• Submitted by: manso
• United States
• Politics and Government
• 09 / 06 / 2010

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Group says trade embargo could hinder a response by the U.S.

The trade embargo against Cuba could undermine efforts to prevent or respond to an oil spill threatening the U.S. coast after Cuba launches a drilling program in the Straits of Florida next year, a Houston-based industry group is warning.

Representatives of the International Association of Drilling Contractors late last month made the first visit of a U.S. oil delegation to the island nation in nearly 50 years. The group from Houston met with Cuban officials to discuss safety protocols and to learn more about the country's plan to drill seven exploratory wells in the Gulf of Mexico, some within 50 miles of Key West, Fla.

In U.S. waters, drilling is prohibited within 100 miles of Florida's Gulf Coast.

Lee Hunt, the group's chief executive, said Cubans are eager to work with U.S. industry to ensure safer drilling. But the embargo forbids sharing certain information and material that would be needed to respond quickly to an accident, such as relief well technology or nearby U.S.-made or U.S.-owned equipment.

"What is most in jeopardy in this is the U.S. interest in our own Florida coastline, and whether the embargo raises the risk by inhibiting cooperation, acquisition of best practices and appropriate response to serious incidents," Hunt said. "We would like to see Cuba, as we would the U.S. and Mexico, take every possible step on the preventive side with proper equipment, training and practices so that spill containment and cleanup never have to occur."

Others are pushing the Obama administration to approve an exception to the embargo that would provide a general license allowing U.S. companies to work with international operators in Cuba in the event of an emergency.

In July, the Obama administration signaled its intent to grant licenses to specific companies providing services related to "oil spill prevention and containment support," but the new concession also requires companies to obtain separate export licenses, which some say could slow the process of mobilizing quickly after a spill.

"The issue is when the company that holds the specific equipment or a part needed ASAP to international oil companies operating in Cuba — the bureaucratic process could take weeks," said Jorge Piñon, a visiting research fellow at the Cuban Research Institute of Florida International University and a former executive at Amoco and BP. "Why not grant a general license - period?"

Travel restrictions

Piñon thinks the U.S. also should ease travel restrictions to the island for energy professionals during emergencies since getting a license to travel can take months. A provision allowing such travel has been introduced in legislation sponsored by Sens. Mary Landrieu, D-La., and Lisa Murkowski, R-Alaska. How an emergency would be defined is subject to debate and represents a slippery slope to some foes of the measures, Piñon said.

Suspicions arise

Some who support the decades-old embargo are suspicious of the sudden push to tweak the trade sanctions and suspect U.S. oil companies are trying to back their way into Cuba's potentially lucrative oil reserves.

"I can't see these companies getting excited over half a dozen wells that are going to be drilled off the coast of Cuba when there are thousands of wells off the coast of Louisiana and Mississippi. Why all of a sudden are they worried about this?" asked Jaime Suchlicki, director of the Institute for Cuban and Cuban American Studies at the University of Miami.

He said the government already can issue licenses at its discretion in the event of an emergency and that the industry is pushing to ease the embargo by playing on public fears after the BP Gulf spill.

One such licensee is Clean Caribbean & Americas, a nonprofit oil spill response corporation in Fort Lauderdale, Fla.A company spokesman said it took months for the firm to get licenses to provide boom, pumps and skimmers to Spain's Repsol and Brazil's Petrobras in the event of an accident involving their Cuban operations.

Hunt said his association's mission is strictly to promote information sharing and the concept of "One Gulf,“ in which the U.S., Mexico and Cuba collaborate to establish common well control standards and safety training, as well as share spill containment and cleanup technology. The initiative is modeled after one in the North Sea.

The association, Hunt said, is seeking a general license from the State Department to allow it to maintain an ongoing safety dialogue with Cuba. Hunt said Cuba's state-controlled oil company, Cubapetroleo, or Cupet, is interested in joining the group.

Operators signing up

After years of stalled oil and gas development in Cuba, the country is preparing to drill seven wells off its northwestern coast. The U.S. Geological Survey estimates there may be 4.6 billion barrels of oil in Gulf of Mexico waters off the island, as well as nearly 10 trillion cubic feet of natural gas. Cuban geologists with Cupet maintain its reserves are double that.

Already, operators from Spain, Norway, Vietnam, India, Venezuela, Brazil and Malaysia have signed leases for offshore blocks in Cuban waters, Piñon said.

Spain's Repsol, which drilled an exploratory well in 2004, will drill the first of the new wells with a new Chinese-built semisubmersible rig owned by Saipem, a unit of Italian oil company Eni.

Hunt said the Scarabeo 9 will begin drilling the well, which Repsol christened Jagüey after a native tree, in mid-2011. Cuban officials said the Jagüey would be drilled under 5,900 feet of water, almost 1,000 feet deeper than BP's Macondo, Piñon said.

Obstacles for Cuba

Piñon said Cuba has been slow to develop its petroleum reserves until now, mainly because of a lack of equipment capable of sidestepping embargo restrictions. They prohibit drilling vessels containing more than 10 percent U.S. parts or technology from working in Cuba.

Piñon said that among other laws, the 1996 Cuban Liberty and Democratic Solidarity Act, often called Helms-Burton, penalizes foreign companies that traffic with Cuba in property formerly owned by U.S. citizens or by Cubans who have since become U.S. citizens.

Piñon said the specially made Saipem rig is one of the few U.S. embargo-compliant rigs. He also said Cuba has limited refining capacity, which will present another challenge if the exploratory wells unearth commercial finds.

Cuba imports 60 percent of its oil and natural gas from Venezuela, which is also helping the country expand its refining capacity, he said.

By MONICA HATCHER

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http://www.chron.com/disp/story.mpl/business/7186410.html