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Oil spill from drilling in Cuban waters could have limited U.S. response

WASHINGTON — As exploratory oil drilling is set to begin in December off the coast of Cuba, the U.S. government acknowledged Tuesday that because of chilly diplomatic relations, it could have a limited ability to control the response to an oil spill there, let alone one the magnitude of last year's Deepwater Horizon disaster in the Gulf of Mexico.

U.S. regulators said their main leverage to encourage safe drilling practices in Cuba is with the company doing the first round of offshore exploration in the communist country: Spain's Repsol oil company. Because of its other extensive U.S. interests, Repsol is likely to exercise caution in a prospect less than 100 miles from the Florida coastline, said Michael Bromwich, director of the agency that oversees offshore drilling here, the Bureau of Safety and Environmental Enforcement.

Repsol's wide U.S. interests have likely "played a significant role in why they've been as cooperative as they have," Bromwich told the Senate Energy and Natural Resources Committee on Tuesday morning.

Bromwich also said the company has pledged publicly that it will adhere to U.S. regulations and the highest industry standards while working in Cuban waters. The company has given U.S. regulators permission to inspect the rig it will be using, Bromwich said, although that inspection will have to be done before it enters Cuban waters. The agency, along with the U.S. Coast Guard, has already participated in a mock response drill at Repsol's facilities in Trinidad.

Regulators have made it clear they expect the company "to adhere to industry and international environmental, health, and safety standards and to have adequate prevention, mitigation and remediation systems in place in the event of an incident," Bromwich said.

But others at the hearing warned that spilled oil knows no political boundaries — or embargoes. And while Congress is most curious about Cuba because of the limited information available about the country's plans, other Caribbean and Gulf of Mexico neighbors are also exploring for oil near U.S. waters. They include Jamaica, the Bahamas and ongoing operations in Mexico.

"If we just kind of close our eyes to it here, and say 'it's not going to happen here,' we're fooling ourselves," said Sen. Lisa Murkowski, R-Alaska, the top Republican on the Senate Energy and Natural Resources Committee. "If there is a spill, the impact doesn't necessarily stop at our borders."

How U.S. companies are allowed to respond to any potential spill in Cuban waters could be vital in protecting Florida and the Bahamas, said Paul Schuler, the president and CEO of Clean Caribbean and Americas, a Fort Lauderdale-based oil-spill response consortium funded by oil companies. He called for a "loosening up" of the red tape required for U.S.-based companies to have any sort of involvement with the communist government.

Schuler's organization, which responded to the 2010 BP spill in the Gulf of Mexico, has been involved in Cuba since 2001, when Repsol and Brazil's Petrobras were first doing work there. CCA applied for and received licenses from the Treasury and Commerce departments to travel to and export equipment to Cuba. They've been to Cuba recently to work with Repsol and Petronas, the state-owned Malaysian oil company also exploring in Cuba, Schuler said.

One of the foremost experts in Cuba's oil drilling capabilities, Jorge Piñon, warned the committee the United States shouldn't "bully" Repsol, which is not the only oil company to explore in Cuban waters. Piñon pointed out that the United States doesn't have the leverage with state-owned entities like Petronas that it does with publicly traded companies with U.S. interests, such as Repsol.

"Mexico, Cuba and the Bahamas are in the process of implementing the most advanced and up to date drilling regulations and standards," said Piñon, a former Amoco executive and a visiting research fellow with Florida International University's Latin American and Caribbean Center's Cuban Research Institute. "But do they have the resources, capabilities, assets, personnel, and experience to enforce them? Can these countries' regulatory agencies appropriately police the operators? These are issues for debate."

Some Republican lawmakers have complained in the past about Cuba's ability to drill so close to the U.S. coastline even as a 125-mile buffer zone remains in place in U.S. waters off of most of Florida's coast. Tuesday, those questions came up again.

"Why not drill there?" asked Sen. Bob Corker, R-Tenn. Bromwich told Corker the agency would be going forward with lease sales in the western Gulf of Mexico in December, and in the central gulf in May or June.

.FAST FACTS

Repsol

• Founded in 1927 as Spain's state-owned oil monopoly, Repsol privatized in 1987.

• Led by Antonio Brufau, a former director of auditing at Arthur Anderson.

• Headquarters in Madrid, with 41,014 employees in more than 30 countries on five continents.

• U.S. interests include a 28 percent stake in the Shenzi field, one of the largest discoveries in the Gulf of Mexico. The company also has extensive interests in offshore Alaska, including a 20 percent stake in 71 blocks in the Beaufort Sea and a full stake in 93 blocks in the Chukchi Sea.

Oil spill from drilling in Cuban waters could have limited U.S. response 10/18/11 [Last modified: Wednesday, October 19, 2011 12:20pm]
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