* Environment groups warn of damage to marine life
* Trade-off between harming offshore wildlife or land
* Cleanup chemical maker Nalco says product is safe
By Deborah Zabarenko, Environment Correspondent
WASHINGTON, May 4 (Reuters) - Oil-dispersing chemicals used to clean up the vast BP spill in the Gulf of Mexico carry their own environmental risks, making a toxic soup that could endanger marine creatures even as it keeps the slick from reaching the vulnerable coast, wildlife watchdogs say.
The use of dispersants could be a trade-off between potential short-term harm to offshore wildlife and possible long-term damage to coastal wildlife habitat if the oil slick were to reach land.
The U.S. Environmental Protection Agency has approved 14 dispersants for use on oil spills, including Corexit, manufactured by Nalco Holding Co. NLC.N of Naperville, Illinois.
Corexit has been provided for use in the BP spill, and the company has exhausted its inventory and is producing more, said Mani Ramesh, Nalco's chief technology officer. Ramesh said Corexit's active ingredient is an emulsifier also found in ice cream; he disputed environmental groups' claims that it is harmful to marine life.
Nalco stock rose more than 11 percent on Monday on news that Corexit was being tested on the ocean floor near the leaking wellhead. But it retreated 2.75 percent to 25.47 on Tuesday in a broad U.S. market sell-off.
So-called dispersants work on an oil spill as dishwashing detergent works on a greasy skillet: they break up oil into tiny droplets that sink below the water's surface where naturally occurring bacteria consume them. Without dispersants, oil stays on the water's surface, where bacteria can't get at them, Ramesh said.
The problem, according to Jackie Savitz, a senior scientist at the marine environmental group Oceana, is that the dispersants themselves can be toxic to wildlife. Dispersants can also enhance oil's toxicity in the dispersion process.
This makes them simply the lesser of two bad options to fight an oil spill such as the slick created by the April 20 explosion at BP Plc's (BP.N) Deepwater Horizon drilling rig, she said.
"A decision is being made where it's the shore wildlife and oysters and beaches versus the animals that live in the water," Savitz said by telephone. "When they use a dispersant, it's taking the oil and essentially dissolving it in the water so that it doesn't wash up on the beach.
"It's also good for public perception, because a lot of people think it's only bad if it washes up onshore."
"Do you kill the fish or do you kill the birds?" Mark Floegel of Greenpeace asked rhetorically.
The choice may be more complex. The judgment may be that spraying these chemicals in the water column -- from the water's surface to the sea bed -- directly affects wildlife living there in the short term, but is meant to prevent the slick from reaching shore, where it could cause long-term harm to coastal wetlands and the species that live in them.
Sea turtles, dolphins and whales have been seen swimming through the oil slick, and bluefin tuna spawning grounds were not far from its southwest edge as of last Friday, according to the National Oceanic and Atmospheric Administration.
Closer to shore are oyster beds and seagrass beds -- where dolphins, birds, lobster, conch, scallops, shrimp and juvenile fish seek food and shelter -- as well as barrier island bird nests, loggerhead turtle nests, sea turtle nests and essential fish habitat, Oceana said, citing NOAA and the Unified Command working on the spill.
Allison Nyholm, a policy adviser at the American Petroleum Institute, noted that current dispersants are different from the thick solvents used in 1967 on an oil spill off the California coast at Santa Barbara.
Nyholm did not directly respond to questions about possible risks from dispersants to marine wildlife, saying there was insufficient data to make this assessment.
But she stressed that dispersants are not spread on marine life or birds: "Birds aren't naturally made to have dispersant sprayed on them. You don't want to interject a chemical reaction where you don't have to." (Editing by Philip Barbara)