U.S. to let American firms respond to any Cuban oil spills

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The United States is paving the way for American firms to respond to any oil spills from drilling set to begin off Cuba’s northern coast later this year, an Obama administration official told the Senate today.

The decision could mean relaxing the 19-year-old U.S. trade embargo against Cuba, which generally bars American commerce with the nation and caps the amount of American-made components in offshore drilling vessels and other equipment at 10 percent.

The federal government is “taking measures to ensure that the appropriate private industry parties are able to respond quickly in the event of an oil spill in Cuban waters,” said Bureau of Safety and Environmental Enforcement Director Michael Bromwich. That includes issuing licenses that would allow U.S. companies to deploy “booms, skimmers, dispersants, pumps and other equipment and supplies necessary to minimize environmental damage in the event of a spill.”

Bromwich said the Treasury Department also is weighing whether to issue export licenses to companies that own and operate containment equipment that is designed to capture crude from blown-out underwater wells. Two U.S. firms developed such subsea containment systems in response to last year’s Deepwater Horizon disasters, but there are no others that would be readily available in case of a well blowout near Cuba.

Under the embargo, individual companies can ask the Treasury Department’s Office of Foreign Assets Control for licenses to travel to or do business with Cuba. At least three U.S. companies specializing in spill response already hold such permits, but only one — Clean Caribbean & Americas — has approval to export products to Cuba.

Some environmentalists and oil industry leaders have united in pressing the administration to issue general license for a broad class of oil service companies so they can share safety information and do business with Cuba in case of an emergency — well before one happens.

Sen. Lisa Murkowski, R-Alaska, said she was concerned that if licensing decisions are made only after a spill occurs, “on a case-by-case, day-by-day basis . . . you may see a delay in our ability to respond quickly and address the cleanup.”

“We have incredible assets and resources standing by just hundreds of miles away,” Murkowski said. But “in the event of . . . a disaster that could imapct our shores, we’re kind of in standby mode. That doesn’t give folks the assurance that we would all like. There’s nothing more frustrating than knowing you have the ability to address something but you have policies that are hanging you up.”

Bromwich insisted the Treasury Department could swiftly issue licenses if the existing long-term permits aren’t sufficient.

“I don’t anticipate that would be a problem,” he told the Senate Energy and Natural Resources Committee. “I have a lot of confidence that if the existing licenses were not sufficient to enable an adequate response . . . that those licenses would be granted very, very quickly.”

And Coast Guard Vice Adm. Brian Salerno said he was confident that top officials in charge of granting those export licenses would move quickly in case of a spill.

“We would be very dependent on the decisions made by the State Department and the Treasury Department regarding the abilty of U.S. companies to offer their capabilities within Cuba’s (exclusive economic zone),” Salerno said. “In our discussion with them . . . I’m very confident that people appreciate the gravity of the situation and the fact that the clock is ticking . . . and we would need very expedient decision making.”

The Senate energy panel is examining the U.S. preparation to combat oil spills in nearby foreign waters, as the publicly traded Spanish oil company Repsol prepares to drill an exploratory well near the Florida straits. The drilling is set to begin before the end of the year, once Repsol’s chosen rig, Saipem’s Scarabeo 9, arrives on site. Partners on the project include Norway’s Statoil and India’s Oil and Natural Gas Corp.

The planned drilling project just 50 miles away from the Florida coast has sparked fears about what might happen in case of an accident, since models show that a spill in the region could send oil washing onto southeast Florida beaches in three days.

Repsol has taken steps to assure U.S. regulators it will abide by America’s offshore drilling regulations as well as “the highest industry standards,” Bromwich said, adding that the company has been very “cooperative.”

For instance, Repsol has pledged to keep federal regulators aware of its oil spill preparation, and recently let U.S. officials witness a table-top spill response exercise conducted in Trinidad. Bromwich said the company also has invited U.S. agencies to inspect the Scarabeo 9 rig that would be used at its site.

“Given the proximity of drilling to U.S. waters — and considering the serious consequences a major oil spill would have on our economic and environmental interests — we have welcomed the opportunity to gather information on the rig’s operation, technology and safety equipment,” Bromwich said.

The Coast Guard and safety bureau are planning to jointly visit and inspect the Scarabeo 9 shortly before the semi submersible rig enters Cuban waters. Bromwich said U.S. officials would conduct a thorough inspection of the vessel, but acknowledged that some tests of emergency equipment known as a blowout preventer could not be conducted before it is at its final drilling site.

“We will do all available tests and inspections that one can do (when) not on the site where the drilling will take place,” Bromwich said. “We will be given access to all components of the rig. We will be able to do everything that we consider necessary with respect to the blowout preventer.”

Bromwich conceded the inspection was “not optimal,” and that a “better inspection (could be done) once the rig is on site.” But, he insisted, “this is the best way to protect U.S. interests as best we can.”

The Obama administration has so far unsuccessfully pressured Repsol to hand over its detailed drilling plans and information about the oil and gas reservoir it will be exploring. The company has said that information is proprietary — and may be restricted from release by the Cuban government.

“We are working through those issues,” Bromwich told reporters. “Repsol has told us there are confidentiality agreements that they have. The lawyers are now trying to work through those to make sure we get that info. The more information we get the more comfortable we’ll feel and the higher level of confidence we will have.”

Repsol’s cooperation with U.S. regulators is tied to its American economic interests. Unlike other oil companies planning to drill near Cuba soon, Repsol holds leases to drill in U.S. waters, opening the prospect that Repsol could face repercussions in the United States for mistakes it makes in Cuban waters.

“Basically, the only leverage we have is companies that are doing business in U.S. waters,” noted Sen. Joe Manchin, D-W.V. “If they’re not in our waters, we have no leverage or oversight whatsoever. We are a tremendous danger for the United States coastline and waters.”

Manchin suggested the U.S. should lift some sanctions against Cuba in exchange for the country stepping up its offshore drilling standards.

“We are at the mercy of the Cuban government to make sure they do it right, and we have no hammer,” Manchin said.

Jorge Pinon, a fellow with Florida International University’s Cuban Research Institute, said the U.S. is “bullying” Repsol, while ignoring impending drilling by other oil companies, such as Russia’s Gazprom.

“We cannot continue in this element of confrontation,” Pinon said. “We’re all in business together. The environment is all of our concern. We need to sit down and work not in the spirit of confrontation but of cooperation.”

Paul Schuler, the CEO of Clean Caribbean & Americas, insisted that more U.S. companies need pre-approval to respond to spills in Cuban waters.

“If there is a significant problem in Cuba and we’re unable to deal with it in Cuban waters, the obvious follow on is that we’ll deal with it in U.S. waters,” Schuler said. “It is in our interest in preserving our natural resources . . . that we do something to engage with the Cubans so we can operate there.”

Environmentalists and industry representatives recently traveled to Cuba to meet with its drilling regulators and said they were impressed by how seriously the company is addressing the issue.

But Bromwich told reporters he wasn’t 100 percent sold on Cuba’s ability to effectively regulate offshore energy exploration.

“We don’t know a lot about the Cuban oversight regime,” Bromwich said after the hearing. “I think the information that we’ve received suggests it is not highly developed.”