WRAPUP 8-BP relief well weeks away, hurricane hurts cleanup

* Weeks before relief well reaches gushing pipe -Salazar

* US administration working on new deep-water moratorium

* BP shares up about 4 percent in New York

* Spill claims expected to easily eclipse $20 billion

* Senate panel moves to remove oil spill liability cap (Adds details on containment operations, Hurricane Alex)

By Kristen Hays and Tom Doggett

HOUSTON/WASHINGTON, June 30 (Reuters) - A relief well intended to plug BP Plc's (BP.L) (BP.N) gushing Gulf of Mexico oil leak is still weeks from completion, a top U.S. official said on Wednesday, as the season's first Atlantic hurricane disrupted cleanup efforts.

In Washington, U.S. lawmakers took a step toward making oil companies face unlimited liabilities from offshore spills like the one sullying the Gulf coast.

Hurricane Alex was delaying British energy giant BP's plans to boost containment capacity at its leaking undersea well and threatening to push more oil-polluted water onto U.S. shores.

A relief well, one of two being drilled, is less than 1,000 feet (330 meters) from its target but will still take weeks to reach the spewing oil pipe, U.S. Interior Secretary Ken Salazar told U.S. lawmakers. The relief wells are intended to intersect and then plug the ruptured deep-sea well.

"So in the next several weeks they'll get it down to the target depth," Salazar said.

Salazar's timetable was in line with BP's own statements, but there had been speculation earlier this week that the relief well link could be established earlier.

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The Gulf oil spill disaster, in its 72nd day, is causing economic and environmental havoc along the Gulf coast, hurting tourism, fishing and other industries, harming wildlife, and leaving the future of BP far from clear.

Salazar said he is working hard to finalize a new moratorium on deep-water offshore drilling that would affect exploratory wells at 500 feet (152 metres) or deeper after a federal court blocked the Obama administration's previously announced six-month ban. Salazar would not say when the new moratorium would be issued.

"We believe the moratorium was correct when we put it in place. We believe it is still correct," Salazar said, and suggested drilling would be allowed in well-known offshore fields.

The administration wants the moratorium in order to give a presidential commission enough time to investigate the cause of the rig explosion that led to this disaster and see what new safety regulations may be needed to prevent future oil spills.

The U.S. Senate Environment and Public Works Committee voted on Wednesday to eliminate limits on liability that oil companies would face for oil spill damages. The measure now goes before the full Senate. It also would need to win passage in the House of Representatives before becoming law.

Oil companies currently have a $75 million cap for compensating local communities for economic losses and cleaning up environmental damage. The change, if approved and enacted into law, would apply retroactively to BP.

Congressional Democrats have made it a top priority. Some Republicans say the change would stop small U.S. companies from drilling and open the door to more big foreign operators.

HURRICANE ALEX

Gulf residents braced for heavy rains and flooding from Alex, a Category One hurricane packing 85-mph (135 kph) winds. The hurricane was on track to make landfall later on Wednesday near the Texas-Mexico border. [ID:nN30192989]

The Coast Guard said controlled burns of oil on the ocean, skimming of surface oil, spraying of dispersant chemicals and booming operations were on hold.

BP kept oil-capture and relief well drilling operations going at the leak on Wednesday despite rough seas and high winds spawned by Alex, the Coast Guard said.

U.S. Coast Guard Admiral Thad Allen, the U.S. government's point man on the spill response, said waves at the leak site reached seven feet (2.1 metres) and winds gusted to 25 miles per hour (40 km per hour).

Allen had said the oil-capture and relief well drilling operations would shut down if winds hit 46 miles per hour (74 km per hour).

The Gulf of Mexico holds the most promising untapped crude oil reserves in the United States, and a string of major discoveries over the past decade by companies including BP have rejuvenated investment in deeper and more difficult waters.

BP STOCK

BP's market capitalization has shrunk by about $100 billion since the drilling rig sank in 5,000 feet (1,525 metres) of water after an April 20 explosion and fire killed 11 workers.

BP shares have lost more than half their value since the spill but were up about 4 percent in New York trading on Wednesday following sharp gains in London.

The PHLX Oil Services Sector index rose on the day as well, but is down nearly 19 percent since the start of the spill.

"The stock prices had really discounted a very negative scenario. ... The reality is not as bad as what the market has priced in," said Eric Marshall, director of research at Hodges Capital Management in Dallas.

That "has probably created a window of opportunity in a lot of these areas," he said.

BP has said it will cover all costs of its Gulf oil spill. It has agreed to establish a $20 billion fund, but claims are expected to easily eclipse that sum. [ID:nWBT014025]

Separately, the new head of the U.S. agency overseeing offshore drilling told lawmakers a record of "bad performance, deadly performance" by an oil company should be considered relevant when the government decides on drilling lease awards.

"It is simply unacceptable for companies to repeatedly misreport production, particularly when it interferes with the auditing process," said Michael Bromwich, who heads the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement. [ID:nN30360458]

The agency was was formerly known as the Minerals Management Service.

In what may signal a generally tougher approach to BP and other oil companies, the Interior Department said it hit BP with a civil penalty of $5.2 million for submitting "false, inaccurate, or misleading" reports for energy output on Native American tribal lands in Colorado. (Additional reporting by Cyntia Barrera Diaz in Mexico City, Ernest Scheyder in Belle Chasse, Louisiana, Mississippi; Richard Cowan in Washington; Chuck Mikolajczak in New York; Writing by Jerry Norton; Editing by Will Dunham)