UPDATE 2-U.S. House approves oil spill reform bill

* Passage lets Democrats claim oversight of Big Oil

* Republicans say bill would cut U.S. oil, gas production

* Safety standards for equipment, workers also in bill

(New throughout)

By Tom Doggett and Richard Cowan

WASHINGTON, July 30 (Reuters) - The U.S. House of
Representatives on Friday approved the toughest reforms ever to
offshore energy drilling practices, as Democrats narrowly
pushed through an election-year response to BP's massive oil
spill in the Gulf of Mexico.

Passing the bill as the House leaves for its six-week
recess gives lawmakers the opportunity to return home boasting
they reined in Big Oil and held BP (BP.L) (BP.N) responsible
for the worst offshore oil disaster in U.S. history.

The vote was 209-193 on the bill supported by President
Barack Obama.

But first, Gulf Coast Democrats won an amendment ending the
federal moratorium on deepwater drilling for oil companies that
met new safety requirements.

The Obama administration's moratorium would end in
November. By the time the full Congress completes action on
this offshore drilling bill -- and it is uncertain that it will
-- it could be November or later.

A similar offshore drilling bill is pending in the Senate,
without the House's new provision to end the drilling
moratorium. But it was unlikely that measure would pass before
that chamber begins its summer recess on Aug. 6.

House Republicans warned the bill would slash U.S. oil and
gas production in the Gulf of Mexico, a major supplier of
domestic energy, and cut high-paying drilling jobs.

"The Obama moratorium on deepwater drilling has already
costs thousands of jobs and this bill will eliminate even more
American energy jobs, making it harder and more expensive to
produce both energy on and offshore," said Republican
Representative Pete Sessions.

"It will drive American companies out of the Gulf," said
Republican Representative Kevin Brady. "This is a choice
between American energy workers and foreign oil."

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Democrats said the bill would make offshore drilling safer
for workers, while also protecting the environment and Gulf
Coast business from future oil spills like the one caused by BP
that damaged wetlands and hurt the region's fishing and tourism
industries.

"This legislation is about safety, about establishing new
safety standards, safety for the workers on the rigs," said
House Speaker Nancy Pelosi.

"If you want to apologize for Big Oil, go right ahead, but
the American people are not on your side on this one,"
Democratic Representative Jim McGovern told his Republican
colleagues during a long day of debate.

Before passing the bill, the House also approved an
amendment to help smaller oil companies compete for Gulf of
Mexico drilling projects under the proposed reforms. The
amendment would let them pool their resources in demonstrating
they have the financial resources to deal with potential oil
spills.

The House vote on the bill was close, as several Democrats
representing districts with strong oil industry interests
joined Republicans in opposition.

Representative Gene Green, from the oil industry-dominated
city of Houston, was one of those Democrats. "There are a lot
of things in there that have nothing to do with safety" of
offshore drilling operations, Green told reporters.

A sticking point in the Senate is opposition from
Republicans and some moderate Democrats to removing all
liability limits oil companies would face for economic damages
stemming from the BP disaster and any future spills.

Current law requires companies to only cover up to $75
million for damages to local economies. The BP spill could end
up costing billions of dollars in lost tourism, fishing and
other Gulf Coast revenues.

BP has said it would pay for all costs related to the
spill, but many lawmakers worry that the company could put
victims through years of litigation.

The Senate energy bill has an added component: new
incentives to encourage more natural gas-powered trucks and
electric vehicles to clean up the environment. It also provides
$5 billion to help improve home energy efficiency.

But Senate Democrats abandoned attempts to attach climate
change provisions that would have set mandatory limits on some
companies' carbon dioxide emissions.

Senate leaders plan to hold a test vote next Wednesday to
gauge support for the bill, according to a Democratic aide. But
Republicans, and possibly some moderate Democrats, might block
a full debate, forcing senators to take it up in September.

The House also approved a separate bill on Friday to give
whistle-blower protection to workers who report violations in
offshore drilling rules.

(Editing by Lisa Shumaker and Sofina Mirza-Reid)