By Chris Baltimore
HOUSTON (Reuters) - BP <:BP.LO:>Plc said on Sunday it is making progress on a new system to capture almost all of the oil spewing from its blown-out well in the Gulf of Mexico as residents braced for more economic and environmental damage.
On Day 83 of the disaster, Attorney General Eric Holder said the Justice Department has started interviewing witnesses as part of a criminal and civil investigation into the worst oil spill in U.S. history.
BP, which has set up a $20 billion spill fund under pressure from the White House, removed a smaller containment cap from the gushing well on Saturday.
It will take up to a week for robots working 1 mile underwater to completely fit a new cap and seal. Oil will flow freely until the bigger containment system is installed, further hurting tourism and fishing in all five states along the Gulf Coast.
The British energy giant, which is also drilling two relief wells to try to halt the leak by mid-August, hopes the new containment system will funnel as much as 80,000 barrels (12.7 million liters) of oil per day to vessels on the surface -- more than three times the current amount.
"We're pleased with our progress," BP senior vice president Kent Wells told reporters on a conference call.
BP has another cap ready if the new system does not work.
It is also making final checks on a ship that will be able to siphon up to 25,000 barrels per day from the well, Wells said. BP expected the ship to begin processing oil on Sunday.
The Obama administration has pressed BP to take advantage of calm weather and move forward with the containment.
Senior Obama adviser David Axelrod, asked on the "Fox News Sunday" program about hopes the spill will be contained by the end of July, said he was "reasonably confident but obviously this thing is uncharted waters."
LIABILITIES AND COSTS
BP shares have been hammered by the disaster and are likely to remain volatile until the well is capped and the company's total costs and liabilities are clear. Some analysts have put BP's likely costs at $20 billion to $40 billion but estimates have gone as high as $100 billion.
Speculation is running high that BP is approaching several sovereign wealth funds for cash to ward off a takeover and to help pay for the spill. BP boss Tony Hayward met an Abu Dhabi state investment fund last week.
In Britain, The Sunday Times newspaper said BP is in talks to sell up to $12 billion of assets, including a stake in Alaska, to Apache Corp.
Holder revealed more details about the Justice Department investigation of the spill, which he reiterated could apply to other companies involved in the drilling of the damaged well.
"We are in the process of accumulating documents, talking to witnesses on both the criminal side as well as the civil side," he told the CBS program "Face the Nation."
Holder said the investigation was aimed at ensuring no tax dollars pay for the cleanup "and to make sure that we hold accountable anybody who was responsible for the spill."
If the Justice Department finds violations, penalties could be in the many billions of dollars.
FRUSTRATION
The people living nearest the crisis expressed frustration over the pace of the cleanup.
For Billy Nungesser, president of Plaquemines Parish in Louisiana, the top priority is more boats to mop up oil.
"Number one is a sense of urgency," he said. "To get out on the water to work 24/7. We have to be on the front lines."
Nungesser said he was due to meet two Obama administration officials on Sunday, a day before its first commission hearings on the spill in New Orleans.
The administration's commission consists of seven engineers, environmentalists and former politicians who plan to investigate decisions by oil companies and government regulators that may have led to the disaster.
As the spill hits livelihoods and local economies, animal welfare groups are distributing donated dog food to Plaquemines Parish fishermen and others to try to keep pets with their struggling owners.
Donna Schexnayder of the Plaquemines Animal Welfare Society said she has noticed more pets being given to the shelter and expects the number to grow.
"We're starting to see it a little more," she said. "Within the next month or so, it will hit."
(Additional reporting by Alexandria Sage and Jeremy Pelofsky and Lesley Wroughton in Washington; Writing by Timothy Gardner; Editing by John O'Callaghan)
