WRAPUP 7-BP struggles with latest bid to contain US oil spill

* White House keeps up heat on BP over oil spill

* U.S. officials ask BP to clarify paying spill costs

* BP wants to get siphoning tube inserted late on Saturday

* BP CEO calls spill “tiny” compared to “very big ocean”

(adds New York Times report)

By Steve Gorman and Patricia Zengerle

GALLIANO, La./WASHINGTON, May 15 (BestGrowthStock) – BP Plc (BP.L: )
struggled on Saturday to get its latest effort to contain the
massive Gulf of Mexico oil spill to work as the Obama
administration demanded the British energy giant clarify its
intentions on paying for damage caused by the accident.

The accident at the offshore oil rig is threatening an
ecological and economic calamity along the U.S. Gulf Coast.

As BP pushed forward with its tricky undersea effort to
redirect the flow of oil after another setback, two members of
President Barack Obama’s Cabinet demanded that BP Chief
Executive Tony Hayward explain in detail the company’s
commitment to pay for the enormous spill’s damage.

“The public has a right to a clear understanding of BP’s
commitment to redress all of the damage that has occurred or
that will occur in the future as a result of the oil spill,”
Interior Secretary Ken Salazar and Homeland Security Secretary
Janet Napolitano said in a letter to Hayward. [ID:nN15228597]

“Therefore, in the event that our understanding is
inaccurate, we request immediate public clarification of BP’s
true intentions,” they added.

With crude oil gushing unabated into the sea from its
blown-out offshore well a mile (1.6 km) deep on the floor of
the Gulf, BP sought to guide undersea robots to insert a small
tube into a 21-inch (53-cm) pipe, known as a riser, to funnel
the oil to a ship at the surface.

TAKE A LOOK on the spill [ID:nSPILL]

INSIDER TV: http://link.reuters.com/rad93k

Graphic: http://link.reuters.com/teb93k

Breakingviews column [ID:nLDE64C1D1]


BP’s initial attempt to insert the tube into the riser ran
into trouble when the metal frame that supports the siphon
shifted, BP Chief Operating Officer Doug Suttles told reporters
in Robert, Louisiana on Saturday. [ID:nN15212364]

Suttles said BP hopes to get the siphoning tube inserted
late on Saturday night and operational overnight.

“We did have to pull it back to surface (Friday) to make
some adjustments so that we could connect it properly to the
pipework,” Suttles said. “We expect to begin operation of that
equipment overnight tonight.”

A BP spokesman did not respond immediately to inquiries
late on Saturday about progress on the latest attempt.

The company’s previous try to contain the oil using a giant
containment dome failed last week.

The spill began after an April 20 explosion on the
Deepwater Horizon rig, which killed 11 workers. It threatens to
eclipse the 1989 Exxon Valdez spill off Alaska as the worst
U.S. ecological disaster.

A New York Times report on Saturday said scientists had
found huge oil plumes in the Gulf, including one as large as 10
miles long, 3 miles wide and 300 feet thick. It said the
discovery provided evidence the leak could be “substantially
worse” than previously estimated by the government and BP.


In an interview published in a British newspaper on Friday,
Hayward appeared to play down the disaster.

“The Gulf of Mexico is a very big ocean. The amount of
volume of oil and dispersant that we are putting into it is
tiny in relation to the total volume of water,” Hayward was
quoted as saying in Britain’s Guardian newspaper.

Hayward also acknowledged his job was on the line and that
he would be judged by the company’s response to the disaster.
BP’s shares have tumbled and wiped out $30 billion of market
value since the disaster began last month.

Questions have been raised about current U.S. law that
limits to $75 million energy companies’ liability for lost
business and local tax revenues from oil spills.

Writing to Hayward, Salazar and Napolitano cited statements
by BP executives that the company was taking responsibility for
the spill and would cover spill-related costs.

“Based on these statements, we understand that BP will not
in any way seek to rely on the potential $75 million statutory
cap to refuse to provide compensation to any individuals or
others harmed by the oil spill, even if more than $75 million
is required to provide full compensation to all claimants,”
Salazar and Napolitano wrote.

Earlier, BP spokesman Mark Proegler said oil washed up in
Mississippi for the first time in the state on Saturday, when
tar balls were discovered at Long Beach. Oil has now
contaminated several beaches in three states after it was also
located at sites in Louisiana and Alabama.

Officials said that so far the spill has had minimal impact
on the shoreline and wildlife, but a massive operation is
underway to protect areas seen as vulnerable along the coast.


Seeking to curb the volume of oil reaching the surface, the
U.S. Coast Guard and Environmental Protection Agency have
authorized more undersea use of chemical dispersants at the
source of the leak. Dispersants are designed to break the oil
into small droplets more likely to sink to the sea floor.

Suttles, speaking to reporters after flying over the scene
of the spill, said the use of the chemical dispersants appears
to be working. “The oil in the immediate vicinity of the well
and the ships and rigs working in the area is diminished from
previous observations,” Suttles said.

Some environmental groups and the Gulf’s shrimping industry
have raised concerns about the effect of the chemicals, saying
the oil might not sink all the way, but become suspended in the
water column and ingested by fish and other wildlife.

Cleanup crews continue attacking the oil slick using
surface dispersants, skimming and controlled burns.

Inland, BP contractors assisted by flotillas of hired
shrimp boats continued to string containment booms around
sensitive coastal areas. National Guard teams with bulldozers
and helicopters pressed on to plug gaps in booms protecting
Louisiana’s storm-battered shoreline to prevent oil from
reaching the fragile marshlands behind them.

The vast but dwindling marshes are the nurseries for
shrimp, oysters, crabs and fish that make Louisiana the leading
producer of commercial seafood in the continental United States
and a top destination for recreational anglers.

Obama on Friday gave a tongue-lashing to all the companies
involved in the spill — BP, Halliburton (HAL.N: ) and Transocean
Ltd (RIG.N: ) — and said he would not rest until the leak was
stopped at its source.

Estimates of the rate of escaping oil range widely from the
official BP figure of 5,000 barrels per day (210,000
gallons/795,000 liters), adopted by the government, to 100,000
barrels (4.2 million gallons/15.9 million liters) per day.

Stock Report

(Additional reporting by Shaleem Thompson in Buras,
Louisiana, Chris Baltimore in Houston and by Tony Pyle and Don
Pessin in New Orleans; editing by Ed Stoddard, Jeff Mason, Will
Dunham and Paul Simao)

WRAPUP 7-BP struggles with latest bid to contain US oil spill