Cuban Oil Well Crisis
Oil leases in the Gulf of Mexico went back on the block yesterday for the first time since the Deepwater Horizon explosion and spill of April 2010. It attracted 241 bids from 20 different companies hoping to access 191 tracts off the coast of Texas.
The names of the bidders were all familiar, with ConocoPhillips and Exxon Mobil leading the pack. Whichever is successful will ultimately sink wells in federal waters at depths of 16 feet and more than two miles.
Simultaneously, in a U.S. District Court room in Washington, a handful of equally familiar names—Oceana, Defenders of Wildlife and the Natural Resources Defense Council—were suing to stop the lease sales, claiming the government has still not taken appropriate steps to avoid a repeat of the disastrous 2010 BP spill.
Yet even while those dramas were being played out, the most interesting story in the oil drilling business was happening just off the southern coast of Florida.
Cuba will soon start drilling in waters of 5,000-6,000 feet just 70 miles off the Florida Keys, which is closer to the Florida Straits than the Deepwater Horizon was to the Louisiana shoreline. The BP spill tarred Florida beaches that were 150 miles away from the site of the accident.
A Chinese-made, Spanish-owned drill rig—the Scarabeo 9—is on its way to the site. Drilling is expected to begin in January. While it is all perfectly legal, given the recent history of the BP mess, many in the U.S., from the White House to the Senate and residents of Florida, are just now pondering the ramifications of a Cuban-operated spill.
Drilling that close to the U.S. raises a variety of questions such as, if it breaks, who would clean it up? Should the embargo be modified to at least assure the well has plenty of working parts and replacements? Given its proximity to U.S. shores, should a U.S. agency be able to inspect Cuban rigs?
If there is a spill there, we could lose part of the Everglades, or the Keys, or the coral reefs, or our fishing industry or tourism—and jobs.
Inside the White House, apparently the question is one of balancing environmental protection for all while simultaneously not stepping on Cuba’s rights.
The $750 million submersible drilling rig was built in China and Singapore. To satisfy the U.S. trade embargo, less than 10 percent of its parts could be from U.S. companies. Those same sanctions prevent spare parts made in the U.S. from being used for the rig’s blowout preventer. If there is a spill, clean-up workers and companies would most likely come from Canada, Norway and the U.K. Despite the proximity, U.S.-based clean-up companies would have to appeal to the government for waivers.
Madrid-based Repsol owns the drill rig. Its plan is to drill to between 5,000 and 6,000 feet, a similar depth the Deepwater Horizon was exploring when it blew. If successful, the rig will be used in the region by companies from as near as Venezuela and Brazil and as far as Malaysia, Russia and Vietnam.
On the local political front, Florida’s U.S. senators have traditionally done a good job keeping drilling away from its beaches. Now they find the state’s pristine tourist destinations potentially at risk thanks to a foreign country and foreign laws. Bill Nelson, Florida’s senior senator, has introduced a bill that would hold foreign oil companies directly accountable for oil spills that pollute U.S. territory and removes the existing $75 million cap.
“If there is a spill there, we could lose part of the Everglades, or the Keys, or the coral reefs, or our fishing industry or tourism—and jobs,”says Nelson.
Inspectors from the U.S. Coast Guard and Department of Interior have been allowed onto the rig as it motors to its destination, but are limited as to what exactly they can “inspect.”
U.S.-based oil companies are watching closely; a spill in Cuba might get drilling banned from the Gulf of Mexico once and for all.
But none of those concerns are going to stop the drilling. It’s a valuable, oil-rich territory. The U.S. Geological Survey thinks there are about five billion barrels in the Florida Straits; Cuba puts the estimate over 20 billion barrels.
Next up? The Bahamas Petroleum Company has announced it will be partnering with a major oil company to explore off its shores in 2012.