Chinese oil rigs off Cuba put pressure to allow oil, gas drilling near Florida

Chinese oil rigs off Cuba put pressure to allow oil, gas drilling near
Florida

By William E. Gibson
Washington Bureau Chief

June 20, 2006

WASHINGTON -- The presence of Chinese oil rigs along the coast of Cuba
and a new attempt in Congress this week to tap the eastern Gulf of
Mexico are putting pressure on Florida to allow American companies to
drill for oil and natural gas near the state's shores.

Drilling advocates unveiled a proposal on Monday that would remove the
federal ban on drilling 100 miles beyond the coast and offer states
financial incentives to allow it closer.

At the same time, some drilling advocates in the House and Senate are
pressing to compete with companies from China, Canada and other
countries to explore off the Cuban coast only 50 miles from Key West.

All this leaves Florida's members of Congress feeling squeezed.

Eager to shelter the state's beaches and tourism industry from potential
spills and pollution, the Florida delegation so far has preserved a
federal ban on offshore drilling that extends far beyond 100 miles. The
latest legislative proposal and foreign exploration in Cuban waters,
which are outside U.S. control, have opened up new fronts in the
long-running legislative battle.

Rig sightings

Leonard Gropper, a retiree who makes occasional boating excursions to
Cuba from his homes in Fort Lauderdale and Marathon, said he was amazed
to see rigs dotting the island's north coast.

"They've got new wells coming in all over the place, pumping away,"
Gropper said. "People have been worried about drilling over in the Gulf,
but I saw all kinds of wells with Chinese writing on them just south of
the Keys. If there is a spill, it will flow into the Gulf Stream and go
all the way up the East Coast."

Citing a rising tide of Chinese investment, a dozen senators and a
half-dozen House members are promoting a bill that would create an
exception to the U.S. embargo of Cuba by allowing American companies to
bid to explore energy resources off the island's north coast.

The Cuban government, which has indicated it would welcome American
bids, is forming contracts with companies from China, Canada, Spain and
other European nations to exploit this resource, which is believed to
contain roughly 4 billion to 9 billion barrels of oil.

"China is trying to lock up resources around the world, and they are
locking up resources in our own backyard where we can't even compete and
play ball," said Sen. Larry Craig, R-Idaho. "This is simply wrong. I've
had enough, and I believe the American people have had enough."

Proponents argue that American companies are more likely to bring high
environmental standards to this work and that the Chinese presence poses
strategic and national security concerns.

"Whether you are living in Florida or elsewhere, you want the best
there, the ones with the knowledge to do it right," said Rep. Jeff
Flake, R-Arizona, who opposes the embargo.

Cuban-American members of Congress strongly oppose drilling in Cuban
waters by companies, foreign or American, for fear it would weaken the
embargo and bolster the Fidel Castro regime with oil money. Rep. Ileana
Ros-Lehtinen, R-Miami, backed by 17 co-sponsors in the House, introduced
a bill that would affirm the embargo while denying travel visas to
representatives of foreign companies, including U.S. subsidiaries, that
invest $1 million or more in Cuba's energy program.

The dispute pits the Cuban-American lobby against the oil lobby.

The oil industry, however, seems primarily interested in using the Cuban
example as an argument for removing the federal ban on offshore drilling
in U.S. waters, especially in the eastern Gulf, where companies see a
big potential resource near existing wells and pipelines.

New Gulf proposal

Many in Congress relentlessly seek greater access to this resource,
citing high fuel prices and a desire to boost domestic energy supplies.

In the latest attempt, Rep. Richard Pombo, R-Calif., the chairman of the
House Resources Committee, struck a compromise with sponsors of various
offshore drilling proposals and with Florida Rep. Adam Putnam, R-Bartow,
which they plan to present to the committee on Wednesday.

The multitiered proposal would create a permanent ban on drilling within
the first 50 miles offshore unless states choose to allow it. States
also would have the option of enacting bans on drilling in areas between
50 and 100 miles of their coastlines. Those that allow drilling would
share in some of the royalties paid by oil and gas companies to the
federal government.

Gov. Jeb Bush supports the concept of creating a permanent buffer around
Florida and of giving states the option to block drilling within 100
miles, said spokesman Russell Schweiss. The governor and his staff,
however, are still reviewing the Pombo proposal.

Florida Democrats have scorned these negotiations, arguing that the
state must not compromise away its environment. "If Florida's
congressional delegation allows this drilling proposal to pass, one
spill could devastate our economy and spoil our beaches for generations
to come," warned Rep. Jim Davis, D-Tampa, and a candidate for governor.

The result is a somewhat fragmented Florida delegation under pressure
from other members who say it is time for Congress and federal officials
to quit indulging the state's objections to offshore drilling.

Rep. John Peterson, R-Pa., last week told an administration witness:
"Tell the White House staff that it needs to get its head out of the
Florida sands."

William E. Gibson can be reached at wgibson@sun-sentinel.com or
202-824-8256 in Washington.

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