Only one more piece is missing

Piñón on Energy: Only one more piece is missing
By Jorge R. Piñón

Over the last few months, we have seen a number of Congressional
initiatives in Washington to restrict international oil companies from
conducting exploration and production activities in Cuba's Gulf of
Mexico waters.

These proposed laws question the experience in deepwater drilling of the
international oil companies working in Cuba, the standards and
regulations under which they will operate, the technology and quality of
the drilling equipment to be used, and the lack of a bilateral disaster
preparedness and coordination agreement in the event of an oil spill.

As early as February of this year, executives of Spain's Repsol YPF —
the company that is scheduled to receive a Chinese-made oil rig in Cuban
waters in September — had given senior U.S. officials of various
government agencies, as well as members of Congress, assurances that
they would follow the strictest set of drilling and safety regulations
and standards. This commitment has now been confirmed by U.S. Interior
Secretary Ken Salazar during his recent visit to Spain.

Repsol "has volunteered to comply with all United States regulations
while drilling in the Gulf of Mexico," Salazar said this past week in a
conference call from Madrid with reporters.

The company

The roots of Spain's Repsol go back to 1948 as it grew into a national
oil company, which was eventually privatized in 1989. With worldwide
operations in 29 countries and over 40,000 employees today, it has
become the ninth largest private integrated oil company in the world.

In the United States, Repsol has exploratory and development interests
in 283 blocks in the Gulf of Mexico, including a 28-percent interest in
the Shenzi field (one of the largest discoveries in the Gulf of Mexico);
and 164 blocks in the Beaufort and Chukchi Seas in Alaska.

In 2009, Repsol, in partnership with U.S. giant Chevron, successfully
drilled the ultra-deep Buckskin prospect Gulf of Mexico, about 186 miles
south of Houston. The exploratory well is one of the deepest oil wells
ever drilled in the U.S. Gulf of Mexico, at a water depth of 6,500 feet
and a total depth to reservoir of 32,000 feet, thus demonstrating the
company's capabilities.

The equipment

The Scarabeo 9 is a Norwegian-designed Frigstad D90 semisubmersible,
whose structure was built in China. It is currently in Singapore, where
her final assembly and readiness are taking place. The sixth-generation
rig is owned and operated by Saipem, a subsidiary of Italy's oil giant ENI.

Recognized as one of the best-balanced international turnkey contractors
in the oil and gas industry, and with over 40,000 employees, Saipem has
a distinctive health and safety environment management system and has
been granted ISO 9001:2000 certification by Lloyd's Register Certification.

The design concept of the partially submerging 54,000-ton Scarabeo 9
lessens both rolling and pitching, allowing her to work in harsh ocean
conditions. It has the ability to withstand maximum wind velocity of 100
knots and wave heights of up to 95 feet.

The Scarabeo 9 is equipped with a computer-controlled system, which uses
computer-generated telemetry signals from beacons on the ocean floor and
satellite information to keep the semisubmersible in place, by
counteracting against the motions of the water and the direction of the
currents. Countering the waves and the winds working to move it about,
the Scarabeo 9 will be using eight 4.3-megawatt azimuth thrusters —
instead of mooring lines tied to the bottom of the ocean — to
automatically maintain her position and heading.

Repsol has "volunteered to have the rig inspected by U.S. authorities,
by the U.S. Coast Guard and the Bureau of Ocean Energy Management,
Regulation and Enforcement," Salazar said in the conference call from Spain.

The regulations and standards

Repsol has made it clear for some time now to the Department of
Interior's Bureau of Ocean Energy Management, Regulation and Enforcement
(BOEMRE), State Department, and the U.S. Coast Guard among others, as
well as members of Congress, that they will follow the strictest set of
drilling and safety regulations and standards in Cuban waters, just as
they do now in the U.S. Gulf of Mexico.

Cuba's regulatory agencies have also committed to the development of a
regulatory framework to ensure that oil and gas exploration and
production are done in an environmentally responsible manner, and done
safely by integrating best practices from a number of countries with
deepwater oil and gas exploration experience such as Norway's
coordinating regulatory agency, the Norwegian Petroleum Directorate; UK
offshore oil and gas regulator The Health & Safety Executive; and the
United States' BOEMRE.

Cuba's regulatory agencies and national oil company are also using the
International Association of Drilling Contractors (IADC) HSE Case
Guidelines, along with the lessons learned from the BP Deepwater Horizon
incident, as a framework for developing an integrated health, safety and
environmental management system to be used in reducing the risks
associated with offshore and onshore drilling activities.

Still missing: Joint oil spill contingency plan

What is still missing is a comprehensive "oil spill risk analysis and
planning process for the development and implementation of oil spill
response plans for nondomestic oil spills in the Gulf of Mexico," as
proposed by Sen. Bill Nelson of Florida.

The development of hydrocarbon resources is inherently a high-risk
enterprise throughout its value chain. Therefore, a crisis and emergency
management plan is needed in order to achieve the common goal of no
accidents, no harm to people, and no damage to the environment.

Such a plan would call for:

Identifying and making available the equipment, facilities and
personnel needed for emergency response.
Personnel to be trained and understand emergency plans, their roles
and responsibilities, and the use of crisis management tools and resources.
Drills and exercises to be conducted in order to assess and improve
emergency response/crisis management capabilities, including liaison
with, and involvement of, external cross-national organizations.
Periodic updates of plans and training to incorporate lessons
learned from previous incidents and exercises.

The United States and Cuba need to develop such an agreement of
cooperation, which sets protocols to follow in case on an oil spill that
would pose a threat to the shared environment of both countries. Such an
agreement already exists between the United States, Mexico and Canada.
Why not Cuba?

Today, the Deepwater Horizon incident and the resulting catastrophic oil
spill demonstrate the urgency in developing a similar policy of
environmental cooperation between the United States and Cuba.

We should be responsible and pragmatic in order to respond effectively
to an oil-related marine accident and accomplish the objective of
prudent environmental stewardship.

Jorge R. Piñón was president of Amoco Corporate Development Company
Latin America from 1991 to 1994; in this role he was responsible for
managing the business relationship between Amoco Corp. and regional
state oil companies, energy ministries and energy regulatory agencies.

http://www.cubastandard.com/2011/06/06/pinon-on-energy-only-one-more-piece-is-missing/