Dome lowered toward site of huge oil spill

ROBERT, Louisiana (Reuters) - BP Plc engineers using undersea robots manoeuvred a massive metal chamber to within 200 feet (60 metres) of a gushing ruptured oil well in the Gulf of Mexico on Friday, working to contain a leak that threatens an environmental catastrophe on U.S. shores.

The four-story structure, the best short-term hope of controlling the spewing crude, was lowered towards the seabed almost one mile (1.6 km) below the surface in an attempt to funnel the escaping oil to a surface tanker.

BP, which faces enormous financial losses from the spill, suffered a further financial blow when ratings agency Standard & Poor's lowered its outlook on the British oil giant to negative from stable.

Using a containment dome has never been tried at that depth, where engineers guiding remotely operated vehicles battle darkness, currents and intense undersea pressure. BP Chief Executive Tony Hayward warned there was no certainty of success.

"The pressures and temperatures are very different here, so we cannot be confident that it will work," Hayward told CNN.

He said the dome was being lowered "very carefully" on to the leak, and the next three to four days would be spent making the connections to try to pump crude to the surface.

BP says the containment dome could be operating by Monday. The company is drilling a relief well to halt the leak that could take two or three months to complete.

Engineers have also considered pumping heavy fluids into the top of the failed blowout preventer to plug the leaking well in a technique called "top kill." But that would be "a couple of weeks away," officials said, as BP tries to fix the blowout preventer with underwater robots.

BP has been under heavy pressure from Washington to meet its responsibilities in what could be the largest oil spill in U.S. history. After meeting with BP executives in Houston, U.S. Interior Secretary Ken Salazar said the company and its partners made "some very major mistakes.

Salazar reiterated the U.S. government will issue no new offshore drilling permits until an inter-agency panel gives a safety review to President Barack Obama by May 28. In the meantime, existing drilling will continue.

CREDIT PRESSURE

Standard & Poor's, in announcing the negative outlook, indicated a ratings downgrade was likely. Another ratings agency, Moody's, said the spill raised the specter of credit pressure for the five primary companies involved in the project.

Besides BP, the companies are Anadarko Petroleum, 25 percent partner in the drilling project; Transocean, owner of the rig that caught fire and collapsed; Cameron International, which supplied the failed blow-out preventer for the well; and Halliburton, which helped cement in place the blown-out well.

Hayward said the company would meet its obligations to contain and clean up the spill, as well as compensate businesses for their resulting losses. He said a $75 million legal cap on its liabilities under federal law, which some U.S. lawmakers want to raise, would not be a limit.

"We have said that it is inevitable that the $75 million (50.7 million pounds) limit has no relevance in this case," he said.

BP shares dropped 2.3 percent in London on Friday, less than the broad STOXX Europe 600 Oil and Gas index which fell 3.8 percent. In New York, trading in BP's American Depository Receipts slipped 2.8 percent.

The world's biggest reinsurer, Munich Re, warned payouts for various natural catastrophes and the U.S. oil spill had placed its 2010 earnings goal in jeopardy. Competitor Swiss Re, said the spill's cost to the entire industry would be $1.5 billion to $3.5 billion.

The spill threatens an economic and ecological disaster on popular tourist beaches, wildlife refuges and fertile fishing grounds in four states. It has forced Obama to rethink plans to open more waters to offshore drilling.

At least 5,000 barrels (210,000 gallons/795,000 litres) have poured into the Gulf each day since the Deepwater Horizon rig exploded two weeks ago, killing 11 workers.

A sheen of oil has engulfed much of the Chandeleur Islands, barrier islands that are part of the Breton National Wildlife Refuge, the first confirmation of the oil slick hitting land. Some oiled birds, including brown pelicans and a gannet, have been found in recent days.

M.A. Sanjayan, chief scientist for The Nature Conservancy, described seeing "ribbons and ribbons" of orange-coloured oil stretching for miles and penetrating the numerous small bays, channels and inlets of the Chandeleur Islands.

From the air, he said, the oil containment operations appeared almost futile.

"We saw over a dozen skimmers working one slick," he said. "As the boats would approach (the oil), it would just give way right in front of them, from the wake. So they looked like toys, like Q-tips, trying to mop up a very large area."

'LAST THING WE NEEDED'

U.S. authorities on Friday modified and expanded the boundaries of the fishing area closed as a result of the spill, and extended fishing restrictions for another 10 days, to May 17. The closed area represents almost 4.5 percent of Gulf of Mexico federal waters, against slightly less than 3 percent included in the original ban.

"This oil spill was the last thing we needed," said Lance Nacio, a shrimper with Anna Marie Seafood in Dulac, Louisiana. "I think this is going to devastate the industry which was already tattered by low dockside prices."

Kevin Begos, a seafood industry spokesman in Apalachicola, Florida, said seafood dealers in his area have seen orders drop considerably. "Right now, it's mostly fear, because oil hasn't come here yet," Begos said.

Alabama tourism officials planned an ad campaign to let tourists know the beaches were still clean and encourage them not to cancel their vacation plans.

"The beaches are beautiful, the weather is great and the water is clean. The oil is way offshore," Alabama real estate agent Bobby Hornsby said in a message to customers.

About 250 boats deployed protective booms and used dispersants to break up the thick oil on Friday as crews took advantage of another day of calm weather to fight the slick.

Coast Guard and port officials said there had been no impact so far on ship traffic, and made preparations to clean vessels quickly en route to port to keep traffic moving -- a move that could eventually cause delays.

Dozens of Louisiana fishermen met with a marine toxicologist in a pizza restaurant in Venice late on Thursday and many said they were worried about the spill's impact.

"BP needs to look at more than the bottom line," said Kindra, who declined to give her last name for fear her husband, a fisherman, could be excluded from a temporary jobs program the company is offering.

(Additional reporting by Matt Daily and Karen Brettell in New York; Tom Bergin in London; Anna Driver and Chris Baltimore in Houston; Tom Brown and Pascal Fletcher in Miami; Steve Gorman in Mobile, Alabama; Matt Bigg in Venice, Louisiana; and Richard Cowan in Washington; writing by John Whitesides and Ros Krasny; editing by Eric Beech)

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