Weather hinders oill spill cleanup

HOUSTON (Reuters) - Tropical storm Alex slowed oil clean-up and containment efforts in the Gulf of Mexico on Thursday, with any permanent fix to BP Plc's ruptured deep-sea oil well still several weeks away.

BP denied a rumour, which helped lift the share price in London, that the gushing leak had finally been capped.

Alex hit land as a hurricane over northeastern Mexico late on Wednesday, well to the west of the spill site, but its high winds and rough seas delayed the British energy giant's plans to expand the volume of oil it is siphoning from the well.

The bad weather also threatened to push more oil-polluted water onto the U.S. Gulf Coast shore and forced the halt of skimming, spraying of dispersant chemicals and controlled burns of oil on the ocean surface.

The worst oil spill in U.S. history is in its 73rd day. It has caused an environmental and economic disaster along the Gulf Coast, hurting fishing and tourism industries, soiling shorelines and killing wildlife.

Talk that BP had managed to cap the leak helped a spike in the UK-based company's London share price on Thursday, but BP officials shot down the rumour.

"That would be really good news, but that's not the information we have," BP spokesman Mark Proegler said. Another BP official said the target date for relief wells to intercept and plug the blown-out well remains early to mid-August.

In U.S. trading BP shares were up around 2 percent.

"I think if you're going to buy BP, you have to buy it before the well is capped, and that's what some people are thinking right now," said Mark Coffelt, chief investment officer of Empiric Funds in Austin, Texas.

"It's been spiking on misinformation, it's hard to know how guilty the company is, how much it can be held liable for."

BP's market capitalisation has shrunk by about $100 billion (£66 billion) and its shares have lost more than half their value since the spill began following an explosion on the drilling rig on April 20, but have shown signs of stabilizing.

Pacific Investment Management Co. PIMCO, which manages the world's biggest bond fund, said on Thursday it is buying more debt of some of the companies involved in the oil spill disaster, though it did not cite specific corporations.

Separately Mark Kiesel, head of the PIMCO corporate bond portfolio management group wrote in a U.S. Credit Perspectives article on the company's web site on Thursday that the possibility of BP filing for bankruptcy was "highly unlikely."

That's because the company has hefty amounts of cash on hand, strong operating cash flow and could sell assets to raise money if needed, Kiesel wrote.

President Barack Obama was scheduled to meet with senior U.S. officials later on Thursday to review the spill situation and oil containment plans, the U.S. Coast Guard said.

The House of Representatives' Transportation and Infrastructure Committee met to negotiate proposed legislation that would hold vessels and facilities more accountable for oil spills. That is one of several bills to target the drilling industry making their way through Congress.

ROUGH SEAS

In the Gulf of Mexico, seas were still running at 4 to 6 feet (1.3 to 2 metres) on Thursday, too rough to allow skimming to resume, and the Coast Guard was not optimistic it would be calm enough to start on Friday.

"The weather today, unfortunately, looks much the same as yesterday. Operations will likely be curtailed," Coast Guard Commander Charles Diorio said on a conference call.

"We expect the seas to start to calm down as we get into Friday and further into the weekend."

"Skimming just isn't effective when you have seas over 4 feet," said Coast Guard Commander Joe Boudrow, deputy incident commander for Florida.

In the bays and estuaries, work crews were replacing boom that was broken or dislodged by the storm but the Coast Guard had no estimate how widespread that damage was.

Regarding reports the world's largest oil-skimming vessel is going to be deployed for the cleanup, Dorio said: "That vessel is currently in New Orleans and is being inspected by a team of personnel, both Coast Guard and BP and other agencies trying to figure out the best way to employ it, if we can employ it at all," Diorio said.

"It is being looked into and hopefully will be decided within the next day or so."

The storm surge from Alex was pushing oil more towards the northwest, towards Mississippi and Louisiana. For the last week it had been moving more northeast towards the Florida Panhandle.

"That has actually reversed," Diorio said.

The weather delayed BP's plans to boost containment capacity at the undersea well, although relief well drilling continues.

Government officials estimate 35,000 barrels (1.47 million gallons/5.56 million liters) to 60,000 barrels (2.5 million gallons/9.5 million liters) spew from the leak each day.

BP's containment systems can handle up to 28,000 barrels daily and its planned addition could raise that to 53,000.

The Deepwater Horizon drilling rig sank in 5,000 feet (1,525 metres) of water after the explosion and fire that killed 11 workers.

(Additional reporting by Anna Driver in Houston, John Parry in New York, and Jane Sutton in Miami; Writing by Jerry Norton; Editing by David Storey)