VENICE, La. (Dow Jones)--The Jamaica-size oil slick leaking from the site of a sunken oil rig in the Gulf of Mexico threatened the coast here Friday, sparking fears of an environmental disaster as rough weather hampered response efforts.
The obstacles to responding to the spill come as there are increasing concerns that the slick may be larger than current government estimates and costs for the clean up are likely to rise.
The U.S. Coast Guard said Friday it has received reports from individuals and agencies that oil has reached Louisiana's shores. The oil spill, which could be among the biggest in history if it isn't contained, has expanded rapidly in recent days as officials have been unable to stanch the estimated flow of 5,000 barrels a day.
Industry experts said that based on radar and satellite imagery and standard measurement tools, the flow rate may be four to five times larger.
State and federal government officials Friday urged BP PLC to seek additional support in its response efforts. Louisiana Gov. Bobby Jindal said he was concerned the spill was going to overwhelm BP's capabilities. Administration and BP officials said they still don't know the cause of the rig blast that triggered the leak.
BP Chief Executive Officer Doug Suttles said the estimates were "highly imprecise." Suttles said his company, with federal government oversight, "continues to respond to a much more significant case, so that we're prepared for the eventuality that it is higher."
Suttles also said costs for the company may rise. Currently, the company estimates it is spending abour $6 million-$7 million a day. "Clearly, as the oil approaches the shoreline, those costs will increase as we mount both additional booming activities and we mount clean-up activities," he said.
In a marina here at the southern tip of the state, crews awaited orders to load boom lines to contain the spill on boats, but strong winds and high seas made sailing difficult. On Friday morning, BP PLC (BP), which is responsible for the spill, was trying to hire local boat captains to participate in the containment and clean-up effort.
High winds also raised concerns that some of the booms that have already been lined out in wildlife preserves near the spill area won't be sufficient to contain the spill, said Tom MacKenzie, a spokesman with the U.S. Fish and Wildlife Service.
"We hope they hold against the wind," he said.
This area is home to a delicate ecosystem that sustains some of the richest shrimp, oyster and fish breeding grounds in the nation, as well as a major outpost for the offshore oil industry. The oil spill could be devastating to the environment and the economy along the Gulf coast, and is weighing heavily on the oil sector.
The incident comes at a time when the federal government--after years of lobbying by the oil industry--was considering opening new offshore areas to oil and gas drilling. It has already prompted some government officials to question the stance.
On Friday, government officials said that proposals for future expansion plans for drilling in new areas off the U.S. coast would be on hold until the probe into the cause of the oil leak in the Gulf of Mexico have is completed.
President Barack Obama, who on Thursday said the government would use all available resources to help contain the spill, has dispatched teams to the Gulf of Mexico to inspect all deepwater oil rigs and platforms for possible violations. He said Friday he has asked Interior Secretary Ken Salazar, who is in Louisiana to tour the areas affected by the spill, to report back to him in 30 days on "what, if any, additional precautions and technologies should be required to prevent accidents like this from happening again."
Attorney General Eric Holder said he's sending a team of Justice Department lawyers to New Orleans to monitor developments. "The Justice Department stands ready to make available every resource at our disposal to vigorously enforce the laws that protect people who work and reside near the Gulf, the wildlife, the environment and the American taxpayers," he said in a press release.
Amid heightened scrutiny of companies involved in drilling and as investors fretted about potential liability issues, shares of several companies fell sharply again Friday. Shares of Transocean Ltd. (RIG), owner and operator of the BP-leased drilling rig that sank last week, closed down 7.9% to $72.32 Friday. Shares of Halliburton Co. (HAL), which was handling the cementing process on the rig, dropped 3% to $30.65.
BP shares traded in New York fell 0.8% at $52.15, after falling more than 8% Thursday, their worst one-day decline since December 2008.
BP spokeswoman Sheila Williams said Friday the company is "taking full responsibility for the spill" and will pay for "legitimate claims" for damages, AFP reported. BP is responsible for the cleanup since it owns the rights to develop hydrocarbon resources in the area where the leak occurred.
BP envisages placing a dome over the leak, a process the company says could take up to a month. The U.K.-based oil giant is also planning to drill a relief well to block the flow of hydrocarbons from the damaged site. This process would take up to three months, by which time the size of the spill may have surpassed the one caused by the Exxon Valdez.
The oil slick is expanding into areas with significant oil and gas production, and has the potential to spread into busy shipping lanes used by tankers bringing foreign crude to the many oil refiners along the Gulf Coast. "The potential disruption of oil tanker traffic in the U.S. Gulf of Mexico is already having an impact on oil prices," wrote analysts with Goldman Sachs Group Inc.
Local officials have said the incident could be a major setback, crippling the fishing industry here. They requested 75 miles worth of boom line to keep the spill from invading the arteries of the Mississippi Delta.
Gov. Jindal said many shrimp and oyster harvesting areas were going to be closed as the slick approaches.
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