BP stops oil spewing into Gulf

BP was conducting a pressure test after it choked off the well on Thursday. Underwater robots scanned the sea floor for signs of oil leaks, which could happen if the undersea well is damaged.

"We've seen no negative evidence of any breaching there," said Kent Wells, BP's senior vice president of exploration and production.

Obama, speaking at the White House, cautiously welcomed the news. "We won't be done until we actually know that we've killed the well and that we have a permanent solution in place. We're moving in that direction, but I don't want us to get too far ahead of ourselves."

BP's shares rose in London on Friday on hopes that it has at last been able to stop the oil that has been leaking into the Gulf of Mexico for the past three months and can focus on the cleanup.

It was the first time BP managed to cap the flow since the April 20 explosion that killed 11 men and caused the worst offshore oil spill in U.S. history.

Investors welcomed the news that the leak has been capped but remained cautious since BP needs to complete 48 hours of tests on whether the well will remain intact after a new tight-sealing containment cap was installed on the mile-deep wellhead on Monday.

Estimates vary widely of BP's total costs, which will run on for many years as lawsuits wind their way through courts.

Three analysts surveyed by Reuters Insider television forecast BP will spend between $63 billion to $100 billion over the next 15 years in fines, cleanup costs and legal costs while analyst Peter Hutton at NCB Securities in London pegs total costs at $40 billion.

"It's relief all around to see that (undersea) camera with no oil coming out," said Hutton. "But people recognize that they're not completely out of the woods."

SHARE PRICE AND ASSET SALES

BP's shares in London were up more than 2 percent on Friday. U.S. were shares down around 3 percent after closing up 7.6 percent on Thursday.

"The stock has been extremely strong over the past week so you're seeing some profit taking," said Michael Sheldon, a market strategist at RDM Financial, Westport, Connecticut.

The battered shares more than halved in value during the first two months of the crisis, but have bounced by more than 40 percent since touching a low in late June. About $65 billion has been wiped off BP's market value since the rig explosion.

Investors also welcomed reports that BP was moving closer to sealing the first deal in its planned $10 billion of non-core divestments to help pay for clean-up costs.

The company and bankers were finalizing details of the sales of assets, including some U.S. interests to Apache Corp, said CNBC and the Financial Times.

The good news about halting the flow of oil into the Gulf was tempered by concern about BP's future in the United States.

The U.S. Senate Foreign Relations Committee said it had scheduled a hearing on July 29 into BP's actions in last year's release of a Libyan convicted of the 1988 bombing of an airliner over Lockerbie.

BP also faced new measures in the U.S. Congress. Lawmakers are considering a range of new rules that could require tougher safety regulations on offshore drilling or bar companies like BP from new offshore exploration leases.

POSITIVE SIGN

BP, which has failed several times to block the leak, managed to stop the flow of oil as it conducted a test in which it closed valves and vents on the containment cap.

The test, which could last up to 48 hours, gauges pressure in the well to assess its condition. Officials said the test would show whether the cap can safely shut off the flow from the well if oil-capture vessels at the surface must disconnect in the event of a hurricane.

BP's Wells said pressure continued to rise in the well as hoped, indicating the undersea structure was intact.

"We're encouraged by this development, but this isn't over," said retired Coast Guard Admiral Thad Allen, the U.S. government's point man on the spill.

BP is likely to release the flow of oil again after the test is done -- siphoning it to ships on the ocean surface in an improved system able to handle up to 80,000 barrels a day until it can seal the well permanently.

That should be more than enough to capture the whole well output, as estimates put the spill rate at between 35,000 barrels (1.47 million gallons/5.56 million liters) and 60,000 barrels (2.5 million gallons/9.5 million liters) a day.

The British energy giant still expects to complete drilling a new well by early August to intersect the ruptured well -- which extends 2.5 miles under the seabed -- and seal it with mud and cement.

The leak has soiled hundreds of miles (km) of shoreline, shut down about a third of Gulf fisheries and hurt tourism and fishing in the U.S. Gulf states. It has also created problems for Obama as the government works to respond to the crisis while area residents struggle financially.

The news that BP had at last stopped the leak gave fresh hope to battered coastal communities.

"I tell you what, we needed that," said Jimmy Thibodaux, a resident of the small southern Louisiana town of Cut Off.

(Additional reporting by Eric Onstad in London, Matthew Lynley in New York, Chris Baltimore in Houston and Alexandria Sage in Cut Off, Louisiana; Writing by Timothy Gardner; Editing by Will Dunham, Greg Mahlich)