Media Note
Office of the Spokesperson
Washington, DC

December 6, 2011

U.S. Department of State and other government officials will participate in a preparedness and response seminar in Nassau, The Bahamas, December 7-9, hosted by the Government of the Commonwealth of The Bahamas and the Regional Marine Pollution Emergency Information and Training Center for the Wider Caribbean (REMPEITC-Caribe). Government representatives from the Caribbean, Latin America, and the United States will discuss topics related to the offshore energy sector, including preventive regulatory frameworks, safety standards for floating production units, and best practices in oil spill containment. The goal of the meeting is to increase regional cooperation and joint planning on responses related to offshore units and marine pollution preparedness. U.S. participants will represent the United States Coast Guard, the Department of the Interior Bureau of Safety and Environmental Enforcement, the Department of Commerce National Oceanic and Atmospheric Administration, the United States Environmental Protection Agency, and the Department of State.

REMPEITC-Caribe is a regional activity center to help countries in the Wider Caribbean and Latin America prevent and respond to major pollution incidents in the marine environment. It receives support from the International Maritime Organization, the United Nations Environmental Programme, and participating governments, including the United States.

As new offshore oil drilling sites begin activities, the United States protects U.S. waters and shorelines by promoting safe drilling and response preparedness in areas close to our exclusive economic zone. The United States will continue to engage multilaterally to advance regional collaboration and to ensure responsible stewardship of the Gulf of Mexico and the Caribbean Sea.

Special thanks to Richard Charter

http://www.businessweek.com/news/2011-12-09/cuba-oil-drilling-tests-u-s-on-protecting-florida-or-embargo.html

December 09, 2011, 9:56 AM EST
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By Katarzyna Klimasinska

Dec. 8 (Bloomberg) — Four U.S. inspectors armed with safety glasses and notebooks will set out on a mission next month to protect Florida’s beaches from a Cuban threat.

They’ll rendezvous in Trinidad and Tobago with the Scarabeo 9, a rig headed to deep waters off Cuba to drill for oil about 70 miles (113 kilometers) south of Florida’s Key West.
Repsol YPF SA is making the Scarabeo 9 available to the U.S. inspectors before the rig starts drilling closer to Florida than the BP Plc well that failed last year in the Gulf of Mexico, causing the biggest U.S. offshore oil spill. The exploration poses an environmental, political and diplomatic challenge to the U.S. more than 50 years after cutting off relations with Cuba’s communist regime.

The Obama administration’s dilemma is “what steps to take for environmental protection and how much to honor current Cuba policy,” Dan Whittle, Cuba program director at the New York- based Environmental Defense Fund, said in an interview.

In the aftermath of the revolution that brought Fidel Castro to power, the U.S. banned exports to Cuba in 1960, withdrew diplomatic recognition, backed the failed Bay of Pigs invasion in 1961 and imposed a full trade embargo in 1962.

Now generations of animosity between the two nations limit cooperation on safety standards and cleanup precautions for the Cuba drilling planned by Madrid-based Repsol, which would be followed by state-owned companies from Malaysia to Venezuela. A conference on regional oil-spill response being held this week in Nassau, Bahamas, may provide a forum for discussions by U.S. and Cuban representatives.

Juan Jacomino, a spokesman for the Cuban Interests Section at the Swiss embassy in Washington, declined in an interview to comment on drilling off of the island nation.

Spare Parts

Repsol can use the Scarabeo 9 without violating the U.S. trade embargo because it was built at shipyards in China and Singapore, and fewer than 10 percent of its components are American, according to its owner, Eni SpA.

The sanctions would block spare parts from the U.S. for the rig’s blowout preventer, a safety device that failed in the BP spill. The restrictions also require Helix Energy Solutions Group Inc. of Houston, which provides oil-spill containment equipment for Repsol in the Gulf of Mexico, to seek a waiver to do so in Cuban waters in case of an accident.

U.S. companies seeking to do business with Cuba must ask the Commerce Department, which considers most applications “subject to a policy of denial,” the agency says on its website. The Treasury Department weighs requests to travel from the U.S. to Cuba.

Granting too few permits for spill prevention and response would keep contractors from offering the technology and services developed after the BP spill, Lee Hunt, president of the Houston-based International Association of Drilling Contractors, said in an interview.

Cuban Exiles

Approving too many licenses would undermine the embargo, enriching a regime listed by the U.S. State Department as a nation supporting terrorism along with Iran, Sudan and Syria, according to anti-Castro lawmakers such as Republican Representative Ileana Ros-Lehtinen of Florida, who heads the House Foreign Affairs Committee.

U.S. “assistance, guidance and technical advice” to Repsol, including the planned visit to Scarabeo 9, may violate the law by “helping to facilitate” the company’s work and providing the Cuban government “with a financial windfall,” Ros-Lehtinen said in a Nov. 1 letter to President Barack Obama.

Ros-Lehtinen, who immigrated from Cuba with her family at age 8, is a leader among Cuban exiles in South Florida who have opposed easing U.S. restrictions. Florida, which has been a swing state in presidential elections, also has been a bastion of opposition to oil drilling that opponents say could despoil the beaches that are a prime draw for tourists.

Florida Drilling Foes

Lawmakers such as Senator Bill Nelson, a Florida Democrat, have fought to keep drilling out of U.S. waters in the eastern Gulf of Mexico bordering Florida.

Nelson and Senator Robert Menendez, a New Jersey Democrat, introduced a bill Nov. 9 that would require foreign companies drilling in Cuban waters to pay for damage to U.S. territory without liability limits. Senator Marco Rubio, a Florida Republican, joined as a cosponsor.

Oil from BP’s spill tarred beaches 150 miles away in Florida’s northwestern Panhandle.
Now Floridians are faced with drilling under the jurisdiction of Cubans, who “don’t have the resources” to control a blowout, Jorge Pinon, an energy consultant and visiting research fellow at the Cuban Research Institute at Florida International University in Miami, said in an interview.

“If the U.S. is not willing to help” in an emergency, “the resources are going to come from Canada, Norway and the U.K., and it will take a very long time,” said Pinon, who led Amoco Corp. units in Mexico City and retired from BP in 2003, according to his biography.

Repsol’s Contract

Repsol signed a contract with Cuba in 2000, according to the company’s website, and confirmed the presence of oil with a Norwegian rig in 2004. Repsol will drill in about 5,000 feet (1.5 kilometers) to 6,000 feet of water, about the depth of BP’s Macondo well, according to Pinon.

Petroliam Nasional Bhd., or Petronas, based in Kuala Lumpur; New Delhi-based Oil & Natural Gas Corp.; Hanoi-based Vietnam Oil & Gas Group, known as PetroVietnam; Caracas-based Petroleos de Venezuela SA; and Sonangol SA of Luanda, Angola, also hold Cuban blocks, Pinon said.

U.S. officials say they are doing all they can to ensure safe drilling off Cuba.
“We are quite focused, and have been for many, many months” on “doing anything within our power to protect U.S. shores and U.S. coastline,” Tommy Beaudreau, director of the Bureau of Ocean Energy Management, an industry regulator, said in a Nov. 29 interview at Bloomberg’s Washington office.

Wild Well Control

The administration has issued some licenses to U.S. companies to respond to a spill in Cuban waters, Mark Toner, a spokesman for the State Department, said in an e-mail. He didn’t say how many have been approved, and the Commerce and Treasury departments didn’t respond to e-mailed requests for comment.

Wild Well Control Inc. of Houston is one permit recipient, according to Hunt of the drilling contractors’ trade group. The company didn’t respond to e-mails and phone calls seeking comment.

“Helix plans to build a new subsea containment cap to safeguard drilling operations in Cuba,” Cameron Wallace, a spokesman for that company said in an e-mail about its request for U.S. licenses. “The cap and associated equipment will be staged at a U.S. port near to the drilling site to minimize response time.”

Walking the Deck

In their visit to the Scarabeo 9, two inspectors from the U.S. Coast Guard and two from the Interior Department will walk the deck and check generators, the positioning system and firefighting equipment, Brian Khey, who will be on the team, said in an interview.

The Americans will watch a firefighting simulation and conduct an abandon-ship drill, according to Khey, the supervisor at the Coast Guard’s Outer Continental Shelf National Center of Expertise in Morgan City, Louisiana,

While the visitors will discuss with Repsol any deficiencies they find, they won’t have enforcement powers, Khey said. Nor will they be able to check the blowout preventer or the well casing and drilling fluid that will be used on site, according to the Interior Department.
Scarabeo 9 was built “according to the latest and most advanced international standards available at the time of her design and construction,” Rome-based Eni said in an e-mailed statement. “Health, safety and environmental protection are always a top priority.”
Eni Subsidiary

The vessel “is one of the very few units in the industry which is using a technology which is not an American one,” Pietro Franco Tali, chief executive officer of Eni’s oilfield- services subsidiary, Saipem SpA, said on an Oct. 27, 2010, conference call.

One U.S. component is the blowout preventer, made by Houston-based National Oilwell Varco Inc. The company hasn’t applied for a license to do business with Cuba and doesn’t plan to, Chief Financial Officer Clay Williams said in a phone interview.

That means rig operators will have to seek training and spare parts in Europe or Asia, according to Hunt, whose group represents 1,494 companies including Saipem.

“It’s like buying a Mercedes and being told you have to go to a Ford dealer for parts,” Hunt said in an interview.

The results of Cuba’s drilling may affect U.S. energy policy. Success would put pressure on the U.S. to open its waters surrounding Florida for exploration, Pinon said.
A serious accident off of Cuba could throw the industry out of the Gulf of Mexico, according to Brian Petty, executive vice president for governmental affairs of the drilling contractors’ group.

“A mess” in Cuban waters would lead critics of drilling to say, “Stop it, don’t let it go on anywhere,” Petty said.

–With assistance from Nicole Gaouette in Washington and Nguyen Dieu Tu Uyen in Hanoi. Editors: Judy Pasternak, Larry Liebert
-0- Dec/09/2011 14:34 GMT
To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net
To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

Special thanks to Richard Charter

http://www.miamiherald.com/2011/12/12/2543744/oil-drilling-off-cuba-prompts.html

Posted on Monday, 12.12.11

Officials from Caribbean countries, including the U.S. and Cuba, met to discuss plans in case a disaster happens at an oil rig off Cuba’s coast.

BY ERIKA BOLSTAD
MCCLATCHY NEWS SERVICE
WASHINGTON — As Cuba embarks on a new round of exploratory offshore drilling, U.S. officials are slightly more enlightened about the island nation’s plans in the event of a catastrophic oil spill on the scale of last year’s Deepwater Horizon explosion.

Several Caribbean countries, including the United States and Cuba, met last week in the Bahamas to talk about response plans. U.S. officials got an opportunity to see the Cuban disaster response plans – they’ve already participated in a mock response drill in Trinidad with the Spanish oil company that’s doing the first round of drilling. That company, Repsol, also agreed to allow U.S. inspectors from the Interior Department to take a look at the rig that will be doing the drilling.

‘INEVITABLE’

Sarah Stephens, the executive director of the Center for Democracy in the Americas, said she was encouraged that Cuban and American officials met, along with other nations that have an interest in regional oil production.

“There should be a lot more direct conversation and collaboration between the U.S., Cuba and others about the rig, because it’s inevitable,” she said.

U.S. officials say their priority is mitigating any potential threat to the United States and its territorial waters from oil drilling in Cuban waters. But they also say they’ve done nothing to facilitate oil drilling in Cuban waters, and that their main goal is to be prepared for the possibility of an oil spill and how they would respond.

“The United States will continue to engage multilaterally to advance regional collaboration and to ensure responsible stewardship of the Gulf of Mexico and the Caribbean Sea,” the State Department said in a statement issued before the meeting in the Bahamas.

Although U.S. officials say they’re not actively working to keep Cubans from drilling in their own waters, the embargo that’s been in place since the 1960s may have caused delays.

CUSTOM-BUILT

Repsol had to find an oil rig made from fewer than 10 percent U.S. components – not an easy task. Although few rigs are U.S.-made, many components – including software and blowout preventers – are made in the United States.

The rig, owned by a subsidiary of the Italian oil company Eni, will go next to state-owned oil companies: Petronas, a Malaysian company, and ONGC, an Indian state-owned company that will be partnering with the Russian state-owned company Gazprom.

“That rig was custom built to be sure that it met the embargo limitations,” said Jorge Piñon, a former Amoco executive and a visiting research fellow with Florida International University’s Latin American and Caribbean Center’s Cuban Research Institute. “That’s why it’s taking so long, over the last three years, for international oil companies to be able to drill in Cuba.”

Piñon and other experts in Cuba’s drilling and regulatory abilities remain concerned that the U.S. government hasn’t spoken with the other oil giants that will be leasing the rig after Repsol – all state-owned companies.

“Politics have exceeded common sense in protecting the environment and economy of Florida,” Piñon said.

The U.S. doesn’t have the same leverage with the other state-owned oil companies next in line, however, Interior Department officials told Congress in October. But because it’s a public company and 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.
Read more: http://www.miamiherald.com/2011/12/12/2543744/oil-drilling-off-cuba-prompts.html#ixzz1gNMKhJhN

Special thanks to Richard Charter

http://www.firstcoastnews.com/news/florida/article/230989/4/Florida-Bill-Drill-in-Old-Wells

3:55 PM, Dec 13, 2011
Associated Press

FORT MYERS, Fla. — A bill sponsored by a Naples state representative would give a tax break to companies that go back to drill in abandoned oil wells or drill new wells in fields that are more than 30 years old.

Rep. Matt Hudson, R-Naples, said his bill seeks to boost production, revenue and jobs for the state. The bill targets oil fields in Southwest Florida and the Panhandle.

“What we do is create a new category of oil called mature oil, and in doing so we allow for rejuvenation of wells that were previously capped,” as well as new wells drilled in “mature” fields, Hudson said.

Instead of exploring elsewhere, companies can go to fields where they know oil exists, he said.

The remaining oil is harder to extract, so the tax break would save companies money by helping offset the drilling cost.

House Bill 87 would apply to oil fields that were discovered before 1981 and wells that would begin producing oil after July 1, 2012.

That would include fields in which all wells are abandoned or plugged; fields that have some active and abandoned or plugged wells; and fields where new wells are being drilled, as long as all the fields were discovered before 1981, Hudson said.

The bill cleared its first hurdle Tuesday with a 10-4 approval by the House Energy & Utilities Subcommittee.

The bill has been forwarded to the Finance and Tax Committee.

One of the bill’s dissenters, Rep. Jeff Clemens, D-Lake Worth, said he had questions about where the abandoned wells are and the potential environmental effects of tapping them.

Florida has long had oil production in parts of Southwest Florida and in the northwest Panhandle.

The first field was discovered about 12 miles south of Immokalee in 1943.

A House staff analysis said the Panhandle fields produced about 1 million barrels of oil in 2010, while the Southwest Florida fields produced about 775,000 barrels.

The scope of the bill means a field such as Raccoon Point in the Big Cypress National Preserve, with mineral rights owned by Collier Resources, would fall under its umbrella.
Raccoon Point has 13 wells, eight active. The field, which is in Collier County, was discovered in 1978. Five new wells have been drilled there since February.

The company, run by descendants of Naples founder Barron Collier, plans to expand drilling.

Collier Resources released this statement through a spokeswoman, Andrea McLendon: “While we have not been following state Rep. Matt Hudson’s proposal, HB 87, we do believe that additional onshore drilling in Florida can provide many benefits including new jobs.

Oil drilling in Southwest Florida, ongoing for over 60 years, has proven to be an economic advantage generating tax revenues and creating jobs all in an environmentally sensitive manner.”

The proposed bill would help future drilling become more profitable for companies such as Collier Resources by lowering severance taxes paid per barrel of oil, which is typically 8 percent.

The severance tax is essentially a tax for severing, or extracting, oil or other minerals from the ground, said David Mica, executive director of the Florida Petroleum Council.

The bill would offer varying severance tax rates for producing “mature” oil: * 1 percent on the value of oil that is $60 and below per barrel. * 7 percent on the value between $60 and $80 per barrel. * 9 percent on the value per barrel of $80 and above. If the bill encourages companies to go back into fields that are plugged and recover more oil through new technological methods like directional, or horizontal drilling, “the purpose of the bill is quite frankly laudable,” said Andrew McElwaine, president and CEO of the Southwest Florida Conservancy in Naples. But drilling, particularly in the Big Cypress, is expanding, he said.

If companies are going to pay less taxes for drilling in existing fields where they were planning to drill anyway, “that strikes me as less laudable,” McElwaine said. “We’re not going to allow people to have a windfall profit from this,” Hudson said. He pointed out that under the bill, companies would pay 9 percent on the value of oil $80 and above per barrel, instead of the typical 8 percent. The bill would benefit residents of the state, Mica said. “If you don’t do anything,” he said, “you won’t produce any additional jobs, any additional oil or any additional revenue.”

There are an estimated 370 million more barrels of undiscovered oil in South Florida, according to the most recent United States Geological Survey oil reserve estimate.

All of South Florida’s oil fields are in the Sunniland Trend, an oil reserve about 150 miles long and 20 miles wide, stretching from Fort Myers to Miami.

The trend has 14 oil fields. Six have all wells plugged or abandoned, according to state Bureau of Mining and Minerals Regulation 2010 statistics.

They are: Baxter Island, 40 Mile Bend, Pepper Hammock, Seminole, Sunoco-Felda and Townsend Canal.

All of those, except for Townsend Canal, are in the Big Cypress and were discovered pre-1981.

A 2008 federal Department of the Interior study gives this forecast for oil expansion in the state over the next 10 years: “It can be expected that there is a significant potential for new drilling and development in the state of Florida. It can further be expected that new drilling will be located near existing oil and gas fields.”

Associated Press
Special thanks to Richard Charter

http://www.chicagotribune.com/business/breaking/chi-bp-says-halliburton-destroyed-gulf-spill-evidence-20111206,0,3412921.story

6:36 a.m. CST, December 6, 2011

BP accused Halliburton Co. of destroying evidence that the oilfield services company did inadequate cement work on the Gulf of Mexico oil well that blew out last year, and asked a federal judge to punish Halliburton.

The accusation, in a BP court filing, raises the stakes ahead of a trial, expected in late February, to assign blame and damages for the April 2010 blowout of the Macondo well, which triggered the largest offshore oil spill in U.S. history.

Citing recent depositions and Halliburton’s own documents, BP said Halliburton “intentionally” destroyed the results of slurry testing for the well, in part to “eliminate any risk that this evidence would be used against it at trial.”

The oil company also said Halliburton appeared to have lost computer evidence showing how the cement performed, with Halliburton maintaining that the information is simply “gone.”

BP asked U.S. District Judge Carl Barbier in New Orleans, who oversees spill litigation, to sanction Halliburton by ruling that Halliburton’s slurry design was “unstable,” a finding of fact that could be used at trial.

It also asked Barbier to direct that forensic experts be hired to find the missing computer data.

“These remedies are amply warranted in law and by principles of fair play, and they are essential to ensure this court’s trial is not tainted by Halliburton’s misconduct,” BP said in the filing.

Halliburton is the world’s second-largest oilfield services provider. A spokeswoman, Beverly Blohm Stafford, said the Houston-based company is reviewing BP’s filing.

“We believe that the conclusion that BP is asking the court to draw is without merit and we look forward to contesting their motion in court,” she said.

The Deepwater Horizon drilling rig’s explosion on April 20, 2010, caused 11 deaths, and brought tens of billions of dollars of lawsuits. Halliburton has accused BP of fraud and defamation, among other claims.

BP has also sued Transocean Ltd, which owned the rig, and Cameron International Corp, which made a blowout preventer.

In October, Anadarko Petroleum Corp, which owned 25 percent of the well, agreed to pay BP $4 billion toward clean-up costs and victims compensation.

BP has also reached settlements with Mitsui & Co, whose MOEX Offshore 2007 LLC venture was a drilling partner, and Weatherford International Ltd, which provided equipment used in the well.

The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

Special thanks to Richard Charter