An image taken from video released by BP shows the equipment being used to cap the oil well in the Gulf of Mexico. (BP LLC/Associated Press)

BP has placed a funnel-like cap on the well spewing hundreds of thousands of litres of oil daily into the Gulf of Mexico but it's still too early to determine whether it will slow the flow.

"The placement of the containment cap is another positive development in BP's most recent attempt to contain the leak," U.S. Coast Guard Admiral Thad Allen said in the statement released to CNN. "However, it will be some time before we can confirm that this method will work and to what extent it will mitigate the release of oil into the environment.

"Even if successful, this is only a temporary and partial fix and we must continue our aggressive response, operations at the source, on the surface and along the Gulf's precious coastline."

The cap, known as a "top hat," resembles an inverted funnel with a rubber seal. The seal is supposed to keep oil from escaping, though engineers acknowledge some crude will still be released.

Earlier, BP engineers successfully cut through the leaking pipe spilling oil into the Gulf.

The cut was made by underwater robots using giant shears, a method BP turned to after efforts to make the cut with a robot-controlled diamond-wire saw failed Wednesday when it became snagged.

In a Thursday afternoon briefing, Tony Hayward, the CEO of BP, called the successful cut an "important milestone," adding that the company should know within 12 to 24 hours if the operation works. He said the operation has not been attempted before and carries some risk.

Even if it works, BP engineers expect oil to continue leaking into the ocean. They've used close to 3.79 million litres of subsea dispersant to break it up at the leak's source.

Oil washing ashore

The oil is not moving in a single mass but is more like "a collection of spills," Allen said.

By Thursday, the upper edge of one spill was approaching the southern areas of Mississippi, Alabama and Florida.

A CBC crew discovered this oil-coated water bottle on Pensacola Beach, Fla., on Thursday morning while interviewing surfers. (Paul Hunter/CBC)

On Dauphin Island, a barrier island at Alabama's southern tip, teams of workers walked the beach Wednesday, stooping often to scoop up tiny blobs of oil that had washed ashore.

A day earlier, "the oil was coming in in roughly hand-sized chunks … just kind of flopping around the water like a bunch of drunken pancakes," said Graham Macdonald, leading a cleanup assessment along the shoreline.

Oil was also drifting perilously close to the Florida Panhandle's popular sugar-white beaches, where crews on the mainland were doing everything possible to limit the catastrophe.

As the edge of the slick drifted within 11 kilometres of Pensacola's beaches, emergency workers rushed to link the last in a kilometres-long chain of booms designed to fend off the oil.

Officials said the slick consisted in part of "tar mats" about 152 by 610 metres in size.

Forecasters said the oil would probably wash up by Friday, threatening a delicate network of islands, bays and white-sand beaches that are a haven for wildlife and a major tourist destination dubbed the Redneck Riviera.

"We are doing what we can do, but we cannot change what has happened," said John Dosh, emergency director for Escambia County, which includes Pensacola.

Oil has washed up on the shores of Louisiana, 80 kilometres from where a BP-leased drilling rig, the Deepwater Horizon, exploded on April 20 and sank, causing the spill. Some 200 kilometres of coastline have been affected there.

Allen directed BP to pay for five additional sand-barrier projects in Louisiana, the state most affected so far by the spill.

BP said Thursday the project will cost it about $375 million, on top of about $1 billion it had spent on response and cleanup as of its latest expense update Tuesday.

White House spokesman Robert Gibbs said the U.S. government was sending BP a $69 million bill to cover costs. Gibbs, who said the bill is the first to be sent to the company, added that he did not know how long BP would be given to pay.

U.S. President Barack Obama was scheduled to make his third visit to the Gulf region on Friday, a week after his last visit, to Port Fourchon, La.

With files from The Associated Press and the CBC's Paul Hunter