Posted on 12/18/2014 4:46:59 AM PST by thackney
President Barack Obama’s decision to normalize relations between the United States and Cuba may lead to more commercial opportunities for Americans within the island nation. But don’t expect U.S. oil producers to move swiftly to take advantage of them.
Although geologists believe billions of barrels of crude may be lurking off Cuba’s coast in the Gulf of Mexico, oil companies have had a hard time finding that black gold. When Repsol, Petronas and other oil companies bored exploratory wells in 2012 and 2013, they turned up dry.
In some cases, oil wasn’t found, and in others, the discovery was not big enough to justify commercial development.
That discourages other oil companies from plumbing Cuba’s coast, said Jorge Piñon, an oil industry veteran who directs the Latin America and Caribbean Energy Program at the University of Texas.
Some geologists “think it is worth going back and taking a second look, but now is not the time to do it,” he said. “Cuba has three big strikes against it.”
The poor performance of international oil companies in 2012, along with the collapse in crude prices and the high cost of doing business in Cuba are factors dissuading deep-water drilling off the country’s coast — especially as Mexico auctions off competing territory in the Gulf of Mexico.
The Obama administration’s actions Wednesday do not explicitly authorize U.S. oil business in Cuba and focus mainly on reestablishing diplomatic relations and permitting more travel between the countries. But in outlining the changes, Obama stressed that “American businesses should not be put at a disadvantage.”
“Increased commerce is good for Americans and for Cubans,” Obama added.
Separately, the White House noted in a fact sheet that longstanding policy against Cuba has at times “isolated the United States from regional and international partners (and) constrained our ability to influence outcomes throughout the Western Hemisphere.”
Those constraints were on full display during the recent deep-water drilling in Cuban waters, when companies were forced to sink wells with Saipem’s Scarabeo 9, because it did not contain more than 10 percent American-made components, a limitation embodied in the U.S. trade embargo against Cuba.
Some lawmakers and industry experts also warned that the embargo would hamper emergency response to an oil spill or other drilling accident. Oil spill containment equipment developed after the 2010 Deepwater Horizon disaster, chemical dispersants to break up crude and boom capable of corralling it all likely would be ensnared by the embargo — at least initially — because they are made by U.S. firms.
The Obama administration said it is prepared to invite discussions with the Cuban and Mexican governments over unresolved maritime boundaries in the Gulf. A recent agreement between the United States and Mexico has unleashed oil development and leasing in territory near the country’s shared Gulf boundary.
Similar discussions with Cuba and Mexico could open up opportunities in parts of the Gulf where ownership is murky.
Although previous agreements delimit the maritime space between the United States and Cubs within 200 nautical miles from shore, both nations and Mexico have extended continental shelf in an area of the Gulf where no boundaries have been defined.
Although oil producers may have tepid interest in exploring in and around Cuba right now, drilling contractors and oilfield service companies may see opportunities there.
Cuba, too, is believed to be interested in honing its own oil production, now about 50,000 barrels a day. To meet its energy needs, Cuba also imports about 100,000 barrels of crude daily from Venezuela, but production is declining there.
“Cuba getting closer to the U.S. is an insurance policy against the possible loss of Venezuelan support” said the UT-Austin’s Piñon.
He stressed that Cuban oil projects are recovering about 10 percent of the oil in place, but the country could boost its harvest with U.S. technology.
“If Cuba could get U.S. service companies — Halliburton and Schlumberger — to come in and give them the technological assistance they need with enhanced oil recovery, Cuba could increase that recovery factor to 17 or 20 percent,” Piñon predicted.
Investing in Cuba is crazy. Look at what’s happening in Venezuela. They will just seize it from you
“Obama Shift on Cuba won’t Mean Big Oil Boom in Gulf of Mexico”
Wanna bet? Maybe not right now, but Big Oil (and its Dem donors) have been eyeing the Gulf off of western Cuba for decades.
Several companies outside the US have done exploration and didn’t find much of anything worth pursuing.
PdVSA to Take Over Rig for Drilling Off Cuban Coast {Venezuela}
http://www.freerepublic.com/focus/f-news/2915240/posts
August 06, 2012
a Malaysian-Russian consortium was unable to make a commercial discovery using the rig at a separate site
- - - -
Repsol’s Decision Smokes Out Cuba’s Oil Ambitions
http://www.freerepublic.com/focus/f-news/2889733/posts
May 30, 2012
Repsol, has confirmed that (his) company and its partners are abandoning drilling offshore Cuba, representing a major blow to the island’s ambitions to secure oil self-sufficiency.... The decision follows reports that the Jaguey-1 exploration well drilled by Repsol and partners Statoil (Norway) and ONGC (India) on Block N26, in Cuba’s Exclusive Economic Zone (EEZ) in the Gulf of Mexico, had come up dry.
Hmmm
Obama’s decision to normalize relations must mean something big is in the works you can bet it won’t be good it never is with him.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.