Cuba drilling continues as US groups press spill response need - Oil & Gas Journalnal

Posted - WASHINGTON, DC, May 11 -05/11/2012 - By Nick Snow - OGJ Washington Editor

Repsol SA continues drilling Cuba’s first offshore oil well as some US government agencies, oil and gas organizations, and environmental groups press to ease restrictions that would keep US companies from responding if the well blows out and sets off a spill, experts at a Center for International Policy seminar said. They reported some progress as more federal officials become aware of the problem, but indicated that much more needs to be done.
“No one is predicting a catastrophe,” emphasized William K. Reilly, co-chairman of the presidential commission that investigated the 2010 Macondo deepwater well incident and oil spill. He said Cuba and Repsol are moving more slowly than normal to keep matters under control, but the US still has not taken the final necessary steps to let US companies respond if the well blows out and begins to leak crude.
“Historically, it’s been appropriate to talk about Cuba only after the next election,” Reilly observed, adding that the White House was not happy when he led a delegation to that country after the presidential commission on the Macondo well spill completed its investigation. US President Barack Obama does not need congressional approval to modify sanctions against Cuba so US companies could respond if there was a spill, he said.
“Contractors in Cuba have had to scour markets worldwide for parts,” noted Lee Hunt, who recently retired after 22 years as president of the International Association of Drilling Contractors, during the seminar at the Carnegie Endowment for Peace. “They haven’t had access to the best and most recent versions of the equipment they’re using.” Saipem SPA had to return a new prevention stack to use there when it learned that it was made in the US, and had to buy one which had been in service elsewhere, he said.
But a US company that wanted to provide services for the current Cuban offshore drilling operation recently got a very broad license from the US Department of Commerce’s Office of Foreign Asset Control (OFAC) in 3 days, compared with other firms’ having to wait 6 months for a restricted license, Hunt said. OFAC now says it would be able to issue licenses within 24 hr in the event of a spill, he added.
‘State-sponsored chaos’
OFAC also granted a broad license to the US Coast Guard to command any resources necessary to protect US interests, and USCG is drafting basic order agreements with US suppliers and contractors, Hunt said. But an open forum is essential so commercial service providers can put forward their issues “so we don’t have state-sponsored chaos,” he maintained.
“If our response to a spill off Cuba is going to be successful, it will need to harness both the US government’s and the US private sector’s capabilities,” said Robert L. Muse, a Washington lawyer with substantial experience in US laws relating to Cuba. The two countries have worked together on hurricane remediation, but when the US government offered aid, Cuba rejected it and sought permission to contract for services with US companies, he said.
He suggested that OFAC needs to create a general license for spill response companies to work in Cuba. “Why don’t we be very American about this and let the contractors respond? They know what’s needed, they have the ability and equipment, and they can mobilize from nearby ports,” Muse said.
Dan Whittle, who directs the Cuba program of the Environmental Defense Fund (EDF), said the US trade embargo against Cuba may prevent full cooperation, but much has been done to forge scientific exchanges. The Obama administration particularly has issued visas for Cuban scientists to come to the US and study with experts from EDF, Cornell University, and other organizations and institutions, he said.
“Much has been done since Bill Reilly led a delegation there with EDF and IADC experts,” Whittle said. “I credit that trip for lighting some important policy-reform fires.”
‘Baby fish in Cuba’
This matters because a Cuban offshore oil spill potentially could do more damage than the Macondo well spill, Reilly warned. Currents off Cuba more directly threaten US coasts, and marine habitats there support US fishing, he explained. “Baby fish in Cuba become adult fish in Florida,” Whittle said. “We need to work with Cubans to better understand what’s downstream.”
Noting that the National Oceanic and Atmospheric Administration recently developed models showing which US coastal areas would be damaged by a Cuban offshore oil spill, Whittle said USCG also is leading multilateral discussions and working with US coastal states, and Cuban scientists have met with their counterparts from the Bahamas in highly technical discussion under the International Maritime Organization’s aegis.
“Accountability rests with Cuba and the foreign oil companies it does business with,” Whittle said. “But it’s in the US interest to make sure they get it right.”
With Cuba on the cusp of its first offshore oil production, opportunities escalate along with the risks, according to Jonathan Benjamin-Alvarado, a University of Nebraska political science professor specializing in foreign policy, international development, and security. The extent to which it develops its own resources will make it less dependent on Venezuela, and many in the country see potential for it to become a major refining and transportation center, he indicated.
“Cubans are serious about developing their oil resources,” Benjamin-Alvarado said. “They want to work with American companies and use American equipment. That reflects the work Jorge R. Pinon [a former Amoco official who recently became a research fellow at the University of Texas at Austin’s Jackson School of Geoscience’s Center for International Energy and Environmental Policy] and others have done to lay the foundation.”
Cuba’s goals
The panelists said Repsol’s well could reach total depth in less than a week, although the operator is moving slowly as it deals with some routine mechanical issues. Whittle said Repsol expects to complete its analysis this month and turn the rig over to Petronas, which plans to move it west. Hunt said the Cubans, with the Chinese, plan to construct a refinery but probably will have to use floating production, storage, and offloading vessels to recover the crude.
“There’s a rapid expansion of oil infrastructure across the island,” Benjamin-Alvarado said. “This isn’t a Cuba-US matter. It’s an environmental question that transcends borders and politics.”
Reilly said in an instance of routine commonsense, NOAA and USCG shared information about the Macondo spill response effort with Cuban officials, who appreciated it. A growing number of people in US agencies want more relations to improve so US companies could respond to a spill off Cuba, but some in the White House worry about congressional objections, he said.
“These issues are important enough that they need to be resolved without letting politics interfere,” he declared. “It doesn’t mean having to embrace a system which some people consider repugnant or restoring full diplomatic relations. I’ve found growing numbers of Cuban-Americans recognize this, and it’s time for the politicians to catch up with them.”
That won’t be easy, observed Wayne Smith, a CIP senior fellow and director of its Cuba project. “Cuba has the safe effect on some Americans that the full moon used to have on werewolves,” he said. “They don’t necessarily froth at the mouth, but it still makes them growl.”


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