* Loop Current may carry oil to Florida Keys, maybe Miami
* Worries of impact on multibillion-dollar Florida tourism
* Obama disappointed in setback to raise liability cap
* BP sees higher cleanup costs, shares slightly up (Adds Obama, Florida lawmaker, Salazar quotes, details)
By Michael Haskins
KEY WEST, Fla., May 18 Fears that oil from a massive Gulf of Mexico spill was drifting to U.S. shorelines rose on Tuesday after tar balls were found in Florida, while BP (BP.L) faced mounting pressure to stem its leaking well.
In a sign of the spill's widening environmental impact, the United States nearly doubled a no-fishing zone in waters seen affected by the oil gushing from the blown well, extending it to 19 percent of U.S. waters in the Gulf. [ID:nN18155760]
But President Barack Obama, whose administration has taken a tough line on BP and other companies sullied by the disaster, saw his drive to increase corporate liability limits for those responsible for oil spills, halted in Congress.
"I am disappointed that an effort to ensure that oil companies pay fully for disasters they cause has stalled in the United States Senate on a partisan basis," said the Democratic president, who blamed Republicans for the impasse. [ID:nN18178809]. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
TAKE A LOOK on the spill [ID:nSPILL]
INSIDER TV: link.reuters.com/wuw64k
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London-based BP, which has seen $30 billion wiped from its market value, said it was capturing an estimated 2,000 barrels per day (84,000 gallons/318,000 liters) after inserting a siphon tube into the well, which began gushing after an April 20 oil rig explosion that killed 11 workers.
That was about 40 percent of the 5,000 barrels (210,000 gallons/795,000 liters) BP estimated was leaking each day. The energy giant said it hoped to increase the amount of contained oil, and its shares closed up about 1 percent on Tuesday.
But a new video of the well showed what appeared to be vast amounts of oil continuing to spew into the ocean.
While officials have stressed the slick's limited impact on prized Gulf beaches, fisheries and wildlife, the discovery of tar balls on a Key West island resort late Monday stoked concern that currents were greatly expanding the oil's reach.
Oil debris and tar balls have been reported in Louisiana, Alabama and Mississippi, and miles of protective booms are being used to defend the shore.
The appearance of new tar balls on a beach is often an indication of an oil spill, the National Oceanic and Atmospheric Administration (NOAA) says on its website.
Tests were being done to confirm whether the 20 new tar balls -- they ranged from three to eight inches (7.6 -20 cm) in diameter -- came from the BP spill, which threatens to eclipse the 1989 Exxon Valdez spill off Alaska to become the worst ecological disaster in U.S. history.
"We believe it is unlikely (the tar balls) are from the Gulf oil spill, but we'll know for sure in a couple of days," Key West Mayor Craig Cates said. The Florida Keys are a major hub for the state's $60 billion-a-year tourism industry.
U.S Representative Ileana Ros-Lehtinen, whose district includes the Keys, said the tar balls, if confirmed as coming from the spill, would mean that Florida had entered "unchartered territory, with serious ramifications on our environment and economy."
Florida Democrat Senator Bill Nelson released a forecast by University of South Florida College of Marine Science experts who said part of the oil slick may reach the Keys in five to six days, and possibly Miami five days after that.
"While I always hope for the best, this is looking like really out-of-control bad," Nelson said in a statement before another round of congressional hearings on Tuesday that were to grill senior officials and BP executives about the spill.
The company, which has offered to pay spill-related damages, estimated the bill for the cleanup at $625 million, $175 million higher than a few days ago. Analysts say costs could reach into the billions.
Signaling further woes for the firm, Interior Secretary Ken Salazar told a Senate panel the government was investigating its Atlantis oil production platform in the Gulf, a day after a consumer group asked a U.S. federal court to stop production.
Salazar also admitted that the Minerals Management Service fell short in preventing the explosion and oil spill. "We have to clean up that house," he said, referring to the federal agency.
Many experts believe oil from the Gulf of Mexico spill may have already been caught up in the powerful Loop Current curling around the Florida Peninsula, which could take it into the Keys and possibly up the East Coast.
NOAA chief Jane Lubchenco said it was likely that some oil would be swept up in the current, if not so already. "When that occurs, oil could reach the Florida Straits in eight to 10 days," she said.
A Coast Guard helicopter and NOAA experts planned to scour the area for signs of additional pollution.
WAY OF LIFE
Key West, the southernmost tip of the popular Straits of Florida island chain, is a famous beach, diving and fishing resort which counted writer Ernest Hemingway among its fans.
Although residents there are used to storms and hurricanes, the oil slick represents a different kind of threat.
"The county hasn't called for an evacuation of tourists as they often do during a hurricane, but if the oil spill affects our waters there won't be any visitors to evacuate. No one knows where the tar balls are from, but they predict doom and gloom," said resident Charlie Bauer.
BP Chief Executive Tony Hayward was quoted by Sky News as saying he believed the ecological impact from the spill would be light. "I think the environmental impact of this disaster is likely to have been very, very modest," he said.
But with oil creeping into rich fishing grounds and oyster beds along the Gulf Coast, and commercial and sports fishing suspended across parts of the region, local residents are worried for their way of life.
"They're not only taking our income, they're taking our livelihood. They're taking the food straight out of our mouths, because the food we eat come out of this bayou," said Cajun fisherman Randy Arceneaux, 28, of Cocodrie, Louisiana.
Obama plans a presidential commission to probe the disaster as the oil industry and its practices come under scrutiny.
Salazar told Congress the United States still needs offshore oil drilling to meet its energy needs.
(Additional reporting by Matthew Bigg and Steve Gorman in Louisiana, Anna Driver in Houston, Tom Brown and Jane Sutton in Miami, Richard Cowan, Tom Doggett and Ayesha Rascoe in Washington, and Sarah Young in London, Writing by Pascal Fletcher and Jeff Mason; Editing by Ed Stoddard and Paul Simao)