A discovery of tar balls on Florida's Key West fanned fears on Tuesday that a massive Gulf of Mexico oil spill was spreading through ocean currents, as energy giant BP Plc worked to capture more of the crude leaking from its gushing deep-water well.

BP, after managing to insert a mile-long siphon tube into the leaking riser pipe of its ruptured well, said it was now capturing an estimated 2,000 barrels per day.

This was about 40 percent of the 5,000 barrels (210,000 gallons/795,000 liters) BP has estimated to be leaking daily. BP hopes to increase this containment.

Held squarely responsible by the Obama administration for an environmental calamity that is hitting Gulf Coast economies and ecosystems, the London-based company is moving ahead with other undersea attempts to shut off the leaking well.

A Coast Guard helicopter and National Oceanic and Atmospheric Administration experts planned to scour the Florida Keys on Tuesday for signs of additional pollution after rangers at Fort Zachary Taylor State Park found some twenty tar balls on the shore on Monday. The balls ranged from three to eight inches in diameter.

Tests were under way to determine whether the tar blobs on Key West, the southernmost tip of the popular Straits of Florida island chain, came from the BP-owned blown out Gulf well. If confirmed, it would be the southernmost and easternmost impact reported from the massive oil spill.

Experts have forecast the risk of the spilled oil being caught up in the powerful Loop Current curling around the Florida Peninsula, taking it into the Keys and possibly up the East Coast. This has stirred fears of an impact on Florida's multibillion-dollar tourism industry, as well as on the only living coral barrier reef in the continental United States.

BP's stock was up more than 1 percent in London on Tuesday, even as the company estimated the bill for the oil cleanup at $625 million, $175 million higher than a few days ago, with analysts saying costs could reach into the billions.

'TAKING OUR LIVELIHOOD'

BP spokesman Tom Mueller said company engineers, who are using undersea robots to try to control the seabed well, were looking to carefully ramp up the amount of leaking oil being captured, which is being pumped to a surface tanker ship.

We'll see how much that flow increases today, and are looking for steady operations with incremental increases over time, he said.

Officials say the spill has so far had only a small pollution impact on the shoreline and wildlife along the Gulf Coast, but oil debris and tar balls had been reported earlier in Louisiana, Alabama and Mississippi.

With oil creeping into rich fishing grounds and oyster beds off Louisiana, and commercial and sports fishing suspended across a swath of the Gulf, local residents are worried that their way of life is under threat.

They're not only taking our income, they're taking our livelihood. They're taking the food straight out of our mouths, because the food we eat come out of this bayou, said Cajun fisherman and deckhand Randy Arceneaux, 28, of Cocodrie, Louisiana.

Obama was expected to announce on Tuesday a presidential commission to probe the disaster as the oil industry and its practices come under sharp scrutiny.

Interior Secretary Ken Salazar is due to face questions from the Senate Energy and Natural Resources Committee about the agency's failings on issues surrounding the oil spill and how the Interior Department will be reformed.

A Senate Commerce Committee hearing Tuesday on the oil spill is also due to question BP America President Lamar McKay and Steven Newman, president of Transocean, which owned the rig that exploded and was working on behalf of BP.

Whether it's a nuclear meltdown at Three Mile Island or an oil blowout one mile deep, appointing an independent review panel is critical to reduce the risks of future accidents, said Rep. Edward Markey, chairman of a House of Representatives committee on global warming and energy independence.

The presidential commission will investigate issues related to the spill and its aftermath, including rig safety and regulatory regimes at the local, state and federal levels.

It will also look into the federal government's oversight role, environmental protections, and the Minerals Management Service, the Interior Department agency that has been heavily criticized for regulatory lapses.

With a shakeup of the agency imminent, Chris Oynes, the top official overseeing its offshore oil and gas drilling, announced he would retire at the end of the month.

BP'S IMAGE TARNISHED

I do feel that we have, for the first time, turned the corner in this challenge, BP Chief Executive Tony Hayward said in Florida on Monday, referring to the containment efforts.

Investors have knocked $30 billion off BP's value over the spill, which followed the April 20 rig explosion that killed 11 workers and the fallout it faces is ramping up.

The disaster has hurt BP's image, already tarnished in the United States from a 2006 spill in Alaska from a BP-owned pipeline and a 2005 fire at the company's Texas City refinery that killed 15 workers and injured 180.

Battling to salvage its reputation, BP said on Monday it was providing grants to Gulf coast states to help them promote tourism, which, along with fishing, is a mainstay of the region's economy.

People are freaking out. They see the news and think oil is everywhere, but it is not, said Michael Dorie, co-owner of Wild Native and Five Rivers Delta Safaris, which takes people on eco-tours of Alabama's Mobile Tensaw Delta.

If it all dries up and disappears, well the highlight of my tours is wildlife and pretty flowers. Take that away and my tour becomes just a boat ride. If people see oil slicked birds, how many more will not come?

(Additional reporting by Steve Gorman in Cocodrie, Louisiana, Anna Driver in Houston and Sarah Young in London, Writing by Pascal Fletcher and Ed Stoddard; Editing by Doina Chiacu)

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