Mainstream reporting on Elgin gas leak

Total's Elgin gas leak costing $2.5m a day

The gas leak from Total's Elgin platform is costing it $2.5m (£1.6m) a day in lost income and response costs, the company said.

the Telegraph

2 April, 2012

Total was in talks with the Health and Safety Executive on Monday over returning to the site to attempt a "topkill" on the well by pumping heavy mud to stop the leak.

"We are talking about weeks to perform the well killing," said Michel Hourcard, Total's senior vice-president. "It should be a relatively easy job."

Total is also preparing to start drilling two relief wells "soon" and will proceed with the drilling – which could take six months – until the topkill is successful. The company said it was waiting for "optimal sea conditions" before deploying a vessel to conduct seabed surveys of relief well locations.

Shares in Total rose 2.31pc, the highest close since the scale of the leak became apparent a week ago. It was buoyed by the confirmation on Saturday that the flare on the platform had burnt out, removing the most obvious ignition risk for the gas.

Total assured investors the final impact of the incident would not be as bad as the Gulf of Mexico disaster for BP. Patrick de la Chevardière, Total's chief financial officer, said: "We understand that comparisons to Macondo are inevitable but the situations are very different."

He said Total estimated lost earnings from the fields it had shut were $1.5m a day. Response costs were a further $1m a day, expected to rise to $1.5m as relief well drilling began. A relief well could cost $150m to $200m in total.

"We believe we have ample resources to deal with this situation," he said. "We have a robust liquidity position with $19bn of cash and cash equivalent on the balance sheet at the end of 2011."

Total expected its capital expenditure and dividend programme to be unaffected.

It did not foresee problems in restarting the other wells at Elgin in due course. 

Ratings agency Fitch had said that, if the entire field were to be lost, it could cost Total €5.7bn.