More leak control helps BP but spill menaces Florida

VENICE, La./LONDON (Reuters) - Shares of BP Plc gained Monday after it announced progress in containing its Gulf of Mexico oil leak but the energy giant still faced tough questions from investors and U.S. lawmakers as the spill threatened more of the U.S. Gulf coast.

Spilled oil is now looming off white sand tourist beaches in northwest Florida, depositing tar balls and debris on some, after soiling stretches of coast in Louisiana, Mississippi and Alabama in the worst U.S. environmental disaster.

During the weekend, BP announced advances in controlling the undersea leak through a containment cap over the blown-out wellhead, giving estimates of captured oil that suggest a significant portion of the escaping crude is being collected.

But a live video feed of the seabed leak still shows black crude billowing out a mile down in the Gulf of Mexico, and BP and government officials have said a definitive solution will only come in August when a relief well is drilled. This will intersect the leaking well and allow it to be sealed.

BP shares have lost about one-third of their value since the crisis began but in London Monday they were up more than 2 percent. The rise came on the news of progress in the operation of the lower marine riser package (LMRP) containment cap put in place late last week.

"At last we have seen some positive news from BP," said Peter Hitchens, oil analyst at Panmure Gordon.

"With the right LMRP efficiency and surface skimming response, we may have turned the corner on shoreline oil spill volumes," analysts at Credit Suisse said in a research note.

Despite the more encouraging news, U.S. President Barack Obama still faces criticism that he has not taken a forceful enough leadership role in tackling America's worst oil spill, which was in its 49th day Monday.

BP, which said it had so far spent about $1.25 billion on the response effort, says an additional system to capture more of the leaking oil using equipment previously developed for a failed "top kill" attempt to plug the well could allow the company to siphon off the vast majority of the leaking oil.

This system could be operating in mid-June, a spokeswoman said.

Nordic bank Nordea said it divested all its BP shares, worth about 10 million euros ($11.94 million), from its funds and would halt further investment in the British oil company until further notice.

BP, whose shares have lost about one-third of their value since the crisis began, has vowed to pay all legitimate damages claims of those harmed by the disaster.

BP said its containment cap had captured 16,600 barrels of oil (697,200 gallons/2.64 million litres) between June 3 and June 6 and it expects an increase in volumes of both oil and gas collected in the next several days.

On June 5, a total of 10,500 barrels of oil was collected by the cap. U.S. government estimates put the well's leak at 12,000 to 19,000 barrels a day, but some independent scientists have said they believe it is much higher. Maximum collection capacity of the existing containment cap is 15,000 bpd.

"INSULT TO NATURE"

The weekend progress came as the company's chief executive, Tony Hayward, insisted he had no plans of quitting over his handling of the environmental disaster, marked by a string of failures since the April 20 rig explosion that triggered the oil spill.

The vast extent of the environmental impact of the spill is only gradually becoming apparent.

"It's just wrong," David Yarnold, executive director of the nonprofit Environmental Defense Fund, said after touring Louisiana's Barataria Bay by boat Sunday.

"Water is not supposed to look like gasoline and shouldn't have big globs of crude in it," he said, describing the oily sheen and large pools of thick, gooey rust-colored oil in the water he saw. "It's just an insult to nature."

Executives from Transocean Ltd, Halliburton and Anadarko Petroleum Corp -- central players in rig disaster -- were to appear at an energy conference in New York Monday, under pressure to explain how the spill happened and discuss its ramifications.

Transocean operated the rig and Halliburton cemented the work. Anadarko owns 25 percent of the well.

Wednesday, BP gives its annual statistical review.

This week also will feature three hearings by various committees of the U.S. Congress -- two in Louisiana, Monday and Wednesday, and one in Washington Thursday -- where BP's handling of the crisis will come under scrutiny.

Representative Edward Markey, chairman of the House energy and environment subcommittee, asked BP for more details on Sunday of how much oil had spilled in order "to determine BP's financial liability in terms of fines, which could be as high as $4,300 per barrel."

ALTERNATIVE ENERGY

The Obama administration has delayed plans to increase offshore drilling as a result of the spill. The crisis has put Obama on the defensive and distracted his team from the domestic agenda -- a new energy policy, reform of Wall Street and bolstering a struggling U.S. economy.

Obama wants to tap into public anger over images of polluted beaches and fishing grounds to press for faster development of alternative energy.

Oil began leaking from the well after the rig exploded, killing 11 workers. BP faces a criminal investigation, lawsuits, dwindling investor confidence and questions about its credit-worthiness.

After contaminating wetland wildlife refuges in Louisiana and barrier islands in Mississippi and Alabama, the black tide of crude has started to hit some of the famous white beaches of Florida, where tourism accounts for nearly 1 million jobs.

Fully one-third of the Gulf's federal waters, or 78,603 square miles (202,582 square km), remains closed to fishing, and the toll of dead and injured birds and marine animals, including sea turtles and dolphins, is climbing.

(Additional reporting by Bruce Nichols in Houston, Tom Brown in Miami, Jeff Mason in Kenner, Louisiana, Kelli Dugan in Orange Beach, Alabama, Sarah Irwin in Buras, Louisiana, Jane Ross in Pensacola and Lisa Lambert in Washington; Writing by Mark Egan and Pascal Fletcher; Editing by Bill Trott)