Cuba oil drilling tests U.S. on protecting Florida or embargo

Four U.S. inspectors armed with safety glasses and notebooks will set out on a mission next month to protect Florida’s beaches from a Cuban threat.

They’ll rendezvous in Trinidad and Tobago with the Scarabeo 9, a rig headed to deep waters off Cuba to drill for oil about 70 miles (113 kilometers) south of Florida’s Key West.

Repsol YPF SA is making the Scarabeo 9 available to the U.S. inspectors before the rig starts drilling closer to Florida than the BP Plc well that failed last year in the Gulf of Mexico, causing the biggest U.S. offshore oil spill. The exploration poses an environmental, political and diplomatic challenge to the U.S. more than 50 years after cutting off relations with Cuba’s communist regime.

The Obama administration’s dilemma is “what steps to take for environmental protection and how much to honor current Cuba policy,” Dan Whittle, Cuba program director at the New York- based Environmental Defense Fund, said in an interview.

In the aftermath of the revolution that brought Fidel Castro to power, the U.S. banned exports to Cuba in 1960, withdrew diplomatic recognition, backed the failed Bay of Pigs invasion in 1961 and imposed a full trade embargo in 1962.

Now generations of animosity between the two nations limit cooperation on safety standards and cleanup precautions for the Cuba drilling planned by Madrid-based Repsol, which would be followed by state-owned companies from Malaysia to Venezuela. A conference on regional oil-spill response being held this week in Nassau, Bahamas, may provide a forum for discussions by U.S. and Cuban representatives.

Juan Jacomino, a spokesman for the Cuban Interests Section at the Swiss embassy in Washington, declined in an interview to comment on drilling off of the island nation.

Spare Parts

Repsol can use the Scarabeo 9 without violating the U.S. trade embargo because it was built at shipyards in China and Singapore, and fewer than 10 percent of its components are American, according to its owner, Eni SpA.

The sanctions would block spare parts from the U.S. for the rig’s blowout preventer, a safety device that failed in the BP spill. The restrictions also require Helix Energy Solutions Group Inc. of Houston, which provides oil-spill containment equipment for Repsol in the Gulf of Mexico, to seek a waiver to do so in Cuban waters in case of an accident.

U.S. companies seeking to do business with Cuba must ask the Commerce Department, which considers most applications “subject to a policy of denial,” the agency says on its website. The Treasury Department weighs requests to travel from the U.S. to Cuba.

Granting too few permits for spill prevention and response would keep contractors from offering the technology and services developed after the BP spill, Lee Hunt, president of the Houston-based International Association of Drilling Contractors, said in an interview.

Cuban Exiles

Approving too many licenses would undermine the embargo, enriching a regime listed by the U.S. State Department as a nation supporting terrorism along with Iran, Sudan and Syria, according to anti-Castro lawmakers such as Republican Representative Ileana Ros-Lehtinen of Florida, who heads the House Foreign Affairs Committee.

U.S. “assistance, guidance and technical advice” to Repsol, including the planned visit to Scarabeo 9, may violate the law by “helping to facilitate” the company’s work and providing the Cuban government “with a financial windfall,” Ros-Lehtinen said in a Nov. 1 letter to President Barack Obama.

Ros-Lehtinen, who immigrated from Cuba with her family at age 8, is a leader among Cuban exiles in South Florida who have opposed easing U.S. restrictions. Florida, which has been a swing state in presidential elections, also has been a bastion of opposition to oil drilling that opponents say could despoil the beaches that are a prime draw for tourists.

Florida Drilling Foes

Lawmakers such as Senator Bill Nelson, a Florida Democrat, have fought to keep drilling out of U.S. waters in the eastern Gulf of Mexico bordering Florida.

Nelson and Senator Robert Menendez, a New Jersey Democrat, introduced a bill Nov. 9 that would require foreign companies drilling in Cuban waters to pay for damage to U.S. territory without liability limits. Senator Marco Rubio, a Florida Republican, joined as a cosponsor.

Oil from BP’s spill tarred beaches 150 miles away in Florida’s northwestern Panhandle.

Now Floridians are faced with drilling under the jurisdiction of Cubans, who “don’t have the resources” to control a blowout, Jorge Pinon, an energy consultant and visiting research fellow at the Cuban Research Institute at Florida International University in Miami, said in an interview.

“If the U.S. is not willing to help” in an emergency, “the resources are going to come from Canada, Norway and the U.K., and it will take a very long time,” said Pinon, who led Amoco Corp. units in Mexico City and retired from BP in 2003, according to his biography.

Repsol’s Contract

Repsol signed a contract with Cuba in 2000, according to the company’s website, and confirmed the presence of oil with a Norwegian rig in 2004. Repsol will drill in about 5,000 feet (1.5 kilometers) to 6,000 feet of water, about the depth of BP’s Macondo well, according to Pinon.

Petroliam Nasional Bhd., or Petronas, based in Kuala Lumpur; New Delhi-based Oil & Natural Gas Corp.; Hanoi-based Vietnam Oil & Gas Group, known as PetroVietnam; Caracas-based Petroleos de Venezuela SA; and Sonangol SA of Luanda, Angola, also hold Cuban blocks, Pinon said.

U.S. officials say they are doing all they can to ensure safe drilling off Cuba.

“We are quite focused, and have been for many, many months” on “doing anything within our power to protect U.S. shores and U.S. coastline,” Tommy Beaudreau, director of the Bureau of Ocean Energy Management, an industry regulator, said in a Nov. 29 interview at Bloomberg’s Washington office.

Wild Well Control

The administration has issued some licenses to U.S. companies to respond to a spill in Cuban waters, Mark Toner, a spokesman for the State Department, said in an e-mail. He didn’t say how many have been approved, and the Commerce and Treasury departments didn’t respond to e-mailed requests for comment.

Wild Well Control Inc. of Houston is one permit recipient, according to Hunt of the drilling contractors’ trade group. The company didn’t respond to e-mails and phone calls seeking comment.

“Helix plans to build a new subsea containment cap to safeguard drilling operations in Cuba,” Cameron Wallace, a spokesman for that company said in an e-mail about its request for U.S. licenses. “The cap and associated equipment will be staged at a U.S. port near to the drilling site to minimize response time.”

Walking the Deck

In their visit to the Scarabeo 9, two inspectors from the U.S. Coast Guard and two from the Interior Department will walk the deck and check generators, the positioning system and firefighting equipment, Brian Khey, who will be on the team, said in an interview.

The Americans will watch a firefighting simulation and conduct an abandon-ship drill, according to Khey, the supervisor at the Coast Guard’s Outer Continental Shelf National Center of Expertise in Morgan City, Louisiana,

While the visitors will discuss with Repsol any deficiencies they find, they won’t have enforcement powers, Khey said. Nor will they be able to check the blowout preventer or the well casing and drilling fluid that will be used on site, according to the Interior Department.

Scarabeo 9 was built “according to the latest and most advanced international standards available at the time of her design and construction,” Rome-based Eni said in an e-mailed statement. “Health, safety and environmental protection are always a top priority.”

Eni Subsidiary

The vessel “is one of the very few units in the industry which is using a technology which is not an American one,” Pietro Franco Tali, chief executive officer of Eni’s oilfield- services subsidiary, Saipem SpA, said on an Oct. 27, 2010, conference call.

One U.S. component is the blowout preventer, made by Houston-based National Oilwell Varco Inc. The company hasn’t applied for a license to do business with Cuba and doesn’t plan to, Chief Financial Officer Clay Williams said in a phone interview.

That means rig operators will have to seek training and spare parts in Europe or Asia, according to Hunt, whose group represents 1,494 companies including Saipem.

“It’s like buying a Mercedes and being told you have to go to a Ford dealer for parts,” Hunt said in an interview.

The results of Cuba’s drilling may affect U.S. energy policy. Success would put pressure on the U.S. to open its waters surrounding Florida for exploration, Pinon said.

A serious accident off of Cuba could throw the industry out of the Gulf of Mexico, according to Brian Petty, executive vice president for governmental affairs of the drilling contractors’ group.

“A mess” in Cuban waters would lead critics of drilling to say, “Stop it, don’t let it go on anywhere,” Petty said.

26 Comments

  1. Contrary Dave

    The embargo and has been been for a long time a really stupid policy. If we can do business with Chavez, we can certainly do business with Cuba. I thought BO might do that, but as it turns out, no cojones.

    #1
  2. phantom

    And I would argue if we can do business with China we can do business with Cuba.

    #2
  3. El Foley

    The Cuban embargo is just plain stupid. It should be ended. The U.S. is allowing a very small portion of our populace to dictate our foreign policy in this regard.

    #3
  4. rts

    So, if we help keep the Cuban drilling clean and safe, the Republican House and Senate members from Florida will use it as negative campaign material against Obama. If we do noting and Cuban oil covers the Florida beaches the Republican House and Senate members from Florida will use it as negative campaign material against Obama.

    We should be drilling also. The pool being tapped is half in our waters and half in Cuban waters. If they are the only ones drilling, our half of the pool is being emptied also.

    #4
  5. Texas Infidel

    Just great, the Castro Marxists are singing “Taladrar Bebe Taladrar: Idiot America gonna watch and Comrade Obama will be Comrades Fidel y Hugo best customer while filling thier Swiss accounts.

    #5
  6. txloanguy

    I’m surprised Obama doesn’t send a few $Bs to Cuba to help fund this well. It’s better to have foreign companies drill in our waters than us, right?

    #6
  7. steve

    c’mon guys an gals! check out what the green team is doing to americans, ourselves, and industrial jobs! made in america? built for americans? not anymore folk.
    to think, foreign folk who hate us, are working their own and others, who dont like us, with-in binocular view, with-in a quick fishing trip!they are paying their bills, an laughing at us.
    our unemployed noses are being rubbed into the ground by those who laugh, who are working the same territory, the gulf, as result of liberal, green failure, obama green, non american green, green as the color on muslim flags.
    embargo countries who hate america? a good thought, sure! doesnt work on the southern border though, cant embargo mexico an related countries, why?
    seems DHS an obama still wish to crack the american paycheck! let run amok those desperate for pay, into consruction, service, and brothels, for more foreign votes. its in the gulf, and in town.
    nomobama, and the fake green team? if your nose is sore? food for thought. thanx all! this was fun! dont be mad at me again, K

    #7
  8. Kittyg

    Oh, Bozo’s happy….at least Cuba is getting the oil and not the U.S. His whole goal is destroying the U.S and thi is just part of it!

    #8
  9. AmericanDefender

    So, OUR SOCIALIST President stops OUR DRILLING but ALLOWS Communist Cuba to drill in OUR WATERS and sell us BACK our OWN OIL? Interesting! I wonder if he and his DEAR FRIEND Hugo Chavez discussed this?

    #9
  10. Glenn Beak

    “It’s better to have foreign companies drill in our waters than us, right?”

    If it were our waters, we could keep Cuba out.

    #10
  11. Let’s get this staright – A US Oil Compnay can not drill offshore Florida but an Interantionla Oil Compnay can?

    Politicians wake up – You fixing to lose some US jobs – That won’t get you elected.

    #11
  12. xanegrey

    cuba was pretty good natured about BP blowing out a well that nearly filled the gulf with oil.

    end the embargo of cuba. thats the best way to end communism. let them get a taste of money. their black market will collapse communism quicker than anything else.

    #12
  13. ntangle

    Agree w/ others about ending the trade embargo of Cuba. It’s hard to exploit them with the embargo still in place.

    #13
  14. Adler

    Hey AmericanDefender and Mie, maybe you should take a look a map sometime. Cuba is drilling in there own territorial waters not US waters. The border between US and Cuba extends north, into the Gulf of Mexico, almost to Tampa-St. Pete. In fact, the Cuban territorial waters in the GoM are all within the 100 mile zone where no drilling is permitted on the US side of the line. And, since this is an international boundary, none of the punitive laws passed by the US have any force 1mm across the line.

    #14
  15. lawaggie

    We are prevented from drilling off the coast of Florida and thereby create U.S. jobs, but our politicians play games without thinking of the consequences. I have come to the conclusion that all politicians have dirty souls, and none of them are Americans. They are either Democrats or Republicans whose only allegiance is to their party, or to that Grover Norquist fellow.

    #15
  16. fencesitter

    yes, it was lovely the president BUSH, yes BUSH that open almost all the coastal waters to drilling, did not do it for florida… why you ask. to protect his brother Governor Bush. None of you complained then.

    #16
  17. Texas Engineer

    US oil companies can’t drill offshore from Florida because the state of Florida whined and cried to the Feds about it, so the Feds won’t permit it….too bad for Florida – think of all the extra $$$ they could make.

    #17
  18. Greg

    Glenn, If I am not mistaken, federal waters off of Florida extend beyond 125 miles. If they are drilling at 70 miles, we are letting them drill?.?.

    #18
  19. Take it over and drill holes everywhere.

    #19
  20. REPUB_RETARD

    Shows that Obama is just as bought off as all the republicans, or nearly as bad. Following this stupid foreign policy is costing us thousands of jobs but the ghost of Jesse Helms and Reagan live on. We need to see that the old commie boogyman has been replaced with the terrorist boogyman. Our civil liberties are even more depleted with the new scare so lets at least have some work here.

    #20
  21. Frank

    xanegrey – Not prone to exaggeration are we? Nearly filled the gulf with oil. Not even 1% of the gulf was filled with oil. You obviously don’t understand geography.

    #21
  22. Charles

    The Cuban embargo has been such a great success over the decades right? No more pandering to the Florida exiles!

    #22
  23. starchamber

    Castro run all of the smart Cubans out of Cuba. We can’t make money off the ones that are left.

    #23
  24. WakeUp!

    The U.S. has noone to blame than itself for imposing a one sided Cuban embargo for over 50 years. The reaction by Washington will change of course, if Cubans do find substantial oil in their sovereign waters. With the smell of oil, it is obvious the U.S. will immediately change its tone and behave either like a prostitute in heat or the neighborhood bully in the hope of getting their hands on the oil. Cuba will kindly show Washington the middle finger in return.

    #24
  25. Signal2Noise

    End the dang embargo!

    #25
  26. Some don’t seem to understand.Repsol which is based in Spain is going to drill wells in CUBAN waters which are only about 70 miles from Florida. If they have a spill American companies cannot respond to the spill in Cuban waters and will have to wait until the oil reaches our water to do any clean up which will be a mess. On another note the wells they drill coulb be pulling oil out of a field under American water, the well would not have to be in our water.

    #26