Posts in Oil

Hello, Washington: Anyone There?

Photo courtesy of FlickrAn April 5th Reuters report headlined HAVANA carried this message: “’Repsol YPF expects to have a Chinese-built drilling rig in Cuban waters by the end of the summer and start drilling immediately into a prospective undersea oil field that looks like it could be a big one,’ a geologist for the Spanish oil company said on Monday.”

The report went on to inform readers of this reality: “After Repsol finishes with the Scarabeo 9 [the drilling rig], which is capable of drilling in 12,000 feet (3,657 meters) of water, the rig will be handed over to Malaysia's Petronas to drill in its Cuban offshore leases, then to ONGC Videsh, which is a unit of ONGC, for its Cuba exploration. ‘Venezuela's PDVSA may also be in line to get the rig for its Cuban blocks, where areas of great potential have been found,’ PDVSA senior basin analyst Jose Noya told reporters at the conference.”

As indicated, Repsol is a Spanish company, working through a consortium including Norway, Italy, Singapore (where the drilling rig is being prepared for its long ocean transit) and others to drill for oil in waters just a short distance off the coast of Florida.

That the largest economy in the world is not involved, moreover that it is doing all it can to hinder the “consortium of the willing” through its draconian embargo on Cuba—and clearly failing to do so—defies the human imagination and begs for laments of ignorance, stupidity, and craven surrender to the tiny special interest group—the hardcore Cuban-American lobby—that has long since outlived any benefit to the United States it might have once offered.  In fact, that special interest group today constitutes a clear and present danger to the real security interests of the United States.

Though the U.S. Geological Survey (USGS) continues to predict that Cuban waters will produce only some five billion barrels, other experts say differently—some going as high as 20 billion and more (and one wonders why all these various oil companies and their countries would be so determined to drill if the USGS forecasts are accurate?).  Moreover, these experts contend that the quality of the oil might well be as high as that of Texas light sweet crude or Libyan oil of similar characteristics, i.e., oil that is not heavily laden with sulphur or other elements that make it very difficult and costly to refine and limit its uses.  In short, if the 20B barrel estimates are correct and the quality of the oil turns out to be light and sweet, the U.S. will be missing out on a colossal resource development just off its coast at a time when the potential for $4-5 per gallon gasoline threatens to derail whatever economic recovery is underway.

The “Splendid” Isolation of the United States

Photo courtesy of Flickr/Deepwater Horizon Response

Jorge Piñón, whose business experience spans time with Royal Dutch Shell, Amoco, British Petroleum and other oil giants, recently wrote: “The Deepwater Horizon incident experience taught the United States very important hands-on lessons on how to manage such a catastrophe, lessons which would benefit us in the future by sharing them with neighbors.”

One of those neighbors to whom Mr. Piñón refers is Cuba.  He writes: “Obviously, the establishment of working relations between the U.S., Cuba, and The Bahamas in marine environmental protection would assist enormously in the contingency planning and cooperation necessary to an early and truly effective response to an oil spill.”

Of course, the creation of such working relations between Washington and Havana is not so obvious to all of Washington’s decision-makers, particularly that tiny group of hardcore Cuban-Americans in Dade County, Florida and elsewhere.  But as Cuba prepares to drill in an offshore area proximate to Florida—and to do so at depths exceeding the depth of the Deepwater Horizon well—it should be.

Recent earthquakes in Haiti and Japan not only highlight the unprecedented nature of such natural events as the world’s population heads for 7 billion and is increasingly concentrated near the oceans, such events also underscore dramatically the need for international cooperation in responding to their aftermath.  Yet the U.S. insists on dealing with Cuba as it has for the past fifty-plus years of failure: embargo, embargo, embargo.  It is as if the ghost of Jesse Helms, never a man whose photo was on the piano of any reasonable person, still gripped Washington in its incomprehensible vise.

Cuba's Oil Equation: Short-term Pain for Long-term Gain?

Photo courtesy of Flickr/10b travelling

While we are anxiously awaiting news about the verdict in the trial of Alan Gross,  the jump in global oil prices last week got us thinking as well...

Cubans are feeling the aftershocks of turmoil in the Middle East and North Africa; not in the form of demands for greater democratization, perhaps, but at the pump, in the form of higher gas prices, as the price of a barrel of oil soars past the $100 market on global markets.

As reported by the Nuevo Herald, the Cuban government raised the price of regular gasoline from 1.15 ($1.06) to 1.20 CUC, ($1.11) last week, the second such hike in less than a year.  The majority of Cubans don’t own cars, because they are both astronomically expensive – the average Cuban makes about $20/month – and their purchase is tightly controlled by the government. But the price increase isn’t just about those who pay to pump. Those cinco centavos will trickle down, placing added strain on already taut Cuban incomes in another sign of what’s to come as President Raul Castro moves to decrease the state’s control over the island’s decimated economy.

U.S. Policy Pushes Cuba into the Arms of our Adversaries,8599,1882557,00.html


This article first appeared in the Sarasota Herald Tribune on February 1, 2011

News last week that French telecom Alcatel-Lucent SA has begun laying a 1,600-kilometer underwater fiber optic cable between Venezuela and Cuba is the latest evidence of how U.S. sanctions toward Cuba undermine U.S. national interests and push the communist island into the open arms of our adversaries and continue Cuban citizen’s dependence on the regime. By focusing solely on isolating the Cuban government and denying it resources, the U.S. has, ironically, only isolated itself from the realities at play inside Cuba and alienated its allies. Unfortunately, legislation proposed last week by Florida Congressman Vern Buchanan only continues this counterproductive pattern and, in this case, puts Florida’s industry and environment at greater risk.

New America Event: U.S. and Cuba Must Share Stewardship in the Gulf

From Deepwater Horizon Response photostream

The blame for the environmental disaster in the Gulf of Mexico is now flowing almost as freely as the oil, and even after a month, the full extent of the Deepwater Horizon disaster won't be known for some time. The explosion and the futility of efforts to stanch the flow have sounded a nightmarish alarm for the United States, Mexico and Cuba.

These three countries not only share the coastline of the Gulf, we share (to decidedly different degrees) the pain of recession. Only days before the explosion of the Deepwater Horizon, the Obama Administration moved to open new areas of the East Coast to oil drilling, in part in response to the siren song of jobs and profits for American companies. The American Petroleum Institute claimed that "exploring for and developing our nation's offshore resources could help generate more than a trillion dollars in revenue and create thousands of jobs to add to the already 9.2 million jobs supported by today's oil and natural gas industry."

What a difference a few weeks makes. While the debate about drilling will continue in the United States, Cuba is in a different position, and their economy in a different place: not facing mere recession, but a free fall. Cash-starved Cuba's drilling in its Economic Exclusive Zone is not a question of if, but when. And with U.S. law prohibiting any meaningful cooperation not only on exploration and extraction but also on disaster preparedness and mitigation, the future may hold more Deepwater Horizon disasters, and even less capacity to handle them.

The Spanish oil company Repsol has contracted with an Italian company to bring a deepwater drill rig into Cuban waters. If that's not ominous enough, the rig is being assembled in China, a country that does not enjoy a reputation for quality control. That may be unfair, but it is fair to say that many people who might not have been that concerned about such an operation before the Deepwater Horizon incident are paying close attention now.

Today's New America event U.S. -- Cuba Engagement in the Gulf: Lessons from the Deepwater Horizon Oil Spill asked the questions: Are we prepared? What's at stake? And, where should the Obama Administration go from here? The answers: no, a lot, and forward with alacrity.

Deepwater Horizon Oil Spill: A Lesson for U.S. - Cuba Engagement

Reuters/U.S. Coast Guard

As BP struggles to staunch the undersea gusher – dumping 200,000 gallons of light crude oil into the Gulf of Mexico each day – after the explosion of its Deepwater Horizon drilling rig, in which at least 11 workers lost their lives, there’s a renewed focus on prevention and mitigation of disasters like this one. Already, coastal Louisiana is feeling the effects, and some scientists predict that the Gulf’s loop current will transport the oil slick along the Florida Panhandle, through the Florida straits and up the Atlantic seaboard as far as North Carolina.

It’s still unclear what exactly it will take to turn off the tap opened by the Deepwater Horizon. But BP - which up until this disaster, was among the most trusted names in the industry - has had at its disposal the best equipment and personnel in the world from the moment the disaster struck. What if this spill had happened in Cuban waters, where the U.S. government forbids American companies to operate, and American personnel to travel? This scenario grows more possible given a report from Havana this week that the Spanish could be drilling in Cuban deep waters – with an Italian rig built in China – as early as this fall.