Cuba's New Deepwater Oil Well Uncomfortably Close

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As a legal case over a moratorium on deepwater drilling works its way through the U.S. courts, a Spanish-led consortium is now preparing to sink a deepwater exploratory well in Cuban waters, just 60 miles off the Florida coast. The move raises concerns about how the U.S. could respond in the event of a major spill.

LIANE HANSEN, host:

Cuba has long drilled for oil but has never produced enough for itself. However, the U.S. Geological Survey estimates there may be up six billion barrels of oil reserves offshore, enough to meet all of Cuba's needs and more. So far, Cuba state-run oil company has been unable to tap them. A Spanish energy company now wants to drill an exploratory well early next year in Cuban waters.

And as NPR's Greg Allen reports, several other international oil companies are expected to follow.

GREG ALLEN: Repsol is a Spanish company with long experience in deepwater drilling. Last year, it successfully sank a well more than six and a half miles down on the floor of the Gulf of Mexico. In 2004, Repsol drilled its first exploratory well off Cuba's northern coast. Now the company says it will drill a second well in the same area early next year.

Jorge Pinon is a former Shell and AMOCO executive, now a research fellow at Miami's Florida International University. I asked him if Repsol is going back for more, does that mean the oil is there.

Mr. JORGE PINON (Senior Energy Research Fellow, Miami's Florida International University): Yes, we assume that it is because a company like Repsol is a company that is not going to go through an exercise like this; talking about a 45 to $50 million expenditure, if they didnt have a good expectation that there is going to be oil.

ALLEN: Repsol isnt saying much about its plans, other than to confirm that we'll use a deepwater rig currently being assembled in China, and that it's partnering in the project with Norwegian and Indian energy companies. Because of the longstanding U.S. trade embargo, U.S. companies are banned from any participation in Cuban oil production, onshore or off.

That worries David Guggenheim, and he has nothing to do with the oil industry. He's a marine researcher and senior fellow with the Ocean Foundation. The oil well may be in Cuban waters, he says, but with the Loop Current and the Gulf Stream, a spill would quickly become a U.S. problem.

Dr. DAVID GUGGENHEIM (Senior Fellow, Ocean Foundation): The modeling studies that theyve performed predict that 90 percent of a oil spill would end up in U.S. waters - in the Florida Keys and up the East Coast of Florida and the U.S. And I think all of this underscores the importance of having a dialogue between the United States and Cuba on this issue.

ALLEN: Next month, a group from the Houston-based International Association of Drilling Contractors is traveling to Havana to discuss best practices, environmental protection, and safety procedures with Cuban officials.

Jorge Pinon says through legislation or an executive order, U.S. companies could be allowed to respond to an oil spill in Cuban waters. But it's important those measures be adopted now before a spill occurs.

Mr. PINON: So that the oil companies operating in Cuba can pick up the phone and in short notice, have the equipment, personnel and other resources necessary in Cuba, in order to suppress any oil spill before it hits Key West or South Beach.

ALLEN: Along with Repsol, at least seven other international energy companies have purchased oil leases off Cuba's northern coast, some just 60 miles away from Key West. Pinon says he and others close to the industry are not asking that U.S. companies be allowed to take part in Cuban drilling, just cleanup. But if oil production takes off in Cuban waters, thats likely to change.

John Kavulich is senior policy advisor to the U.S.-Cuba Trade and Economic Council.

Mr. JOHN KAVULICH (Senior Policy Advisor, U.S.-Cuba Trade and Economic Council): U.S. companies will definitely put pressure on the U.S. Congress and on the White House to, at minimum, allow the oil companies to access information, to have meetings and if they can't directly contract, perhaps contract as a subcontractor.

ALLEN: That would mean easing the U.S. trade embargo, a touchy subject.

And there's another way in which Cuba's new off-shore oil production may have a profound impact on the U.S. If a mini drilling boom gets underway in the Atlantic off Cuba, and eventually the Bahamas, pressure will build to lift the ban on drilling in U.S. waters, near the coast of Florida.

Greg Allen, NPR News, Miami.

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