VENICE, La. (Reuters) - BP Plc overcame a snag in its latest effort to curb the Gulf of Mexico oil spill as the British energy giant's shares stabilized on Wednesday and parts of the huge oil slick crept near Florida.
The company's latest plan is to cut away the leaking riser pipe protruding from the ruptured wellhead on the sea floor, then lower a containment cap onto the remaining apparatus to trap much of the escaping oil and funnel it to the surface.
The diamond-tipped saw used to sever the pipe became stuck on Wednesday, but BP managed to dislodge the cutting tool after several hours of difficult maneuvering of its robot submarines on the Gulf floor, allowing the operation to continue, a source familiar with the operation told Reuters.
If the remote-controlled saws manage to slice off remaining bits of the pipe and provide a smooth foundation at the top of the well assembly, BP aims to place the containment cap with a rubber seal over the opening to siphon off most of the oil.
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As the desperate effort to contain the undersea gusher proceeded a mile (1.6 km) deep underwater, escaping oil on the surface stretched ever farther across a coastal region whose vital seafood and tourism industries have been shaken for weeks by the worst U.S. oil spill in history.
Heavier amounts of tar balls and other oil debris washed up on Alabama's Dauphin Island and parts of Mississippi while toxic goo from the far-flung slick crept within 10 miles (16 km) of Florida's northwest panhandle.
Tourist-magnet Florida is ramping up reconnaissance efforts and preparing to deploy more booms and conduct coastal cleanups. Officials prepared for landfall that could come as early as Friday.
In Louisiana, hardest hit so far by the oil slick, Governor Bobby Jindal announced White House approval for a controversial plan to build five large offshore berms with sand dredged from the sea floor to help shield the state's fragile coastline.
Critics have questioned whether the artificial barrier islands can be built up quickly enough to keep more oil from washing ashore. But supporters of the plan say the spill is likely to remain a threat to Louisiana for months, and that the berms could prove crucial in holding back oil debris that would otherwise be swept inland by hurricanes.
U.S. Coast Guard Admiral Thad Allen said he has directed BP to pay for the five berm projects, in addition to one he already approved last week. But there was no immediate word on the estimated cost of the effort.
BP, now facing a U.S. criminal investigation, has lost one-third of its market value, or about $67 billion (46 billion pounds), since the April 20 oil rig explosion that killed 11 crewmen and unleashed the spill.
The latest plan to curb the oil flow, after BP failed in its "top kill" attempt at plugging the well, is widely seen as the last best hope of at least containing the rupture until August, when two relief wells aimed at halting the gusher are expected to be finished.
This latest attempted fix may actually increase the flow of oil, at least temporarily, before the well can be controlled.
President Barack Obama, facing one of the biggest challenges to his presidency, is under relentless pressure to stop the leak.
Vice President Joe Biden rejected criticism of the administration's handling of the disaster.
"From my perspective, I think if there's any mistake made (it is) that we haven't communicated clearly enough what the president has done on this oil spill from the beginning," Biden told PBS' "Charlie Rose" show.
In a speech in Pittsburgh, Obama said it is time for the United States to embrace a clean energy future because of the inherent risks of drilling deep into the earth for oil.
"The catastrophe unfolding in the Gulf right now may prove to be a result of human error -- or corporations taking dangerous short-cuts that compromised safety," Obama said.
BP shares recovered from an earlier dip to close nearly unchanged in London on Wednesday, while the company's New York-traded shares rose more than a point; both equities plunged over 10 percent on Tuesday.
The outlook for BP was further clouded as the market barometer of the company's risk of defaulting on its debt hit a new high on Wednesday, reflecting growing concerns about BP's exposure to the mounting costs of the Gulf spill.
Credit default swaps protecting BP's debt jumped 87 basis points to a record 255 basis points, or $255,000 per year to insure $10 million for five years, according to Markit Intraday. By comparison, those swaps stood at about 100 basis points last Friday and 42 basis points in April.
The cost of insuring the debt of rig operator Transocean and Anadarko Petroleum Corp, which owns a 25 percent stake in the blown-out well, also reached record levels on Wednesday.
Meanwhile, BP Chief Executive Tony Hayward issued an apology for his latest public relations gaffe, saying he was appalled by his own widely reported remark that "I want my life back" -- a comment that stirred anger in the Gulf region where the spill is destroying livelihoods.
"Those words don't represent how I feel about this tragedy," he said.
Off Alabama, a section of Dauphin Island beach well known for its powder-white sand was covered with patches of black and an orange sheen. Hundreds of workers and around 150 boats set out to lay more protective booms around the island, though they were delayed by a squall that passed over the tourist haven.
"It is so depressing. It is really happening. It really won't go away. And the American people really don't know what has hit them," said Dauphin Island homeowner Caroline Graves.
BP's latest cut-and-cap operation, which could take 72 hours to complete, is intended to collect a large portion of the billowing oil and channel it through a hose to a ship on the surface of the Gulf.
The cap is equipped with valves to allow operators to inject methanol or warm water that would prevent the buildup of slushy gas hydrates that thwarted an earlier siphoning effort.
But sawing off the end of the damaged riser pipe through which oil has been pouring non-stop could increase the flow of crude by 20 percent until the cap is in place.
As much as 19,000 barrels of oil (800,000 gallons or 3 million litres) a day has been pouring into the Gulf off the coast of Louisiana since the rig explosion.
The accident ranks as the worst oil spill in U.S. history, surpassing the 1989 Exxon Valdez tanker disaster in Alaska.
The spreading slick coincided with the official start of the Atlantic hurricane season, which forecasters say could be the stormiest since 2005, when Katrina and Rita wreaked havoc on the Gulf Coast.
Commercial fishing, shrimping and oyster harvests have been shut down for weeks along much of the Gulf Coast, home to a $6.5 billion seafood industry.
While cleanup crews have attacked the oil slick on the surface with skimmers, dispersants and controlled burns, shoreline-protection teams have scurried to block the spread of oil with containment booms, sandbags and other barriers.
Scientists and Gulf residents are most concerned about the encroachment of oil into bayous and marshes teeming with shrimp, oysters, crabs, fish, birds and other wildlife.
(Additional reporting by Kristen Hays and Chris Baltimore in Houston, Michael Peltier in Tallahassee, Jeremy Pelofsky in Washington, Verna Gates on Dauphin Island, and Joanne Frearson in London; writing by Steve Gorman; editing by Eric Beech)
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