Progress toward Gulf oil well cap

VENICE, Louisiana (Reuters) - Energy giant BP Plc indicated some progress on Monday toward capping the underwater well that ruptured in the Gulf of Mexico almost two weeks ago, pushing a giant oil slick toward the U.S. Gulf Coast.

The swelling slick, now estimated to be at least 130 miles by 70 miles, or about the size of the state of Delaware, threatens shipping, wildlife, beaches and one of the United States' most fertile fishing grounds.

"This spill, it can fundamentally change our way of life here," Louisiana Gov. Bobby Jindal said.

BP, the British energy company, has been working to plug a leak nearly a mile under the surface of the ocean, under heavy pressure from the U.S. government to try to limit a looming ecological and economic disaster.

Tony Hayward, BP's chief executive, and Lamar McKay, BP America president, met on Monday with top Obama administration officials including the energy, interior and homeland security secretaries and the head of the Environmental Protection Agency, to discuss coordinated response efforts.

Separately, BP said crews in Louisiana have finished building the first of three massive steel and concrete containment domes the company plans to lower in place over one of the three leaks on the ocean floor.

"We will load that on a ship tomorrow along with other associated equipment, and transport it to the site," Doug Suttles, chief operating officer of BP's exploration and production unit, told reporters on a conference call.

Drilling also started Sunday night on a relief well that could cap the oil spill on the Gulf floor, the company said. Still, this operation is expected to take two to three months to complete.

THREATENS FOUR STATES

The National Oceanic and Atmospheric Administration projects that the oil slick, which continues to spread over a wider surface area in the warm Gulf waters, will move further east and west by Tuesday, although not necessarily further north toward the coast.

Efforts to prevent the slow-moving mass from washing ashore in parts of four states have been hampered for days by choppy seas and high waves in the Gulf, but forecasts suggest calmer conditions in the next few days.

"The stormy weather is clearing as we speak," Shawn O'Neil, a meteorologist with the National Weather Service in New Orleans, said. "The winds will stay light and variable all the way through Friday. They will have much improved conditions to do what they need to get done."

Miles of booms are being laid along the coast of four states in an effort to contain the movement of oil onto beaches and into key wildlife sanctuaries and breeding grounds.

The Obama administration has kept the focus on BP to pay for and assume responsibility for the oil spill disaster, which started with an explosion April 20 on the Deepwater Horizon rig that killed 11 workers.

For its part, the federal government has come under fire for not responding more quickly to the spreading economic and environmental threat -- criticisms that may have prompted Obama to travel to the affected region on Sunday.

The oil spill, which continues unchecked for now, could ultimately rival the Exxon Valdez disaster from 1989.

That spill was caused when a single, massive oil tanker spewed some 10.8 million gallons or 250,000 barrels of crude oil into Alaska's Prince William Sound.

Estimates put the daily flow from the current well leak at 5,000 barrels or more, but government and company officials have suggested they that estimate could be low.

Comments by U.S. Attorney General Eric Holder that the Justice Department was involved in the investigation of the incident raised the specter of criminal liability for BP over the spill.

A Justice Department official said it was not a criminal probe at this stage.

BP's Hayward on Monday acknowledged his company's responsibility in a round of appearances on American TV and radio shows, a day after U.S. Interior Secretary Ken Salazar said the administration would keep "keep the boot on the neck" of BP to fulfill its legal responsibilities.

Analysts say BP's total liability could exceed $14 billion.

In New York, American Depositary Receipts of BP's shares fell 3.7 percent to close at $50.19. Shares of Transocean Ltd, operator of the sunken oil rig, rose 0.82 percent to 72.91.

Argus Research on Monday downgraded both Transocean and BP to "hold" from "buy" citing negative impact from the Deepwater Horizon spill.

CRUDE PRICE RISING

"In many ways, the timing of this incident could not have been worse, as President Obama recently supported the expansion of drilling activity to areas where it was previously prohibited," the brokerage said.

Mississippi Governor Haley Barbour, speaking on CNN, said Obama should not move hastily, despite the leak's severity.

"It wouldn't be very wise to stop all drilling off the Gulf of Mexico," Barbour said, noting that the Deepwater Horizon well was "one of thousands" in the area.

Oil prices moved above $86 a barrel as economic optimism lifted Wall Street and concerns the spill could cause short-term disruptions to supplying.

So far, major shipping lanes in the Gulf of Mexico have not seen delays. But the rate to charter oil and product tankers in the Caribbean and Gulf Coast region has surged by 50 percent or more over the past week on worries about potential delays from the oil spill, analysts said.

Fishing in a wide swathe of federal waters between Louisiana and Florida's Pensacola Bay was restricted for 10 days on Sunday to avoid any chance that contaminated seafood will make its way to store shelves.

Wildlife experts also fear a heavy toll on animals and birds. Near Gulfport, Mississippi, 19 sea turtles were found dead and necropsies were being done by experts at the National Marine Fisheries Services. But they had no external oil soiling and it was not clear if the deaths were linked to the slick.

Before significant amounts of oil potentially come ashore, environmental groups were mobilizing thousands of volunteers to prepare for clean-up efforts. Those that make their living from the sea were already counting their losses.

"We have an opportunity to lose our entire fishery down here. I mean, not just the customers. It's everything," said Ross Barkhurst, a boat owner in Venice.

(Additional reporting by Kelli Dugan in Mobile, Chis Baltimore, Anna Driver and Kristen Hays in Houston; Matt Daily and Tom Bergin in London, Pascal Fletcher in Miami, Jeremy Pelofsky in London; Writing by Pascal Fletcher and Ros Krasny Editing by Philip Barbara)