Australia oil rig leak could take 7 weeks to contain

SYDNEY, Aug. 24 (UPI) -- Oil and gas that began leaking Friday from a drilling rig off the Kimberley coast of Western Australia could take more than seven weeks to contain, the Herald Sun reports.

Rig operator PTTEP Australasia evacuated the crew of 69 on Friday. There were no injuries.

The Australian Maritime Safety Authority on Monday said the oil slick has responded well to aerial applications of dispersant.

Some 19 miles long, the slick is located about 155 miles off the Kimberley coast of Western Australia, a region dubbed as "one of the world's last true wilderness areas" by Tourism Australia.

PTTEP said it would engage a mobile offshore rig from Singapore to drill a hole into the leaking oil well. Mud would then be pumped into the hole to alleviate pressure and stop the flow of the leaking oil.

The spill may cost PTTEP between $10 million and $50 million, and could reduce the company's profit by as much as 6 percent in 2009, DBS Vickers Securities analyst Vichitr Kuladejkhuna said in a note to clients Monday, Bloomberg reported.

Jose Martins, chief financial officer of PTTEP, said AMSA is "dealing with the oil spill, so we expect that the position will remain under containment for some time," he told Radio Australia Monday. He said that PTTEP has a contract with AMSA and "will continue to pay all their costs to contain environmental possession."

In the wake of the rig leak, environmental groups are urging the Australian government to reconsider energy projects in Western Australia. The Environment Institute of Australia and New Zealand says there needs to be more assessment of the marine life of the area near the current oil spill and other areas further south were future energy projects are being planned.

But the incident is not expected to affect other energy projects planned for the state, including the massive Gorgon natural gas project announced last week, Western Australia Premier Colin Barnett said.

"To suggest that this would hold up all oil and gas developments is just not sensible," Barnett said, Bloomberg reports. "There is always a risk. This accident occurred during the drilling and development stage. That is obviously a riskier process than normal, ongoing production."

Federal Environment Minister Peter Garrett said the Gorgon proposal "has been very carefully and closely assessed" by both the West Australian and national governments, he told Radio Australia. He said he expects to make a decision this week "on those matters that relate to specific environment issues under the national environment legislation."

Last year Western Australia accounted for two-thirds of Australia's oil production and 71 percent of the nation's gas output.