BP is nearing completion of a relief well to seal once and for all the Deepwater Horizon spill site in the Gulf of Mexico.  Upon completion, BP will begin its “bottom kill” operation to plug the leaking well with mud and cement.  The well has been provisionally sealed with a containment cap since July 15th.

“They are closing in on the last 30-40 feet,” said retired Coast Guard Admiral Thad Allen, the government’s lead point person on the scene.  He expects to intercept the remaining space between the well shaft and the surrounding rock  “sometime before the end of the week,” depending upon the path of a developing tropical storm moving across the Florida peninsula.

Carol Browner, the energy and climate change adviser to President Obama, says approximately three-fourths of the spilled oil has been recovered from the Gulf of Mexico waters. Deliberate burning, skimming and direct recovery accounted for about 25%, while natural evaporation, dispersion and other processes took care of about 50% of the volume.  The remaining oil has either congealed into tarballs, been embedded into sediment, or remains as a sheen on the water’s surface.  “The good news is that the vast majority of the oil appears to be gone,” Browner said during a recent television appearance.

So far, BP has spent $6.1 billion dealing with fallout from the Gulf spill, the worst in United States history.  BP has already paid $319 million in compensation to businesses and individuals that have been affected by the spill, and will likely continue to face high costs as it continues environmental cleanup operations in the afflicted region.

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The Gulf of Mexico spill is a “wake-up call” for the entire offshore drilling industry, says Bob Dudley, the new replacement for embattled BP CEO Tony Hayward.  In the face of harsh public criticism and Congressional scrutiny, Dudley has promised to make safety his number one concern – a change in direction for the company, which has a reputation for risk-taking.

Clean up and other associated costs related to the spill, the largest in U.S. history, may reach as high as $30 billion.  Since the rig explosion in April which broke open the deep-sea well, estimates say over 5 million barrels of oil have spilled into the Gulf of Mexico, endangering marine life and resulting in major closures of fishing waters and tourist beaches along the Gulf coastline.

The U.S. House of Representatives took up debate today on a bill to reform off-shore drilling practices in the wake of the spill.  The Senate, the SEC and the Department of Justice have also launched their own investigations, and private lawsuits against BP have piled up as well.  The combined effect of these developments has knocked nearly 40% of BP’s market value since the explosion.

BP says it could begin its “static kill” drilling operations to seal the leaking well shut once and for all by this weekend, ahead of schedule.  Still, retired Coast Guard Admiral Thad Allen, the government’s main representative in the region, says conclusive clean up of the region will be both costly and time-consuming, requiring many more millions, many more years and much more effort from BP over the long-term.

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After 85 days, BP has finally succeeded in containing the gushing oil spill in the Gulf of Mexico waters.  After closing valves and vents on the containment cap during a test on Thursday, the well has stayed in place for two full days.

Although this is a very positive sign, both BP and the White House have warned that the containment cap does not represent a permanent fix – there is still much more work to do to seal the well shut for good, and to clean up the hundreds of millions of spilled oil.  “We’re encouraged by this development, but this isn’t over,” said the U.S. government’s lead contact in the region, retired Coast Guard Admiral Thad Allen.

BP will likely release the flow of oil again, siphoning it up to ships on the surface as it continues to drill a relief well to permanently shut the well with mud and cement.  The well is expected to be ready in early August.

Investors welcomed news of the containment caps success, sending BP shares higher in trading today.  However, since the rig explosion in April nearly $65 billion has been knocked off BP’s market value.

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In the wake of the catastrophic oil spill in the Gulf of Mexico, the Obama administration moved last week to ban all offshore drilling operations in the Gulf region for six months until further investigation into the cause of the BP gusher, which has been spilling oil into the ocean since April.

However, a judge in New Orleans struck down the ruling, calling it “rash and heavy-handed.”  The Obama administration appealed immediately, saying that continued drilling poses a danger to oil workers and to the environment that “the president does not believe we can afford.”

It is a contentious issue that has even brought in Abdalla Salem El Badri, the Secretary General of OPEC.  After meeting with European ministers in Brussels, Mr. El-Badri urged the United States to reconsider its ban on offshore drilling, warning that a six month hiatus would hold back oil supplies.  “We should not really ban it and we should not jump to conclusions,” he told reporters.

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The BP oil spill in the Gulf of Mexico – which has become the largest environmental disaster in United States history – has also re-ignited public awareness of the climate and energy bill awaiting approval in the Senate.

President Obama has vowed to acquire all the remaining votes needed to pass this legislation, saying in the wake of this catastrophe, the United States must re-address its energy policies.

“If we refuse to take into account the full cost of our fossil fuel addiction – if we don’t factor in the environmental costs and national security costs and true economic costs – we will have missed our best change to seize a clean energy future,” said the President.  He also noted that America “consumes more than 20% of the world’s oil, but has less than 2% of the world’s oil reserves.”

Speaking of the bill, Mr. Obama says “the votes may not be there right now, but I intend to find them in the coming months.”

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