Better weather aids fight against oil slick

VENICE, Louisiana (Reuters) - A flotilla of nearly 200 boats tackled a massive oil slick in the Gulf of Mexico on Tuesday, taking advantage of calm weather to intensify the fight to reduce the spill and limit its impact on the U.S. shoreline.

Cleanup crews waiting on shore across the U.S. Gulf got a few days reprieve as the slow-moving slick remained parked in the Gulf waters that are calm, for now.

"Right now, we're not showing shoreline impact for three days," BP Plc Chief Operating Officer Doug Suttles said.

Energy giant BP, under heavy pressure in Washington, hustled to plug a gushing undersea leak that threatened to wreak havoc on Gulf Coast fishing and tourism and reshape the U.S. political debate on offshore drilling.

The company expects a giant steel containment device, fabricated in Port Fourchon, Louisiana, and designed to be placed over the biggest of three oil well leaks on the seabed, to leave port on Wednesday, Suttles said.

The box-shaped chamber, designed to channel oil up to a ship, will "hopefully" be operating within six days, he said.

Lawmakers and the White House vowed on Tuesday to change a law limiting BP's liability for lost revenues from fishing, tourism and other businesses from $75 million to $10 billion. The amendment is being authored by Senator Robert Menendez of New Jersey.

Those payments would be aside from the total spill clean-up costs, which analysts estimate as high as $14 billion.

"The administration is working on legislation to lift that cap and extend it ... we could easily top $75 million in a short period of time," said White House spokesman Robert Gibbs.

Crude oil prices tumbled on Tuesday, though, as traders downplayed the threat the spill presents to production and shipping in the Gulf region. BP shares also showed signs of stabilization after a nearly two-week skid.

WEATHER HELPS

The Mississippi River delta and other areas of the U.S. Gulf Coast are threatened by contact from the leak, spewing from the ocean floor at a rate estimated at more than 5,000 barrels (210,000 gallons/795,000 liters) a day.

Calmer seas after days of high winds aided one of the biggest oil-containment operations ever attempted.

Boats were laying down and repairing miles of boom lines strung along Gulf shores to try to fend off and contain the drifting slick estimated to be at least 130 miles by 70 miles in size.

"With the conditions turning better and better, it's encouraging," Coast Guard Petty Officer Matthew Schofield said from the Joint Information Center in Roberts, Louisiana. "There have been no reports of thick oil on shore."

Still, environmental regulators reported a "first sighting" of slick near the Chandeleur Islands, three narrow islands off the southeast coast of Louisiana, on Tuesday.

Local officials braced for yet another potential swing in wind direction that could threaten the Chandeleurs.

"The winds are helpful to us but on Thursday they begin to be less helpful," Louisiana Governor Bobby Jindal said at an appearance in New Orleans.

In New York, BP American Deposit Receipts rose 2.01 percent to 51.20 in New York trading after falling on Monday.

The stock has fallen about 17 percent in the two weeks since the company announced an explosion and fire on the Deepwater Horizon drilling rig, which subsequently sank killing 11 workers and unleashing the oil flow into the sea.

Oil prices dropped 4.4 percent, hurt by the weak euro and expectations that inventory reports on Wednesday will show rising U.S. stockpiles. Traders are also less worried that the Gulf oil spill will disrupt production and tanker traffic.

The leak, still weeks or months away from being stopped, threatens to eclipse the 1989 Exxon Valdez catastrophe in Alaska, the worst previous U.S. oil spill to date.

'DISASTER FOR YEARS AND YEARS'

"Our biggest concern is that the oil comes in in any kind of volume and settles in the cane. Once it settles it destroys the cane and kills the shrimp," charter boat captain Dan Dix said in Venice, Louisiana.

"If you kill the shrimp, you kill the fish that feed off the shrimp, and if you kill the fish then there is nothing left in the Gulf of Mexico. That would absolutely be a disaster for years and years," he said.

U.S. Defense Secretary Robert Gates approved requests from three more governors of Gulf Coast states to fund the deployment of thousands of National Guard troops to respond to the oil slick, the Pentagon said.

"We are committed to preventing as much of the economic damage as possible by working to contain the impact of this potentially devastating spill," President Barack Obama said.

In addition to the stopgap measure of the containment chamber, drilling started Sunday on a relief well that could cap the oil spill on the Gulf floor, but the operation is expected to take two to three months to complete.

The accident highlighted the difficult politics of balancing U.S. energy security and worries about protecting the environment and industries that depend on it, like fishing.

It forced Obama to suspend plans to expand offshore oil drilling, unveiled last month partly to woo Republican support for climate legislation.

Florida Democratic Senator Bill Nelson, a fierce opponent of offshore drilling because of the environmental risks it entails, said the expanded drilling proposals were "dead on arrival" in Congress.

In an effort to keep climate control legislation moving forward, the bill's sponsor, independent Senator Joseph Lieberman of Connecticut, said language in the bill would be modified to allow energy exploration and drilling at least 75 miles off the Florida coast, against an initial requirement of 50 miles.

California Governor Arnold Schwarzenegger pulled his support for expanded drilling off his state's coast, citing the Gulf spill. His reversal came after he had called for more oil drilling off California to raise money to help cover a $20 billion state budget shortfall.

But the governors of Texas and Mississippi warned against a rush to judgment against offshore oil drilling.

Anadarko Petroleum Corp, which owned a 25-percent stake in the downed well against BP's 65-percent stake, said the leak has not yet changed its budget or strategic plans.

BP said it is releasing $25 million each in block grants to Louisiana, Mississippi, Alabama and Florida to jump-start clean-up projects. The funding can be used for numerous expenses such as vessels for hire.

On Tuesday, Florida Governor Charlie Crist said it was possible that his state could sue BP over any damage Florida might suffer from the spill.

(Additional reporting by Matt Daily and Tom Bergin in London; Anna Driver and Chris Baltimore in Houston; Pascal Fletcher in Miami; Michael Peltier in Pensacola; and Ricard Cowan in Washington; Writing by John Whitesides and Ros Krasny; Editing by Philip Barbara)