By Matthew Bigg
VENICE, Louisiana (Reuters) - Energy giant BP Plc indicated some progress on Monday towards capping the underwater well that ruptured in the Gulf of Mexico almost two weeks ago, pushing a giant oil slick towards the U.S. Gulf Coast.
The looming ecological and economic disaster has started to fuel high-level opposition to the Obama administration's push to open more waters to oil drilling to bolster U.S. energy security, as governments question a potentially high toll to oil spills.
The swelling slick, now estimated to be at least 130 miles (208 kilometres) by 70 miles (112 km), or about the size of the state of Delaware, threatens shipping, wildlife, beaches and one of the United States' most fertile fishing grounds.
"This spill, it can fundamentally change our way of life here," Louisiana Gov. Bobby Jindal said.
BP, the British energy company, has been working to plug a leak nearly a mile under the water's surface, under heavy pressure from the U.S. government to try to limit the damage.
Tony Hayward, BP's chief executive, and Lamar McKay, BP America president, met with top administration officials including the energy, interior and homeland security secretaries and the head of the Environmental Protection Agency, to discuss coordinated response efforts.
Separately, BP said crews in Louisiana have finished building the first of three massive steel and concrete containment domes the company plans to lower over one of the three leaks on the ocean floor, where crude is escaping at a rate estimated at more than 5,000 barrels a day.
"We will load that on a ship tomorrow along with other associated equipment, and transport it to the site," Doug Suttles, chief operating officer of BP's exploration and production unit, told reporters on a conference call.
In another bid to slow the flow of oil, drilling started Sunday on a relief well that could cap the well on the Gulf floor, the company said. Still, this operation is expected to take two to three months to complete.
ARNOLD'S ABOUT-FACE
The incident has brought into sharp focus the thorny politics of balancing U.S. energy security with protecting the environment and industries that depend on it, like fishing.
But California Governor Arnold Schwarzenegger made an about-face on Monday, saying the BP spill convinced him to oppose plans to expand oil drilling off his state's coast. "I am withdrawing my support," he told reporters.
The White House has already acknowledged the spill could force President Barack Obama to rethink plans to open more waters.
Mississippi Governor Haley Barbour, speaking on CNN, said Obama should not move hastily, despite the leak's severity.
"It wouldn't be very wise to stop all drilling off the Gulf of Mexico," Barbour said, noting that the Deepwater Horizon well that sunk was "one of thousands" in the area.
Pursuing more domestic energy to reduce dependence on OPEC nations remains one of the industry's top initiatives.
"We realise fully that there is an impact from this incident. I'm not trying to belittle that," said Sara Banaszak of the American Petroleum Institute. "I'm trying to say that when you look at the whole picture within which this incident has occurred there are still benefits from producing these fuels at home."
The National Oceanic and Atmospheric Administration projects that the oil slick, which keeps spreading in the warm Gulf waters, will move further east and west by Tuesday, although not necessarily further north towards the coast.
Efforts to prevent the slow-moving mass from washing ashore in parts of four states have been hampered for days by choppy seas and high waves in the Gulf, but forecasts suggest calmer conditions in the next few days.
Crews are laying miles of booms along the coasts of the states to contain the movement of oil onto beaches and into key wildlife sanctuaries and breeding grounds.
COMPARISONS TO VALDEZ
Obama has kept the focus on BP to pay for and assume responsibility for the disaster, which started with an explosion April 20 on the Deepwater Horizon rig that killed 11 workers.
For its part, the federal government has come under fire for not responding more quickly -- criticisms that may have prompted Obama to travel to the affected region on Sunday.
The oil spill, which continues unchecked for now, could ultimately rival the Exxon Valdez disaster from 1989.
That spill was caused when a single, massive oil tanker spewed some 10.8 million gallons or 250,000 barrels of crude oil into Alaska's Prince William Sound.
Comments by U.S. Attorney General Eric Holder that the Justice Department was involved in the investigation of the incident raised the spectre of criminal liability for BP over the spill.
A Justice Department official said it was not a criminal probe at this stage.
BP's Hayward on Monday acknowledged his company's responsibility in a round of appearances on American TV and radio shows, a day after U.S. Interior Secretary Ken Salazar said the administration would keep "keep the boot on the neck" of BP to fulfil its legal responsibilities.
Analysts say BP's total liability could exceed $14 billion.
In New York, American Depositary Receipts of BP's shares fell 3.7 percent to close at $50.19. Shares of Transocean Ltd, operator of the sunken oil rig, rose 0.82 percent to 72.91.
Argus Research downgraded both Transocean and BP to "hold" from "buy", citing negative impact from spill.
Oil prices moved above $86 a barrel as economic optimism lifted Wall Street and concerns the spill could cause short-term disruptions to supplying.
Fishing in a wide swath of federal waters between Louisiana and Florida's Pensacola Bay has been restricted for 10 days on Sunday to avoid any chance that contaminated seafood will make its way to store shelves.
Those who make their living from the sea were already counting their losses.
"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.
(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 Jeffrey Jones, Pascal Fletcher and Ros Krasny. Editing by Philip Barbara)
