WRAPUP 3-BP hopes to keep blown well capped, gov't cautious
* BP aims to keep new cap closed as long as possible
* U.S. government says test to be extended in increments
* British PM Cameron visits Washington this week
* BP expresses confidence that well is structurally intact (Adds Allen comments, details on energy legislation)
HOUSTON, July 18 (Reuters) - BP Plc (BP.L)(BP.N) said on Sunday its new cap has stopped the oil that has gushed into the Gulf of Mexico for three months and hopes to keep it that way until a relief well can permanently seal the leak next month.
The British energy giant expressed confidence its blown-out Macondo well is intact below the seabed and it would not need to resume a collection system that has been used to siphon oil from the undersea gusher to ships on the surface.
But the official in charge of the U.S. government's spill response reacted cautiously, saying pressure readings needed to be analyzed and tests of the well's structural integrity that began on Thursday may be extended only in 24-hour increments.
"As a condition of the extension, the U.S. government has required significant new monitoring and periodic evaluation and approval by our science team," retired Coast Guard Admiral Thad Allen, who has the final word on BP's next course of action, said in a statement.
The worst oil spill in U.S. history has caused an economic and environmental disaster in five states along the Gulf Coast, hurt President Barack Obama's approval ratings and complicated traditionally close ties with Britain.
Those concerns are sure to be discussed when British Prime Minister David Cameron meets Obama in Washington on Tuesday.
The plan had been for BP to resume siphoning the oil after the completion of the pressure tests on the well, which extends 2.5 miles (4 km) under the seabed, to judge if it is able to withstand the process to seal the leak.
But Doug Suttles, BP's chief operating officer, said the company now hopes to keep the damaged well shut until the relief well is completed in August and the leak is sealed off with heavy drilling mud and cement.
"We're hopeful that if the encouraging signs continue that we'll be able to continue the integrity test all the way to the point that we get the well killed," he told reporters before Allen issued his statement. "Clearly we don't want to reanimate flow into the Gulf if we don't have to."
For full spill coverage link.reuters.com/hed87k
Insider TV link.reuters.com/hyr57m
Graphic on BP shares r.reuters.com/dez27m
When BP choked off the flow a mile (1.6 km) under the water's surface with a new, tighter cap on Thursday, it was the first time oil has not spewed since an April 20 explosion on an offshore rig killed 11 workers and triggered the disaster.
"While we are pleased that no oil is currently being released into the Gulf of Mexico and want to take all appropriate action to keep it that way, it is important that all decisions are driven by the science," Allen said.
"Ultimately, we must insure no irreversible damage is done which could cause uncontrolled leakage from numerous points on the sea floor."
Billy Nungesser, president of Plaquemines Parish in Louisiana, said the new cap was good news after a three-month losing battle to try to clean up oil hitting fragile marshlands as more lapped ashore.
"We're very optimistic," Nungesser told the "Fox News Sunday" program. "We see light at the end of the tunnel. It's a very long tunnel but today we're making progress."
In Boothville, Louisiana, where a sign on a roadside snack stand said "Thank you, Jesus, the well is capped," residents were happy about the latest news but frustrated at the economic toll the spill is taking.
Shrimper Marvin Davis said he has received only two emergency payments of $2,500 each from BP but has been told to submit more paperwork to keep the money coming.
"I feel we're going to be shut down a long time -- in our best area," he said.
Obama -- under fire to push BP to plug the leak and clean up a spill that has fouled beaches and ravaged fishing, tourism and drilling industries -- welcomed the success of the new cap but said there was much work ahead on a permanent solution.
Beyond monitoring the meeting between Cameron and Obama, BP and its lobbyists are keeping a close eye on the U.S. Congress amid debate on an energy bill that could include reforms meant to prevent a repeat of Gulf of Mexico spill.
Lawmakers are considering a range of new rules that could require tougher safety regulations on offshore drilling or bar companies like BP from new offshore exploration leases.
The crisis took on a new twist over the weekend as the British government said there was no evidence of a connection between BP and last year's release of a Libyan man convicted of the 1988 airline bombing over Lockerbie, Scotland, that killed 270 people, most of them Americans. [ID:nN17129022]
The U.S. Senate Foreign Relations Committee has scheduled a July 29 hearing on possible ties between BP and the release of Abdel Basset al-Megrahi, a Libyan intelligence officer who was the only person convicted of the bombing of Pan Am Flight 103.
BP has said it lobbied the British government about slow progress in resolving a different prisoner transfer agreement with Libya in 2007 but was not involved in Megrahi's release. (Additional reporting by Paul Eckert in Washington, Eileen O'Grady in Houston, Alexandria Sage in Louisiana; Writing by Deborah Charles; Editing by John O'Callaghan)
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