Oil recovers as Thunder Horse delayed

BP Plc, Europe's second-largest oil company, announced on Monday, that the restart of its 250,000 barrel-a-day Thunder Horse platform in the Gulf of Mexico has been delayed by 18 months and will not start till mid-2008.

The company said, that the delay was caused by problems with the project's sub sea infrastructure as a key piece of undersea production equipment, called a manifold, failed during testing which was possibly the consequence of a kind of corrosion that made the steel brittle.

The news of impediment ended the decline of oil prices of recent weeks as Crude oil rose a third day in New York going up 47 cents to $63.80 a barrel. Prices have gained 3.2 percent since reaching $62.03 a barrel on Sept. 15, the lowest since March 23.

After the explosion at its Texas City refinery last year and the shutdown of its Prudhoe Bay field, in Alaska, following leaks from a corroded pipe, this delay has come as a major setback to BP as the start up of Thunder Horse was reported by analysts, to be the only good news on the horizon for the oil giant.

Now the company is planning to retrieve all the four manifolds for testing them onshore which will be nowhere close to simple and cheap. The multimillion-dollar manifolds are resting in about 6,000 feet of water, weigh 635,000 pounds each and are about the size of two tractor-trailer trucks parked side by side.

Some questions regarding the project’s returns were put on Monday. The company has pushed that the field will deliver 1.5bn barrels of oil, making it the biggest find yet in the Gulf of Mexico.

But according to a BP employee, UK oil and Gas Company was making moves to revise down expectations from the field, with new estimates that it might hold just 600m barrels of oil.

Most of the project's undersea equipment had been provided by FMC Technologies and the delay may drag them into trouble as well.

However, “The manifold problem does not seem to be caused by manufacturing or installation problems,” BP spokesman Neil Chapman said, although the company is still studying the equipment failure.

"If BP uses FMC for any repair or retrofitting work, it's an endorsement of FMC's approach," Pickering said. "But if they decide not to continue working with them on future projects, that may be a concern."

BP has said it will pay for repairs to the equipment, FMC spokesman Bruce Bullock said.