Energy giant BP said Tuesday it would pay "all legitimate claims" of economic damages from a catastrophic oil spill in the Gulf of Mexico, well over a 75-million-dollar legal ceiling.

"Liability, blame, fault, put it over here," BP America chief Lamar McKay told a key Senate panel holding the first hearing into the Deepwater Horizon disaster, gesturing as though pushing something to one side.

"We are the responsible party," said McKay. "We will pay all legitimate claims."

The executive said BP had thus far paid out some 1,000 claims, "mostly fishermen" whose livelihoods were threatened by the economic and environmental ruin gushing from BP's uncontrolled well.

"So far I think we're meeting the local needs," said McKay, who refused to "speculate" on the final cost of responding to the catastrophe but underlined "the full resources of BP are behind it."

Asked about the 75-million-dollar cap, McKay told the Senate Energy and Natural Resources Committee: "We think that we're going to exceed that."

While BP is liable for all clean-up costs, US law caps economic damages from such a disaster at 75 million dollars, though many lawmakers have called for raising that to 10 billion dollars.

Asked for the British energy firm's position on that proposal, McKay replied: "I can't comment right now."

Asked what constitutes a legitimate claim, McKay replied: "Substantiated claims — I can't define the term," while promising to be "fair, responsive and expeditious" in addressing them.

At a subsequent hearing, Democratic Senator Tom Carper pointed out that any BP outlays above the cap would be eligible for reimbursement by the federal government and that the oil giant thus had "every incentive" to pay.

Americans affected by the spill who receive a BP check will "no idea that the federal government will be footing the bill," said Carper.

McKay replied that BP was being careful and renewed a vow by the company not to tap into the government trust fund for damages paid above the cap.

earlier related report

Oil companies pass the buck for Gulf of Mexico spill
Washington (AFP) May 11, 2010 –

Three oil industry titans traded blame Tuesday for the Gulf of Mexico oil spill as US lawmakers grilled their executives over the giant slick threatening environmental and economic calamity.

BP, Halliburton and Transocean faced off at two congressional hearings examining the April 20 explosion on the Deepwater Horizon rig, which killed 11 workers and has led to one of the worst spills in American history.

Operator BP said rig owner Transocean, the world's largest offshore drilling contractor, was responsible for the failure of a giant valve system to stop the blast.

"Why did Transocean's blowout preventer, the key failsafe mechanism, fail to shut in the well and release the rig?" BP's America chief Lamar McKay testified.

Transocean chief Steven Newman passed the buck back, saying: "All offshore oil and gas production projects begin and end with the operator."

Newman also pointed the finger at Halliburton, saying the US oil services behemoth was responsible for the cement work that may have failed to seal the exploratory well correctly.

Halliburton's chief safety officer Tim Probert said BP was ultimately responsible for all of the work done on the rig and that his firm had met the British energy giant's instructions and industry practice.

"I hear one message. And the message is, don't blame me," the exasperated Republican Senator John Barrasso told the Energy and Natural Resources Committee hearing. "Well, shifting this blame does not get us very far."

While willing to display their anger that no one would step up and acknowledge being at fault, senators were reluctant to be too hard on an industry on which oil-thirsty America is so dependent.

"Blocking future offshore exploration only means we will import more from foreign countries," admitted Barrasso.

But the ranking Republican on the committee, Senator Lisa Murkowski, suggested the future of offshore drilling was at stake if the industry failed to convince the public their activities were safe.

"Not only will BP not be out there, but the Transoceans won't be there… and the Halliburton's won't be there."

Moments before the hearing began, demonstrators took aim at BP, some with black teardrops painted on their faces in quiet protest, others calling out "BP kills wildlife, BP kills people, BP kills the planet."

McKay said during his testimony on Tuesday that BP would pay "all legitimate claims" of economic damages, well over a 75-million-dollar legal ceiling.

BP has accepted responsibility for the clean-up and is leading frantic efforts to stop an estimated 210,000 gallons of oil from spewing into the sea each day.

It lowered a giant dome over the main leak on Friday but by Sunday this had become clogged with ice crystals and was unable to function as intended as a funnel to divert the leaking oil up to a waiting tanker on the surface.

BP plans to make a second attempt this week with a smaller version, dubbed the "top hat," which it will lower onto the ruptured pipe nearly a mile (1,500 meters) down on the seabed.

BP began drilling a relief well on May 2 that could divert the flow until the well is permanently sealed, but this may not be ready until August so engineers are furiously searching for alternatives.

As efforts to contain the leak grow more desperate, an oil slick the size of a small country has developed off Louisiana, sending large expanses of sheen near vital shipping lanes and encircling ecologically fragile nature reserves.

Louisiana's 2.4 billion dollar fishing industry is already being hit by a partial ban and animals are at risk in a region that is a major migratory spot for rare birds and contains vital spawning grounds for fish, shrimp and crabs.

President Barack Obama has dispatched a fresh delegation of officials led by Energy Secretary Steven Chu to meet this week with BP representatives in Houston, Texas.

His administration also announced plans Tuesday to split the Minerals Management Service (MMS) into two separate parts: one to regulate the industry, and another to provide drilling leases and collect federal royalties.

Two days of separate public hearings into the rig explosion and subsequent oil spill got under way Tuesday in a suburban New Orleans hotel.

The probe co-chaired by the US Coast Guard and the MMS, began with a moment of silence for the 11 dead workers.

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