High winds and large waves expected in the Gulf of Mexico as the first named storm of the Atlantic hurricane season passes to the west are likely to slow efforts to contain the largest oil spill in U.S. history.
As costs associated with the spill mount, shares in London-based energy giant BP Plc are languishing near 14-year lows, prompting the New York Federal Reserve to investigate potential systemic risks posed by the company.
The Gulf oil crisis is in its 71st day with no firm end in sight. The economic and ecological costs — to tourism, wildlife, fishing and other industries — continue to mount for four states along the U.S. Gulf coast.
Tropical Storm Alex, forecast to reach hurricane strength on Tuesday, is projected to travel well west and south of the undersea gusher about 50 miles off the Louisiana coast.
But plans to move a third containment vessel to the leaking well could be pushed back by about a week by high waves associated with Alex, a BP spokesman said on Monday.
U.S. government officials estimate that 35,000 to 60,000 barrels are leaking from the blown-out well each day.
BP's current containment system can handle up to 28,000 barrels daily. The planned addition would have raised that to 53,000 bpd, said Kent Wells, a senior vice president with BP.
Deep below the ocean floor, drilling of a pair of relief wells intended to plug the leak for good by August will continue "unless, unfortunately, a storm heads directly our way," Wells said.
The first relief well is now tantalizingly close to the blown out well — just 20 feet (6 meters). But BP said on Monday it will be drilled another 900 feet (275 meters) before an attempt is made to intercept the rogue well.
BP's market capitalization has shrunk by hundreds of billions of dollars since the Deepwater Horizon drilling rig sunk in 5,000 feet (1,525 meters) of water on April 22, two days after an explosion and fire killed 11 workers.
The company continues to publicly stand behind Tony Hayward, its embattled chief executive.
FED SEES NO SYSTEMIC RISK
On Monday, sources told Reuters the New York Federal Reserve has been monitoring firms' exposure to BP to ensure that if the oil giant buckles it will not put the global financial system at risk.
"The Fed gave banks' exposure to BP a passing grade," said one of the sources, on condition of anonymity.
Still, some of BP's trading partners, such as Credit Suisse, are tightening collateral requirements imposed on the company, CNBC reported on Monday.
Top U.S. officials continue to beat a path to the Gulf region, responding to criticism that President Barack Obama and his administration responded too slowly to the crisis. Vice President Joe Biden heads to the region on Tuesday.
On Monday, former President Bill Clinton told CNN Obama was getting "a bum rap." The failed well is a "geological monster" and if efforts to cap the leak should fail, the U.S. Navy might have to blow it up, Clinton added.
As crude oil and dispersants float on the surface of the Gulf, crews are battling to keep filth off beaches and away from wildlife breeding grounds. Rough weather created by Alex would be just the latest blow to the hard-hit region.
