BP says turns corner in oil spill

COCODRIE, Louisiana (Reuters) - Energy giant BP said on Monday it had "turned the corner" in a weeks-long effort to contain an oil spill in the Gulf of Mexico even as the company faced fresh questions about its industry safety record.

London-based BP Plc said its latest "quick fix" -- a mile-long siphon tube deployed by undersea robots down to the leaking well-- was capturing about a fifth of the oil leaking from the ruptured well.

Officials cautioned that the tube is helping contain the oil but will not stop the flow.

The company's stock rose more than 2 percent in London on the news but later shed its gains.

More efforts to stem the spill were under way and there is another smaller leak besides the one now being targeted.

"I do feel that we have, for the first time, turned the corner in this challenge," BP Chief Executive Tony Hayward said in Florida after meeting with Governor Charlie Crist.

"Over the last 48 hours, we're beginning to meet with some significant success," Hayward said.

BP Chief Operating Officer Doug Suttles said the company hoped the pipe could help contain half of the oil escaping from the well. "We're getting a little over a thousand barrels of oil a day up through that tube and over the course of today we'll be trying to increase that rate." he told reporters.

BP executives have faced tough questions from the U.S. government over the huge spill threatening economic and environmental calamity to the U.S. Gulf Coast.

The disaster has hurt BP's image, already tarnished in the United States from a 2006 spill in Alaska from a BP-owned pipeline and 2005 fire at the company's Texas City refinery that killed 15 workers and injured 180.

A study released by the Center for Public Integrity showed two BP-owned U.S. refineries accounted for 97 percent of all flagrant safety violations found in the refining industry by government inspectors over the past three years.

"The only thing you can conclude is that BP has a serious, systemic safety problem in their company," Jordan Barab, deputy assistant secretary of labor for occupational safety and health, was quoted as saying in a statement from the nonprofit group.

U.S. lawmakers are studying raising a cap on corporate liability for oil spills, but. Senate Majority Leader Harry Reid has rejected a proposed cap of $10 billion for oil companies to cover damages from oil spills as "inadequate."

The spill threatens to eclipse the 1989 Exxon Valdez accident off Alaska as the worst U.S. ecological disaster.

"PEOPLE ARE FREAKING OUT"

While the U.S. Gulf Coast has so far been spared a massive landfall of heavy oil, small amounts in the form of surface sheen and tar balls, have come ashore in outlying parts of the coastline of Louisiana, Mississippi and Alabama.

"People are freaking out. They see the news and think oil is everywhere, but it is not," said Michael Dorie, co-owner of Wild Native and Five Rivers Delta Safaris, which takes people on eco-tours of Alabama's Mobile Tensaw Delta.

"If it all dries up and disappears, well the highlight of my tours is wildlife and pretty flowers. Take that away and my tour becomes just a boat ride. If people see oil slicked birds, how many more will not come?" he added.

Shrimpers in southeastern Louisiana remained bleak despite news of BP's progress.

"They're a big company. They'll probably change their name and start over," said Drake Dupre, 48, a shrimp boat captain. "We've got one life. We can't start over again. We're not rich."

Detailing the undersea efforts, BP's Suttles said a suction tube had been inserted into a well riser pipe that fell to the ocean floor after last month's explosion and sinking of a rig drilling the BP-owned well. The riser pipe has been gushing oil from the blown-out well.

The inserted suction tube was siphoning off 1,000 barrels per day, about one fifth of the 5,000 barrels (210,000 gallons/795,000 liters) BP estimated to be leaking per day. Other estimates are much higher.

BP said in a filing with the U.S. Securities and Exchange Commission that it would take time to try to increase the amount of oil and gas being siphoned off to a surface ship.

"This remains a new technology and both its continued operation and its effectiveness in capturing the oil and gas remains uncertain. Other containment options continue to be progressed," it added.

BP's next move, which it hopes will stop the flow completely, would involve a so-called "top kill" option in which engineers using the undersea robots would try to shoot heavy "mud," a mixture of synthetic materials, into the well to form a barrier to prevent oil and gas from escaping.

This may be combined with a "junk shot" to inject material like golf balls and pieces of rubber tire, into the ruptured well's failed "blowout preventer" to seal off oil flow.

"LOOP CURRENT" COULD CARRY OIL

Investors have already knocked around $30 billion off BP's value over the spill, which followed the April 20 explosion in which eleven workers were killed. Survivors' accounts to media raised questions about whether safety controls were observed.

In comments to U.S. media over the weekend, scientists said they had found huge underwater "plumes of oil" several miles long in the Gulf of Mexico, suggesting much wider impact on the marine habitat than previously thought.

But the National Oceanic and Atmospheric Administration cast doubt on those reports, saying no definitive conclusions had been reached about the discovery of "undersea layers."

"The hypothesis that the layers consist of oil remains to be verified," it said.

There are fears that as the oil slick, which is broken into segments, spreads through the action of winds and current, it could run into the so-called "Loop Current" that could take it down to the Florida Keys and even up the U.S. East Coast.

NOAA said that with light winds forecast from the south and the west in coming days, "ocean models indicate that any tar balls leading the southern edge of the plume could begin moving more to the south west and potentially into the Loop Current."

"The worst case would be if a hurricane comes through, that is my biggest fear," Alabama boat captain Dorie said.

But U.S. Coast Guard Rear Admiral Mary Landry told reporters the oil had not entered the "Loop Current" yet.

The U.S. Senate's Homeland Security Committee began a hearing on the oil spill on Monday.

BP had been under intense scrutiny by the Occupational Safety and Health Administration since the refinery explosion in 2005, according to the Center for Public Integrity study.

Refinery inspection data obtained by the center for OSHA's nationwide program and the parallel Texas City inspection show BP received 862 citations between 2007 and 2010 for alleged violations at its refineries in Texas City and Toledo, Ohio.

Virtually all were for alleged violations of OSHA's process safety management standard, rules governing everything from storage of flammable liquids to emergency shutdown systems.

(Additional reporting by Tabassum Zakaria in Washington, Pascal Fletcher in Miami, Verna Gates in Mobile, Alabama, Chris Baltimore and Jeff Mason in Houston, Brian Gorman in London, and Michael Peltier in Tallahassee; Writing by Pascal Fletcher and Jeff Mason; Editing by Chris Wilson)