Oil execs quizzed on safety, BP tries new well fix

WASHINGTON/PORT FOURCHON, Louisiana (Reuters) - U.S. lawmakers pressed oil executives about flaws in a crucial well safety device on Wednesday while BP scrambled with its latest deep-sea effort to control the huge Gulf of Mexico spill that threatens environmental disaster.

BP Plc said it hoped to have a small containment dome in place by late Thursday in hopes of staunching the oil flow from the Gulf floor.

BP, Transocean Ltd and Halliburton Co were all back in the hot seat in Washington over their responsibility in a April 20 rig explosion that killed 11 workers and triggered what could be the worst-ever U.S. oil spill if the crude keeps spewing unchecked into the Gulf.

A U.S. House of Representatives panel said it had uncovered significant problems with a safety control mechanism on BP's oil well that could have contributed to the accident.

Representative Bart Stupak said his panel's investigation showed the Deepwater Horizon rig's underwater blowout preventer had a leak and was not powerful enough to cut off the oil flow before the rig blew up.

Panel investigators spoke with officials of the company that made the blowout preventer and reviewed company documents, finding that the device on the Transocean-owned rig had been modified, making it difficult to operate after the accident.

"The safety of its entire operations rested on the performance of a leaking and apparently defective blowout preventer," Stupak said.

A race is on to contain the catastrophe with BP preparing another potential subsea fix. Meanwhile, oil is still gushing from the sea floor at a rate of about 5,000 barrels (210,000 gallons/795,000 liters) per day and oil has reached at least four shorelines.

Shoreline cleanup and assessment teams said on Wednesday that crews found oil washing ashore at Whiskey Island in the western part of Louisiana's Terrebonne Bay, west of the Mississippi Delta. Crude had been found previously at the Chandeleur Islands and Port Eads in that state, as well as on Dauphin Island, Alabama.

An attempt to maneuver a "top hat" containment dome over the seabed leak -- the second such effort in days -- was under way. BP engineers have lowered it to the seabed and are hoping to start capturing oil in it by late Thursday.

The company is not guaranteeing it will work, citing the difficulties of working almost a mile under the ocean surface.

BP also is drilling a relief well, which could take 80 more days. Within two weeks it aims to try to plug the leak by pumping materials like shredded tires and golf balls into the well at high pressure.

Despite the efforts, U.S. Interior Secretary Ken Salazar said he is unhappy with the inability so far to stop the leak.

"We're depressed, frankly, with what has happened here," he said after meeting with BP engineers in Houston. "There is a great deal of frustration."

Investors have cut the value of BP shares by more than $30 billion since the accident, exceeding even the worst estimates of the spill's cost, reflecting uncertainty about how the calamity will play out.

BP shares fell 0.7 percent in London, while Transocean fell down 2 percent and Halliburton was up 1.8 percent in New York.

Fisheries and tourism, two of the Gulf's economic mainstays, along with birds, sea turtles and other wildlife, are threatened by the unfolding fiasco that could surpass the massive Exxon Valdez disaster in Alaska in 1989.

LOCAL IMPACT

With most of the shrimping grounds near Grand Isle, Louisiana, shut down, Ronald Polkey was one of dozens of local fishermen waiting in line at the town's community center on Wednesday, hoping BP will cut him a check.

"We're screwed this year for shrimp," Polkey, 42, said. "I took all the nets off my boat."

To make matters worse, he said, he left a temporary job laying boom when BP offered to pay him $2,000 a day for spill mitigation. He is still waiting to be put to work.

The White House proposed new legislation which foresees $188 million in one-time discretionary spending -- most of which will be covered by BP -- so assistance can be sped to those affected if the spill worsens.

It would also lift an existing cap on damage liability for the company responsible -- in this case BP -- relating to economic losses caused by the spill. The legislation also calls for a 1 cent-per-barrel increase in the tax that oil companies pay to an oil spill liability fund.

Protesters are becoming more active in Washington and the Gulf region. An activist group called Seize BP planned protests at the company's offices and other sites across the country on Wednesday to demand the government freeze BP's assets to ensure payment for the cleanup and compensation for those impacted.

A new opinion poll showed that despite the oil spill 57 percent of likely voters agree that offshore drilling "is still a safe, reliable and cost-efficient method of producing oil." The poll also showed 53 percent thought expansion of offshore drilling will lead to increased environmental problems.

Cathy Norman of the Edward Wisner Donation, a land trust that owns the property that makes up the Port of Fourchon, the main harbor for the Gulf's deepwater oil and gas industry, said the area's shoreline already is "disappearing at an astronomical rate."

The National Oceanic and Atmospheric Administration forecast persistent southeast winds throughout the week, which have the potential to move new oil onshore.

(Additional reporting by Tom Doggett, Ayesha Rascoe and David Alexander in Washington, Steve Gorman in Grand Isle, Louisiana, Shaleem Thompson and Don Pessin in Venice, Louisiana, Verna Gates in Mobile, Alabama and Pascal Fletcher; Writing by Deborah Charles and Jeffrey Jones; editing by Bill Trott)