats to halt operations on Tuesday.

BP was facing criticism for its reported promise to US regulators in March, prior to the disaster, that it had the capacity to skim and remove 491,721 barrels of oil per day in the event of a spill.

A damning report Tuesday by The Washington Post said that in the 77 days since the well blowout, BP has managed to skim or burn just 60 percent of the amount the company claimed it could remove in just a single day.

"BP's credibility is shot. None of the numbers they have given us from day one have proved to be accurate," John Young, council chairman of Jefferson Parish in Louisiana, told CNN in reaction to the report.

"They've underestimated the flow out of the pipe when it blew out. They've overestimated what they can capture," said Young.

It will likely be mid-August at the earliest before the gushing well is permanently capped by injecting mud and cement with the aid of relief wells.