NEW YORK (Reuters) - Shares of Nalco Holding Co jumped more than 11 percent on Monday following news that the water treatment maker was supplying chemicals for oil cleanup in the Gulf of Mexico.

Nalco's stock rose $2.80 to $27.53 in morning trading and was as high as $29.25 earlier in the session.

Erik Fyrwald, CEO of the Naperville, Illinois-based company, told CNBC his company was working with BP to apply one of its proprietary chemicals that breaks down oil into small parts that can be eaten and dissolved by naturally occurring bacteria.

Since the Deepwater Horizon rig exploded and sank last month, claiming 11 lives, hundreds of thousands of gallons of crude have been gushing into the Gulf from the ocean floor, with no quick or easy solution.

With a huge oil slick threatening shipping, wildlife, beaches and one of the United States' most fertile fishing grounds, President Barack Obama has called the situation "a massive and potentially unprecedented environmental disaster.

Fyrwald said Nalco has tested its proprietary chemical near the wellhead on the ocean floor -- and plans to pump it directly into the wellhead -- as well as on the ocean's surface.

The product has a "beneficial impact" on cutting oil in water, he said.

Nalco is ramping up production of the product, he said.

Other companies also stand to benefit from the oil spill cleanup, including oil boom and detergent makers.

(Reporting by Ernest Scheyder; editing by John Wallace)