Feds plan probe of BP; stocks tumble

June 2, 2010 at 12:00a.m.

bp oil spill

Associated Press

NEW ORLEANS

BP’s stock plummeted and took much of the market down with it Tuesday as the federal government announced criminal and civil investigations into the Gulf of Mexico oil spill.

BP engineers, meanwhile, tried to recover from a failed attempt to stop the gusher with an effort that initially will make the leak worse.

Attorney General Eric Holder, who was visiting the Gulf to survey the fragile coastline and meet with state and federal prosecutors, would not say who might be targeted in the probes into the largest oil spill in U.S. history.

“We will closely examine the actions of those involved in the spill. If we find evidence of illegal behavior, we will be extremely forceful in our response,” Holder said in New Orleans.

BP’s stock nose-dived Tuesday, losing nearly 15 percent of its value on the first trading day since the previous best option — the so-called “top kill” — failed and was aborted at the government’s direction. It dipped steeply with Holder’s late-afternoon announcement, which also sent other energy stocks tumbling, ultimately causing the Dow Jones industrial average to tumble 112 points.

After six weeks of failures to block the well or divert the oil, BP was using robotic machines to carve into the twisted appendages of the crippled well. The latest attempt involved using tools resembling an oversized deli slicer and garden shears to break away the broken riser pipe so engineers can then position a cap over the well’s opening.

Even if it succeeds, it temporarily will increase the flow of an already massive leak by 20 percent — at least 100,000 gallons more a day. And it is far from certain that BP will be able to cap a well that one expert compared to an out-of-control fire hydrant.

“It is an engineer’s nightmare,” said Ed Overton, a Louisiana State University professor of environmental sciences. “They’re trying to fit a 21-inch cap over a 20-inch pipe a mile away. That’s just horrendously hard to do. It’s not like you and I standing on the ground pushing — they’re using little robots to do this.”

The operation has never been performed in such deep water and is similar to an earlier failed attempt that used a larger cap that quickly froze up. BP PLC officials said they were applying lessons learned from the earlier effort.

Since the Deepwater Horizon rig exploded April 20, killing 11 workers and eventually collapsing into the Gulf of Mexico, an estimated 20 million to 40 million gallons of oil has spewed, eclipsing the 11 million that leaked from the Exxon Valdez disaster.

President Barack Obama on Tuesday ordered the co-chairmen of an independent commission investigating the spill to thoroughly examine the disaster, “to follow the facts wherever they lead, without fear or favor.” The commission is led by Bob Graham, a former Florida governor and U.S. senator, and William K. Reilly, a former head of the Environmental Protection Agency.