BP reels as spill advances, fallout widens

VENICE, Louisiana (Reuters) - Energy giant BP Plc was under siege on Monday over the catastrophic oil spill from its ruptured Gulf of Mexico well, as its shares fell and the U.S. government pressed it to try to limit a major environmental disaster.

As a huge oil slick advanced toward the Gulf Coast shoreline, the London-based company came under increasing pressure to do more to stop, or at least control, what is fast turning into the worst oil spillage in U.S. history.

Comments by U.S. Attorney General Eric Holder that the Justice Department was involved in the investigation of the incident raised the specter of wide liability for BP over the spill after an April 20 explosion at a rig drilling its well.

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

Holder has sent two top Justice officials to New Orleans. “We’re down there to try to ensure that BP is held liable for their responsibility in the spill that has occurred,” he said.

The White House again stressed U.S. President Barack Obama’s commitment to ensuring BP pay the price.

“The commitment the president made yesterday is the responsible party will pay for this and that responsible party is BP,” spokesman Robert Gibbs said.

British markets were closed on Monday but BP’s Frankfurt-listed shares opened 8 percent lower and were down 7 percent at midday, against a 0.3 percent fall in the STOXX Europe 600 oil and gas index.

In New York, American Depositary Receipts of BP’s shares fell 7.8 percent to $48.10, bringing their drop since the close of trading on April 23, to nearly 20 percent.

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Oil prices moved above $86 a barrel.

The swelling slick, at least 130 miles by 70 miles, threatened shipping, wildlife, beaches and one of the United States’ most fertile fishing grounds. The government estimates that 210,000 gallons (795,000 liters) of oil a day are pouring into the Gulf, and Obama has called the situation “a massive and potentially unprecedented environmental disaster.”

BP Chief Executive Tony Hayward was due to meet Monday with the Interior and Homeland Security secretaries and other U.S. officials to discuss how to control the widening spill.


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

“We are responsible not for the accident but we are responsible for the oil and for dealing with it and cleaning the situation up,” Hayward told NBC’s “Today” show.

He told National Public Radio the company would pay all “legitimate claims” from the spill.

In Louisiana, the first point of impact for the slick, rough weather once again hampered efforts to lay protective plastic booms to keep the oil from the shore.

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“It’s really bad. I mean they can’t lay down the boom in this kind of weather with the oil slinging on top. It’s pouring all over the top ... I was going to work today but they turned us around because of the weather,” fisherman Thomas Tiser, one of many recruited for the cleanup, told Reuters Television.

People living along the Gulf coast were bracing for the slick. “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.

In a visit to Louisiana, one of four coastal states at risk, Obama stressed on Sunday BP was responsible for paying for the cleanup involving hundreds of boats and planes and thousands of military and civil personnel across five U.S. states.

Analysts say the total costs of the spill following the explosion and sinking of a drilling rig operated by Swiss-based driller Transocean nearly two weeks ago could exceed $14 billion.

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BP said last week that it and its partners in the well, including Anadarko Petroleum, were paying $6 million a day in cleanup efforts but admitted costs would rise sharply when the oil slick hit land, as would claims for damages.

Hayward said the technical options his company was working on to try to seal the ruptured well included an undersea containment system that would capture the leaking oil and channel it to a tanker on the surface.

Another option was the drilling of a relief well to intersect the ruptured well and try to control and plug the flow that way, Hayward added. “The worst-case scenario is that we would need to contain this for two to three months whilst a relief oil is drilled,” Hayward told NBC.


BP was also using undersea robots to try to fix the well blowout preventer, a mechanism he said had failed to keep the oil from gushing from the stricken rig after the accident.

BP officials have likened efforts to fix the failed preventer to performing “open-heart surgery at 5,000 feet in the dark.”

“No one understands why it’s failed,” Hayward 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.

The Gulf supports a seafood industry that is second only to Alaska in the United States. The area accounts for the bulk of U.S. production of oysters and shrimp.

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.

U.S. energy output from the Gulf has not been not strongly affected and shipping operations at the Louisiana Offshore Oil Port were normal, a port spokeswoman said.

Many of the coastal communities in the path of the oil slick, including Venice on the west bank of the Mississippi River, were devastated by Hurricane Katrina in 2005.

“It’s just like Katrina, catastrophic,” said Frances Lacross, a local resident.

The looming disaster in the Gulf threatens to eclipse the 1989 Exxon Valdez spill of 11 million gallons (40.8 million liters) in Alaska, the worst previous U.S. oil spill to date. (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; Editing by Doina Chiacu)