BP unveils new oil spill plan as shares tumble

GULFPORT, Miss./HOUSTON (Reuters) - Energy giant BP unveiled a plan on Monday to vastly boost the amount of oil it is siphoning off from its blown-out Gulf of Mexico well, while President Barack Obama kept up pressure on the company to swiftly compensate victims of the spill.

The president, in Gulfport Mississippi on his fourth visit to the Gulf Coast since the crisis began, said he would press BP executives at a White House meeting on Wednesday to ensure that individuals and companies were dealt with "in a fair manner and a prompt manner."

With the spill certain to continue for weeks, BP's U.S.-listed shares tumbled more than 9 percent as investors feared the British company may give way to U.S. political pressure to suspend its quarterly dividend.

Under intense administration pressure, BP is planning new measures to draw off more oil and to replace the containment cap which has not stopped thousands of barrels of oil from escaping daily from the well into the Gulf. It is digging relief wells to permanently block the flow in August.

BP plans to send more vessels to the spill site to increase its capacity to capture oil from the well from around 15,000 barrels a day now to 40,000-53,000 barrels by the end of this month and 60,000-80,000 by mid-July.

In a pivotal week in the 56-day-old crisis, Obama began a two-day visit to Mississippi, Alabama and Florida. He will address the nation on Tuesday before meeting BP executives on Wednesday for what a White House spokesman said would be a "very frank" encounter.

Lawmakers are due to grill BP executives at hearings on Tuesday and Thursday. Setting the stage for the showdown, top Democratic lawmakers Henry Waxman and Bart Stupak wrote to BP CEO Tony Hayward, accusing BP of taking risky short-cuts that had increased the danger of a "catastrophic well failure."

"It appears that BP repeatedly chose risky procedures in order to reduce costs and save time and made minimal efforts to contain the added risk," the letter said.

BP hired investment banks Blackstone Group LP, Goldman Sachs Group LP and Credit Suisse Group AG as advisers, a source familiar with the matter said.

Obama has seen the massive spill overshadow his political agenda, eclipsing job creation and Wall Street reform. Both are key issues in November congressional elections in which Obama's fellow Democrats are expected to face a tough fight to hold on to their majorities.

Facing intense criticism that he has not shown enough leadership in the spill, Obama will seek to use his meeting with BP executives and his first nationally televised Oval office speech to show that he is on top of the crisis.

But Anthony Bourgeois, 62, a seventh-generation commercial fisherman, said the situation was past the point where Obama's words could quickly bring a quick solution.

"There ain't much he can say. We're all commercial fishermen and we can't go out and make a living," he said in blazing heat in Venice, Louisiana.

BP SHARES SLIDE AGAIN

BP has faced a barrage of criticism from Gulf Coast residents and the administration over its handling of the cleanup, and last week was confronted with a White House threat to widen its liabilities for the disaster.

The company has lost over 40 percent of its market value since the crisis began. In London trading, BP's shares closed down 9.30 percent on Monday.

"The concern is that BP is going to cut its dividend, and that's weighing on the stock. I don't know how big the cut will be, but BP wants to keep the government happy," said Andy Fitzpatrick, director of investments at Hinsdale Associates, in Hinsdale, Illinois.

Addressing investor concerns, British Energy and Climate Change Secretary Chris Huhne told Britain's parliament that BP had exceptionally strong cash flow which provided it with the financial resources to clean up the oil spill.

Millions of gallons of oil have gushed into the Gulf since an April 20 explosion on an offshore rig killed 11 workers and ruptured BP's well. The spill has soiled 120 miles of U.S. coastline, imperiled a multibillion dollar fishing industry, and killed birds, sea turtles and dolphins.

The spill has created an unprecedented financial, legal, regulatory and environmental crisis for companies that operate in the Gulf of Mexico, Moody's Investors Service warned on Monday, saying it could be up to two years before oil production reached pre-spill levels.

The administration's six-month moratorium on deepwater drilling in the Gulf of Mexico posed "uncertainties that could last well beyond this date for producers, drillers and service companies operating in the region," Moody's said in a report.

In his meeting with BP Chairman Carl-Henric Svanberg on Wednesday, Obama will press for the company to set up an independently managed fund to pay oil spill damage claims.

Obama said in Gulfport he was aware there were still problems with BP's claims process. Meeting local business owners on a pier, he said the 40 percent drop-off in business experienced by one hotel was proof of the economic damage of the spill.

SCRAP THE DIVIDEND?

White House spokesman Bill Burton told reporters aboard Air Force One the administration was confident BP would agree to set up the fund. He would not put a monetary value on the account, but said it would be in the billions of dollars.

Gulf Coast residents have been complaining for weeks that the BP claims process was too slow and that the money the company was paying out was too little to make ends meet.

U.S. politicians have also been calling on BP to scrap its quarterly dividend to ensure it has enough money on hand to pay compensation claims and clean up the spill.

A source told Reuters on Sunday BP was not planning to scrap the dividend, currently valued at about $10.5 billion annually but was considering deferring it, paying it in shares or paying into a ring-fenced account for investors.

BP executives will likely face renewed pressure from lawmakers over the issue when they testify at this week's congressional committee hearings.

Representatives of BP, Exxon Mobil, Royal Dutch Shell, Chevron and ConocoPhillips are due to testify on Capitol Hill on Tuesday, and may provide the best view yet of how the industry believes the spill will affect it in the long term.

But analysts also expect the hearing to be full of drama.

"It's going to be ugly for BP officials and there's probably not going to be a lot gained from the experience," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

BP's Hayward will make his first appearance at a congressional hearing on Thursday and is expected to face harsh questioning from lawmakers. The CEO is the public face of BP's response to the spill and a lightning rod for criticism that the company played down the scale of the disaster to reduce its potential liabilities.

(Additional reporting by Jeffrey Jones in Louisiana, Tom Bergin, Adrian Croft, Julie Crust and Keith Weir in London, Kristen Hays and Chris Baltimore in Houston, Rick Cowan and Caren Bohan in Washington, and Leah Schnurr and Ryan Vlastelica in New York; Writing by Ross Colvin; Editing by Alan Elsner)