Cuba Chases 5 Billion Barrels of Undiscovered Oil; U.S. Intervenes

"Energy 9/04/2011 @ 11:12AM

Cuba Chases 5 Billion Barrels of Undiscovered Oil; U.S. Intervenes

The island nation of Cuba is scrambling to secure access to what it
believe to be about 5 billion barrels of oil lying deep under the ocean
off its northern coast. A massive drilling rig is en route to Cuba and
plans to start drilling in a matter of months.

Meanwhile, the United States government is sufficiently concerned about
the risks of another oil spill that is dispatching a group of
quasi-diplomats to Cuba on a fact-finding mission as early as tomorrow,
according to reports in Dow Jones.

U.S. officials believe Cuba's waters could contain more than 5 billion
barrels of undiscovered oil. Cuba will begin a plan to tap its offshore
oil later this year, when a consortium led by Spanish company Repsol YPF
S.A. plans to start drilling a well in more than 5,500 feet of water off
the country's northern coast, which will likely trigger a race to set up
production in Cuban waters, presuming Repsol finds oil.

If oil is discovered, Cuba will reduce its reliance on Venezuela for its
energy needs. In 2009, Cuba produced roughly 50,000 barrels of oil a day
from onshore and coastal wells and relied on imports from Venezuela to
supply an additional 130,000 barrels to meet consumption levels,
according to the U.S. Energy Information Administration.

Repsol will be drilling in waters that are deeper than those in which
the Deepwater Horizon rig operated at the time it exploded last year.
Repsol will be using a Chinese-built drilling rig that only recently
left Singapore for Cuban waters. The rig, known as Scarabeo 9, is
expected to arrive in November or December.

Scarabeo 9 is a semi-submersible drilling vessel recently built by
Yantai Raffles, which will be on contract by Repsol YPF for deepwater
exploratory drilling off Cuba.

In response to Cuba's drilling plans, the U.S. is sending a delegation
led by Bill Reilly, co-chief of the Deepwater Horizon oil spill
commission, to Cuba next week to help evaluate that country's plans for
developing its oil resources, according to reports by Dow Jones.

The delegation will be on a fact-finding mission to determine the
country's long-term plans for pursuing its oil resources and identify
steps to ensure safety and environmental protection.

The author is a Forbes contributor. The opinions expressed are those of
the writer.

http://www.forbes.com/sites/williampentland/2011/09/04/cuba-chasing-5-billion-barrels-of-undiscovered-oil-u-s-intervenes/