Thursday, September 30, 2010

Drilling Plans Off Cuba Stir Fears of Impact on Gulf

Drilling Plans Off Cuba Stir Fears of Impact on Gulf
Desmond Boylan/Reuters
Cuba's nascent oil industry has pumps near Havana but lacks some of the
equipment needed to handle a major deepwater spill.
Published: September 29, 2010

HOUSTON — Five months after the BP oil spill, a federal moratorium still
prohibits new deepwater drilling in the American waters of the Gulf of
Mexico. And under longstanding federal law, drilling is also banned near
the coast of Florida.

Yet next year, a Spanish company will begin drilling new wells 50 miles
from the Florida Keys — in Cuba's sovereign waters.

Cuba currently produces little oil. But oil experts say the country
might have reserves along its north coast as plentiful as that of the
international oil middleweights, Ecuador and Colombia — enough to
bolster its faltering economy and cut its dependence on Venezuela for
its energy needs.

The advent of drilling in Cuban waters poses risks both to the island
nation and the United States.

Ocean scientists warn that a well blowout similar to the BP disaster
could send oil spewing onto Cuban beaches and then the Florida Keys in
as little as three days. If the oil reached the Gulf Stream, a powerful
ocean current that passes through the region, oil could flow up the
coast to Miami and beyond.

The nascent oil industry in Cuba is far less prepared to handle a major
spill than even the American industry was at the time of the BP spill.
Cuba has neither the submarine robots needed to fix deepwater rig
equipment nor the platforms available to begin drilling relief wells on
short notice.

And marshaling help from American oil companies to fight a Cuban spill
would be greatly complicated by the trade embargo on Cuba imposed by the
United States government 48 years ago, according to industry officials.
Under that embargo, American companies face severe restrictions on the
business they can conduct with Cuba.

The prospect of an accident is emboldening American drilling companies,
backed by some critics of the embargo, to seek permission from the
United States government to participate in Cuba's nascent industry, even
if only to protect against an accident.

"This isn't about ideology. It's about oil spills," said Lee Hunt,
president of the International Association of Drilling Contractors, a
trade group that is trying to broaden bilateral contacts to promote
drilling safety. "Political attitudes have to change in order to protect
the gulf."

Any opening could provide a convenient wedge for big American oil
companies that have quietly lobbied Congress for years to allow them to
bid for oil and natural gas deposits in waters off Cuba. Representatives
of Exxon Mobil and Valero Energy attended an energy conference on Cuba
in Mexico City in 2006, where they met Cuban oil officials.

Right now, Cuba's oil industry is served almost exclusively by
non-American companies. Repsol, a Spanish oil company, has contracted
with an Italian operator to build a rig in China that is scheduled to
begin drilling several deepwater test wells next year. Other companies,
from Norway, India, Malaysia, Venezuela, Vietnam and Brazil, have taken
exploration leases.

New Mexico's governor, Bill Richardson, a Democrat who regularly visits
Cuba, said Cuba's offshore drilling plans are a "potential inroad" for
loosening the embargo. During a recent humanitarian trip to Cuba, he
said, he bumped into a number of American drilling contractors — "all
Republicans who could eventually convince the Congress to make the
embargo flexible in this area of oil spills."

"I think you will see the administration be more forward-moving after
the election," Mr. Richardson said.

Despite several requests in the last week, Cuban officials declined to
make anyone available for an interview.

Currently, the United States, Mexico and Cuba are signatories to several
international protocols in which they agreed to cooperate to contain any
oil spill. In practice, there is little cooperation between Washington
and Havana on oil matters, although American officials did hold
low-level meetings with Cuban officials after the BP blowout.

"What is needed is for international oil companies in Cuba to have full
access to U.S. technology and personnel in order to prevent and/or
manage a blowout," said Jorge Piñón, a former executive of BP and Amoco.
Mr. Piñón, who fled Cuba as a child and now briefs American companies on
Cuban oil prospects, said the two governments must create a plan for
managing a spill.

Several American oil and oil service companies are eager to do business
in Cuba, Mr. Piñón said, but they are careful not to identify themselves
publicly because they want to "protect their brand image in South
Florida," where Cuban-Americans who support the embargo could boycott
their gasoline stations and other products.

There are signs the Obama administration is aware of the safety issues.
Shortly after the BP accident, the Office of Foreign Assets Control, the
agency that regulates the embargo, said it would make licenses available
to American service companies to provide oil spill prevention and
containment support.

Charles Luoma-Overstreet, a State Department spokesman, said licenses
would be granted on a "application-by-application basis," but he would
not comment on the criteria.

Mr. Piñón said it appeared that an American company could apply for a
license before an emergency but that a license would be issued only
after an accident had occurred. "We're jumping up and down for
clarification," he said.

One group — Clean Caribbean & Americas, a Fort Lauderdale cooperative of
several oil companies — has received licenses to send technical
advisers, dispersants, containment booms and skimmers to Cuba since
2003. But it can only serve the member companies Repsol and Petrobras,
not Cuba's government.

Economic sanctions on Cuba have been in effect in one form or another
since 1960, although the embargo has been loosened to allow the sale of
agricultural goods and medicines and travel by Cuban-Americans to the

Mr. Hunt of the drillers' group said that the association had sent a
delegation to Cuba in late August and had held talks with government
officials and Cupet, the Cuban national oil company.

He said that Cuban officials, including Tomás Benítez Hernández, the
vice minister of basic industry, asked him to take a message back to the
United States. "Senior officials told us they are going ahead with their
deepwater drilling program, that they are utilizing every reliable
non-U.S. source that they can for technology and information, but they
would prefer to work directly with the United States in matters of safe
drilling practices," Mr. Hunt said.

Mr. Benítez became the acting minister last week when the minister of
basic industry, the agency that oversees the oil industry, was fired for
reasons still unclear.

Donald Van Nieuwenhuise, director of petroleum geoscience programs at
the University of Houston, said that if an accident occurred in Cuban
waters, Repsol or other companies could mobilize equipment from the
North Sea, Brazil, Japan or China. But "a one-week delay could be
disastrous," he said, and it would be better for Havana, Washington and
major oil companies to coordinate in advance.

Opponents of the Cuban regime warn that assisting the Cubans with their
oil industry could help prop up Communist rule. Instead of making the
drilling safer, some want to stop it altogether.

Senator Bill Nelson, Democrat of Florida, is urging President Obama to
recall a diplomatic note to Havana reinforcing a 1977 boundary agreement
that gives Cuba jurisdiction up to 45 miles from Florida. "I am sure you
agree that we cannot allow Cuba to put at risk Florida's major business
and irreplaceable environment," he wrote the president shortly after the
BP accident.

A version of this article appeared in print on September 30, 2010, on
page A1 of the New York edition.

No comments:

Post a Comment