By Kristen Hays
HOUSTON (Reuters) - BP <:BP.LO:>Plc prepared on Tuesday to test a new cap on its runaway well in an effort to finally arrest the flow of oil gushing into the Gulf of Mexico for the last 12 weeks.
The tests, due to last between six and 48 hours, will begin later on Tuesday on BP's newly installed "capping stack", which has a better seal than the last cap placed on the well and aims to stop oil from spewing out of the failed blowout preventer.
Regardless of the test results, BP should be able to contain the flow from the ruptured well with oil-siphoning vessels by mid-July, said retired Coast Guard Admiral Thad Allen, the top U.S. official overseeing the oil spill.
As the oil giant prepared for a potential turning point in the worst offshore spill in U.S. history, it also said its plans to sell non-core assets, which will help pay for a $20 billion clean-up fund, were moving forward.
Both pieces of news had helped BP shares maintain their recent recovery in London, although they were down in New York trade on profit taking after morning gains.
"We are in discussions with a number of companies about a number of assets," BP spokeswoman Sheila Williams said in London, declining to give details. "Talks are going well."
In Dubai, Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahayan said the emirate was considering investing in BP.
"We are still thinking about it," Bloomberg quoted him as saying when asked about buying a stake in the firm.
BP Chief Executive Tony Hayward visited Abu Dhabi last week and met with the sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA).
BP divested a small non-core asset on Tuesday, selling Magellan Midstream Partners L.P. its crude oil storage tanks in Cushing, Oklahoma and related petroleum pipelines for $289 million.
Investors snapped up BP shares again in London and initially in New York on Tuesday on optimism about possible asset sales and hopes the new technology could cap the 85-day-old gusher that caused the spill and hit the U.S. Gulf economy.
"It's a combination of the cap news and leftovers from the asset sales announcement, but more the asset sales announcement most likely moving the shares," said Joe Saluzzi, from Themis Trading in Chatham, New Jersey.
But the recent focus on divestments highlighted just how much a pounding BP shares have taken, since the firm's net asset value is around $80 billion more than its market value, said analyst Jason Kenney at ING in Edinburgh.
About seven non-core assets -- including ones in Alaska, Colombia, Venezuela and Vietnam -- could be worth $45-50 billion, he said.
In London the shares were up 2.9 percent on Tuesday after a strong day of trading, but after early gains BP's U.S. shares were down about 2 percent at midday.
"It doesn't have anything to do specifically with news out of the company, somebody just got a good profit off the past couple of days," said Mike Breard, analyst with Hodges Fund in Dallas, Texas.
"It's had a real big run, it's not unusual to retrace when you've lost 50 percent or so."
U.S. shares had advanced around 40 percent since the stock collapsed to a low at the end of June.
NO MORE OIL FLOWING?
BP said it would begin pressure tests by midday on Tuesday on the new containment cap just installed atop its leaking wellhead a mile underwater. The new cap was custom-designed and built for the leaking well.
Allen said BP will start the tests on Tuesday afternoon to determine if it can seal the well completely.
Even if the new cap fails, BP will have the ability to siphon up to 80,0000 barrels per day of oil from the blown-out well by mid-July and either burn it or store it aboard vessels on the surface, Allen said.
"Either through a potential shut-in of the well or being able to produce most if not all of the flow that is generated, either way, we will have a way to contain the oil," he said.
Kent Wells, senior vice president of exploration and production, said BP and government scientists would monitor the cap during the tests at "very minute intervals."
If tests progress as hoped, BP said no oil would flow from the well for the first time since a rig being drilled for BP by Transocean Ltd sank days after an explosion on April 20 that killed 11 workers.
During the tests, two smaller siphoning systems, including the one brought online on Monday, will be turned off. But BP warned the outcome was uncertain since the system has never been tested at such depths.
Depending on test results, BP will either keep the cap closed entirely or use it to resume siphoning oil to ships on the surface. If it works effectively, the cap should either hold all the oil in or allow it to be safely captured and funneled away.
While the cap could contain the flow, Wells said relief wells remain the sole means to kill the leak permanently. The first of those wells has another 30 feet to drill before inserting pipe and preparing to intercept the blown-out well by the end of July, Wells said.
The potential breakthrough in efforts to fully contain BP's wellhead came a day after the Obama administration issued a repackaged moratorium on deep-water oil drilling.
Critics said new rules just revised an earlier ban struck down by courts, and put tens of thousands of jobs at risk unnecessarily.
(Additional reporting by Ayesha Rascoe and Alexandria Sage in New Orleans, Matthew Lynley in New York and Eric Onstad in London; Writing by Deborah Charles; Editing by Simon Denyer and Jerry Norton)
