BP Oil Spill Estimate Remains Elusive

BP says Thursday afternoon that it's siphoning off up to 5,000 barrels a day from the oil spill, but the success throws into question BP's estimate that the well was leaking a total of 5,000 barrels daily.
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HOUSTON, Texas (

TheStreet

) --

BP

(BP) - Get Report

said on Thursday that it's now capturing 5,000 barrels a day from the

oil well leaking

into the Gulf of Mexico.

But the company, in trumpeting that success, appears to have thrown into doubt its own highly criticized thoughts on the amount of oil gushing from the underwater well each day, which BP had "guesstimated" at 5,000 barrels.

Last Sunday, BP had its first success in siphoning off leaking oil, using a small tube inserted directly into a pipe coming from the underwater well. Each day this week through Wednesday, the amount of oil being captured by the tube has been increased by BP by about 1,000 barrels a day.

BP's CEO, Tony Hayward, has said previously that the 5,000-barrel estimate given as the total amount of oil leaking into the Gulf waters each day was a "best guesstimate." Attacks by scientists and legislators have intensified this week, aimed not just at BP but at the National Oceanic and Atmospheric Administration, or NOAA, asking all parties to do a better job in calculating the actual rate of the leaking oil.

Even with the tube's success, Interior Secretary Ken Salazar told the press on Wednesday, that BP's "top kill" effort may be a make or break attempt to take control of the oil spill. The Interior Secretary said a "top kill" might be tried by Sunday, and would work by forcing what is known as heavy drilling mud into the leaking well and cementing the well shut afterward.

On Wednesday, Congressman Ed Markey (D-Mass.) told BP it should make a live video feed of the leaking underwater well, located 5,000 beneath the Gulf of Mexico surface, available to the public. BP had agreed by Thursday morning, and the video was up on a House of Representative climate web site, www.globalwarming.house.gov, on Thursday afternoon.

Scientists contend that the U.S. government's NOAA has been slow to investigate the spill, in particular, the large plumes of underwater oil first noticed early this week by scientific research vessels.

Interior Secretary Salazar assured the U.S. public on Thursday that the government is at work on a better estimate and has "nothing to hide."

BP wasn't the only company involved in the oil spill massaging the public message on Thursday.

Nalco

(NLC)

, the chemical company which has been providing hundreds of thousands of gallons of chemical dispersants used by BP to break down oil, issued a press release on Thursday saying that it was, "gratified that the EPA has acknowledged that the use of Nalco's dispersants has been effective and has had no undue impact on the marine environment."

What Nalco neglected to mention was that the EPA had made that statement in conjunction with ordering BP to find a less toxic chemical dispersant to use in its oil spill containment effort.

Nalco's product ranked 13th out of 18 chemicals approved by the EPA in level of effectiveness against southern Louisiana crude oil. Of the 12 chemicals above it, all were equal to or less toxic than BP's chemical of choice, according to the EPA.

As of early this week, there were 1.2 million gallons of Nalco chemical dispersants that had been ordered in relation to the BP oil spill, and there were reports that 655,000 gallons had already been put to use by BP, according to press reports.

Nalco shares were down more than 5% on Thursday, though it was amid another general equities market rout.

At Nalco's annual investor day earlier this week, the company estimated that the BP oil spill business was just 1% of sales, and 7 cents to 8 cents of earnings, according to Laurence Alexander, an analyst at Jefferies, who attended the event.

With close to half of the amount of dispersant ordered already used, the financial significance of the EPA ban is minor, the analyst said. To begin with, the 1% of sales represented by the BP oil spill was relatively small in terms of earnings impact.

Additionally, the Jefferies analyst said it's still not certain that any other chemicals manufacturer would be able to produce the volume required for BP. Therefore, the EPA and BP could come back in a few days and say that they attempted to find adequate volume in the market, but couldn't. As a result, BP would likely use the remaining stockpile of Nalco dispersant.

Yet Spring Valley, N.Y.-based

U.S. Polychemical

, which makes a dispersant called Dispersit SPC 1000, told the

New York Times

on Thursday that it had received a large order from BP and would increase its production to 20,000 gallons a day in the next few days, and eventually as much as 60,000 gallons a day.

Nalco lists among its major shareholders Warren Buffett's

Berkshire Hathaway

(BRK.B) - Get Report

.

The BP oil spill also took a turn in an odd direction Wednesday when BP gave approval to use six $24 million oil centrifuge devices that were created by a team backed financially by

Kevin Costner after the Exxon Valdez oil spill

.

-Reported by Eric Rosenbaum in New York.

RELATED STORIES:

>>Kevin Costner in BP Oil Spill Spotlight

>>Oil Spill in Pictures: Gulf of Mexico Impact

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