http://www.ibtimes.com/articles/296258/20120210/gulf-mexico-florida-coast-guard-cuba-oil.htm

By PIERRE BERTRAND: Subscribe to Pierre’s RSS feed
February 10, 2012 12:54 AM GMT

Cuba’s fledgling oil industry has for the first time dropped an offshore rig into the waters off the Florida Keys, a move that has U.S. officials and environmentalists warning that the island nation’s energy ambitions could come at the expense of the ecologically sensitive region at the tip of the Florida Peninsula.

“Cuba cannot be trusted to provide even the bare essentials to its own citizens and it certainly can’t be trusted to oversee safe and environmentally sound oil drilling only 90 miles off our pristine Florida coast,” said Florida Lt. Gov. Jennifer Carroll in testimony before the House Subcommittee on Coast Guard and Maritime Transportation.

Working with Spain’s biggest oil company, Repsol, Cuba has placed an exploratory well 30 miles off Havana, 5,600 feet below the ocean surface. It’s one of five wells planned in the region and is deeper than BP’s Macondo well that spilled millions of barrels of oil in the Gulf of Mexico in 2010. The well sits 56 miles away from the Keys. By contrast, BP’s well was 41 miles off the Lousiana coast. Cuban officials hope that the oil produced offshore will fill a 100,000-barrel-a-day supply gap currently covered by Venezuela.

Because of the well’s location in the Florida Strait a spill or blowout, like the one that occurred in the Gulf, would be an environmental disaster of untold peril, said John Proni of Florida International University, a scientist with the Atlantic Oceanography and Meteorological Laboratory, a branch of the National Oceanographic and Atmospheric Administration.

Proni, who also testified before the maritime subcommittee, explained that the Cuban rig sits dangerously close to the Gulf Stream current system. Any leaked oil that gets into this whirlpool would reach U.S. coastal waters quickly and threaten the “iconic Florida coral reef system, important fisheries and breeding grounds, location of threatened and endangered sea grass and coral, and habitat for rare and endangered species,” Proni said.
The drilling of the well is expected to take roughly two months.

The Bureau of Safety and Environmental Enforcement concluded last month that the Cuban rig met U.S. standards after American offshore oil drilling regulators boarded and reviewed the Spanish-operated equipment before it reached Cuban waters. However, because the rig was not bound for U.S. territory, nor contracted for exploration in the United States, the regulators had no authority to influence Repsol’s plans. The U.S. has recently overhauled its offshore permitting processes and tightened regulations — and it is likely that these rules will continue to evolve in the coming years. Since the U.S. and Cuba do not have diplomatic relations, it will be impossible to continue to monitor this offshore project even as the standards for operating rigs in coastal waters improve.

Oil spills in offshore projects are an increasingly common occurrence. From the early 1970s through the 1990s there were only four a year in U.S. waters. But between 2005 and 2010, there was an average of more than 20 oil spills a year in coastal waters. So although Repsol has a relatively good reputation for quality, the chance of a spill cannot be discounted. If it occurs in this project, Cuba simply does not have the capabilities or equipment to respond quickly enough to an accident before it begins to compromise the waters around it, said Jorge Pinon, a former president of Amoco Oil Latin America and an expert on Cuba’s oil industry. The BP well blowout required 5,000 vessels, three additional rigs, submersibles, more than 100 aircraft and 30,000 emergency responders to get under control.

“Cuba doesn’t have these assets,” said Pinon. “They will have to come from the United States.”

Because of the U.S. embargo on Cuba, which restricts business transactions and trade between the two countries, U.S. companies and experts would not be permitted to respond to a Cuban offshore oil rig accident. However, Pinon noted that the U.S. president could temporarily lift the embargo to allow crews and first responders to participate in a shutdown and recovery operation. The Spanish rig uses a U.S. blowout preventer so replacement equipment could theoretically be sent in as well.

But the logistics of such a rescue effort would mar its effectiveness, Pinon added. With so little routine communication and so much antagonism between the two countries, it’s hard to imagine how a plan could be worked out quickly for who takes command of the many moving parts involved in a cleanup. And there would be many questions to address about whether U.S. spotter and oil dispersant planes could fly in Cuban airspace, where rescue teams could operate and whether crews would need visas. All of this could greatly delay the response and increase the chance that the Florida Keys would be damaged, Pinon said.

Jennifer Diaz, a spokeswoman for the Florida Department of Environmental Protection, said the state is in the process of drafting a coastal oil spill response plan. Two others for the region are being put together by the U.S. Coast Guard.

Lt. Patrick Montgomery, a spokesman for the Coast Guard, which would take the lead on any ocean cleanup, said it is always on the lookout for oil spills. But in the event of a spill in Cuban territorial waters, the Coast Guard’s response powers are nil.

Montgomery said that under current rules crews can only clean up oil that is spilled or drifts into U.S. and international waters. But since the well is in Cuban territory, it will be the responsibility of Cuban and Repsol authorities to shut down a malfunctioning well and prevent any oil from leaking.

“We have in place contingency plans that adhere to the strictest international standards and are confident that we have all the elements in place to deal with potential threats,” said Kristian Rix, a spokesman for Repsol, who did not elaborate further. “Our diligence has been rewarded by the positive comments and feedback received from the U.S. Coast Guard during their inspection of the rig.”

Rix added the company implemented two suggestions made by U.S. regulators but did not elaborate.

Manuel Marrero of the Cuban Ministry of Basic Industry said on the Ministry of Foreign Affairs Website that Cuba’s environmental regulations pertaining to oil drilling are “very strict and severe.” Companies involved in the drilling of offshore oil in Cuban waters will be required to have equipment and a logistics center in the coastal town of Mariel, located several miles outside Havana.

None of this is comforting to Frank Verrastro, senior VP and director of the Center for Strategic and International Studies’ Energy and National Security Program, who put it succinctly: Cuba has never drilled for deepwater oil before and “the expectation is [Cubans] don’t have the capability to handle [a large spill].”

Special thanks to Richard Charter

This Fact Sheet explains in plain words the dangerous OCS offshore drilling provisions contained in HR 7, which can be used in drafting letters and added into the context of comprehensive fact sheets also covering the Arctic Refuge drilling and other issues. Feel free to use and adapt this as needed. Richard Charter

Florida’s Gulf Coast:
Waives the bipartisan agreement reached in 2006 called the “Gulf of Mexico Energy Security Act” (GOMESA) which opened vast new areas to exploration and, in exchange, guaranteed necessary protections for the Military Mission Line in the Eastern Gulf of Mexico. HR 7 ignores this compromise and would instead require new lease sales of not less than fifty contiguous tracts within GOMESA during 2013, again in 2014, and again during 2015. Should the Secretary of Defense identify any military areas in conflict with the proposed leasing plan, for each and every single tract removed from leasing for Department of Defense purposes, two other tracts would be substituted for leasing, regardless of other values.

California:
Requires offshore drilling on tracts in sensitive Southern California waters to be conducted from shore or from existing offshore platforms using the very risky application of directional drilling, a technique particularly vulnerable to the same kinds of “cementing” problems that contributed to the BP Gulf of Mexico oil disaster. States’ rights under the Coastal Zone Management Act would be waived for all related drilling activities off of Southern California.

Off of Northern California, Oregon, Washington, and along the Atlantic coast, requires that at least fifty-percent of the coastal tracts in any OCS Planning Area considered most likely to have petroleum potential be offered for lease in each and every subsequent “Five-Year OCS Leasing Program”, with no consideration of fisheries values or local economic concerns. Another fifty-percent of any remaining such tracts required to be offered in the next Five-Year Program, continuing until entire planning area is leased.

Virginia:
Requires that lease sale 220 along the mid-Atlantic be held no later than one year after enactment of this Act, and that the present seaward boundaries now associated with the Commonwealth of Virginia be arbitrarily expanded northward and southward to encompass federal waters now associated with North Carolina and Maryland. Should the Secretary of Defense identify any military areas in conflict with the proposed leasing plan, for each and every single tract removed from leasing for Department of Defense purposes, two other tracts would be substituted for leasing, regardless of other values.

Bristol Bay, Alaska:
Requires that the Secretary of Interior conduct Lease Sale 214 in Bristol Bay, Alaska within one year of enactment, amidst the largest runs of wild salmon on earth, in waters supplying 40% of the total U.S. fish catch including halibut, red king crab, Pacific cod, and pollock and supporting billions in sustainable annual economic activity.

Elana Schor, E&E reporter
Published: Wednesday, February 8, 2012

When more than 20,000 barrels of fuel leaked from an oil sands crude pipeline in Michigan in 2010, the government set aside $13 million from a fund formed for spill cleanup — and stretched to its limits by that spring’s Gulf of Mexico gusher.

Five months later, the Internal Revenue Service quietly ruled that a significant portion of the type of Canadian crude flowing through that Michigan pipeline was exempt from the per-barrel tax created for that spill-liability fund. The loophole for oil sands fuel, which also forms the bulk of the crude set to run on the Keystone XL pipeline, remains in effect today despite congressional proposals to close it.

“It’s a real concern that these spills appear to be incredibly expensive to clean,” Natural Resources Defense Council (NRDC) attorney Anthony Swift, a leading critic of increased oil-sands development, said of leaks from pipelines carrying Canadian crude. “And the transportation of this crude is not producing the taxes that we’ll rely on to clean up spills.”

The IRS ruled on taxation of the oil sands crude that Keystone XL would carry in a January 2011 memo, issued at the request of a company whose identity was kept secret. While the agency “has not issued final regulations” on the Oil Spill Liability Trust Fund, paid for by an 8- cent-per-barrel tax set to expire in 2017, it noted that a congressional report accompanying that law excluded “synthetic petroleum” from its definition of oil.

“Accordingly, tar sands imported into the United States … are not subject to the excise tax on petroleum” that keeps the spill-cleanup fund flush, the IRS wrote. “However, crude oil and/or petroleum products that are coming led with tar sands are subject to the excise tax.”

It remains unclear how the per-barrel tax could be applied to only a portion of the fuel that came through Enbridge Energy Partners LP’s Michigan oil sands line, through Keystone XL or through any other pipe originating in Canada that carries its bituminous product. Pipeline companies typically accept fuel in “batches” that can include “dilbit,” a mixture of oil sands crude and natural gas condensate subject to the tax, or “syncrude,” a partially upgraded fuel that appears exempt (Greenwire, Aug. 23, 2011).

What is clear is the precarious financial future that the trust fund faces following the $626 million-plus strain imposed on it by cleanup of the Deepwater Horizon spill in 2010.

The per-barrel tax that oil sands crude was exempted from by the IRS comprises more than 90 percent of the fund’s intake, according to a recent Government Accountability Office audit that said it would soon run dry if Congress did not extend the levy beyond 2017 (E&ENews PM, Oct. 24, 2011).

Sen. Charles Schumer (D-N.Y.) submitted an amendment ahead of a Finance Committee vote yesterday on funding for a two-year
transportation bill that would have ended the oil sands crude exemption. Yet his plan would have sent the resulting money to the
nation’s cash-strapped highway trust fund, not the spill-liability fund, according to a summary released by the Finance panel. Schumer’s amendment never came up in the Finance markup last night (see related story).

The oil industry’s top trade group does not “currently have a position” on whether lawmakers should expand the spill liability tax
to cover oil sands crude, American Petroleum Institute tax policy manager Stephen Comstock said in an interview.

“I think the policy we’d have is, as long as the money is used to go to the [spill liability] fund, to us that’s the proper policy,” Comstock added. “There are some discussions about the money going off to do something else, and from our perspective, as long as you have a fund … you shouldn’t be diverting those dollars away.”

With Congress increasingly consumed by debate over oil sands crude in the wake of Keystone XL’s rejection by the White House, however, the taxation status of that Canadian fuel is likely to draw fresh scrutiny in the coming weeks.

Swift, of NRDC, warned that oil sands companies could be getting “a free ride.” Using the preferred appellation of greens opposed to Keystone XL, he added: “It appears that these tar sands are a product that places an inordinate strain on a fund they’re not contributing to.”

Kate Colarulli, associate director of the Sierra Club’s oil campaign, sounded a similar note in blasting the GOP as “incredibly
irresponsible” for pushing Keystone XL when the taxation of oil sands crude remains an unsettled question. “At the same time that we’re seeing intense Republican pressure to permit an oil pipeline, right now this isn’t being treated as oil” for tax purposes, she said.

Special thanks to Richard Charter.

http://summitcountyvoice.com/2012/02/06/groups-sue-to-halt-7-year-oil-spill-in-gulf-of-mexico/

Posted on February 6, 2012 by Bob Berwyn

Feb. 2 report compiles independent monitoring data

By Summit Voice

SUMMIT COUNTY- Citing the public’s right to know why an oil rig 11 miles off the coast of Louisiana has been leaking oil for seven years, a coalition of watchdog and environmental groups has filed a lawsuit against Taylor Energy Company LLC.
The lawsuit, filed last week in federal court by the Waterkeeper Alliance and several Gulf Coast Waterkeeper organizations, aims to halt the spill and to make public the facts of the company’s seven-year response and recovery operation. The lawsuit claims that the damaged operation has been leaking several hundred gallons per day into the Gulf of Mexico.

The spill is one of several identified in a new Gulf monitoring report released Feb. 2 by watchdog groups including SkyTruth, SouthWings, Lower Mississippi Riverkeepers and the Waterkeepers Alliance.

“The plaintiffs filed suit to stop the spill and lift the veil of secrecy surrounding Taylor Oil’s seven-year long response and recovery operation,” said Marc Yaggi, Executive Director of Waterkeeper Alliance. “Neither the government nor Taylor will answer basic questions related to the spill response, citing privacy concerns.”

The public deserves to know how this spill happened and why it continues. Coastal communities should understand the risks involved in developing off-shore oil resources and what protections are in place to prevent damage from future spills, Yaggi added.
Part of the evidence presented in the course of the lawsuit will come from satellite images, research by SkyTruth and aerial observations by SouthWings.

The Waterkeeper Alliance and its local Waterkeeper organizations say the spill started after an undersea landslide in the aftermath of Hurricane Ivan in 2004. An offshore platform and 28 wells were damaged, and since then, Taylor has yet to stop the daily flow of oil from the site.

“The Taylor Oil spill is emblematic of a broken system, where oil production is prioritized over concerns for human health and the environment,” said Justin Bloom, Eastern Regional Director of Waterkeeper Alliance. “Nearly two years after the BP Deepwater Horizon Spill, none of the comprehensive reforms recommended by the National Oil Spill Commission have been enacted and Congress has yet to pass a single law to better protect workers, the environment or coastal communities.”

President Obama has called for a massive push to open up another 38 million acres in the Gulf of Mexico to oil exploration and extraction. He also seeks to open up pristine Arctic waters to drilling, but oil exploration and extraction technology has dramatically outpaced the development of safety and recovery technology, while the regulatory regime appears incapable of controlling what critics call a runaway industry.

A report released this week by the Gulf Monitoring Consortium, a partnership between Waterkeeper Alliance, SkyTruth, and SouthWings, investigates several spills in the Gulf (including the Taylor Spill) and highlights numerous deficiencies in the reporting and response process.

A copy of the report can be found here: http://waterkeeper.org/ht/a/GetDocumentAction/i/24733

“Imagine an incident like the Taylor Spill in a deepwater, high-pressure environment, that could not be contained in 7 years,” said Paul Orr, the Lower Mississippi Riverkeeper, “Do we really want to race to the bottom without a lifeline when it looks like big oil is still at the helm?”

One Response
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Norman, on February 6, 2012 at 7:42 am said:
Under the guise of “national security”, or what ever the excuse, the lack of enforcement by the appropriate agency[s] to monitor these leaks and have them fixed, proves how broken/corrupt the system is today. The industry knows that they can get away with almost anything, so they do it. The snivel and whining that is heard when ever anyone calls them on the subject, well, the attitude of “there you go again” needs to stop. Of course, that won’t happen until the money is taken out of politics. Considering that the congress critters spend most of the time begging for money, while letting the office help run the show, proves just how much the system needs an overhaul.
Reply

Special thanks to Richard Charter

http://www.reuters.com/article/2012/02/02/us-cuba-oil-idUSTRE8111S620120202

By Jeff Franks
Havana | Thu Feb 2, 2012 12:56pm EST

(Reuters) – Spanish oil company Repsol YPF has begun drilling the first well in Cuba’s long-awaited exploration of offshore oilfields that the communist country says hold both billions of barrels of oil and the key to greater prosperity, industry sources told Reuters.

The massive Scarabeo 9 drilling rig, which arrived in Cuban waters two weeks ago, began drilling into the sea floor about 30 miles northwest of Havana on Tuesday night, the sources said.

A Repsol spokesman said the company could not comment on “operational details.”
The newly built, high-tech rig is operating in 5,600 feet of water, or what the oil industry calls “ultra-deep water,” in the Straits of Florida, which separate Cuba from its longtime ideological foe, the United States.

Sources close to the project said such wells generally take about 60 days to complete.
Repsol, which is operating the rig in a consortium with Norway’s Statoil and ONGC Videsh, a unit of India’s Oil and Natural Gas Corp, has said it will take several months to determine the results of the exploration.

The well is the first of at least three that will be drilled in Cuban waters with the Scarabeo 9, which was built in China and is owned by Saipem, a unit of Italian oil company Eni.

Sources have said that Repsol will drill the first well and then the rig will go to Malaysia’s Petronas in partnership with Russia’s Gazprom Neft and then back to Repsol for the third well.

It is not clear what happens after that, although some sources have said Repsol, which is leasing the Scarabeo 9 from Saipem at a rate said to be more than $500,000 a day, will move the rig to Brazil for exploration there.

Cuba has said it may have 20 billion barrels of oil in its northern waters, which are its part of the Gulf of Mexico. The U.S. Geological Survey has estimated it may have 5 billion barrels of oil, but its study does not include the entire Cuban gulf zone.

(Additional reporting by Jane Sutton in Miami; Editing by Bob Burgdorfer)

Special thanks to Richard Charter