Monday, May 28, 2012

Good News: Cuba's First Deepwater Oil Well Comes Up Empty

When news hit South Florida and the Florida Keys that Cuba was planning to drill for oil in the Florida Straits, the narrow body of water separating the United States and the island of Cuba, a universal cringe was elicited throughout the region still reeling from the BP oil spill that just months prior threatened environmental Armageddon. (Just for clarification: no oil ever reached Key West, the Florida Keys, or South Florida).

Hard line Cuban-American politicians rattled their sabers and further complicated the anxiety by preventing the two nations from creating a mutual oil spill response plan.

All the while, the tiny island of Key West, only 90 miles from Cuba, worried what oil drilling so close to its shore might mean for the future of its beautiful and fragile ecosystem.

It turns out, due to an embargo enacted by the United States in response to the Cuba drilling plan, there is only one drilling rig in the entire world that is not affected by the embargo and can drill at the depths planned.  That rig, known as Scarabeo-9, pictured below, is one of the world's largest - measuring 377 feet long - and can drill at up to 12,000 feet in depth.  The Cuban wells are planned to be drilled at depths of .25 to 1.6 miles below the sea surface.

Scarabeo-9 is a mammoth floating rig that travels around the globe following a schedule of drilling appointments.  Leasing the rig is not cheap.  Repsol, the Spanish oil company leasing the rig to drill the first deepwater well in Cuba, is paying $500,000 per day for Scarabeo-9.

Oil drilling, especially in the deep ocean, is a lot like gambling, with participants wagering huge sums of money for the slim shot of hitting the jackpot.

The good news is that Scarabeo-9 has just completed drilling its first well and it has come up dry. No oil. No jackpot.  That well was estimated to have cost between 100-150 million dollars.

Scarabeo-9 is currently leased to drill up to four more wells in Cuba for other oil companies willing to take a gamble. Next up, the Malaysian oil company Petronas will take its chances drilling an exploratory well.

But after the remaining four wells are drilled by Scarabeo-9, the rig heads to Brazil.  So, Cuba has a few more chances at finding oil.  But if it doesn't, the rig leaves and with it Cuba's hope of finding a larger reserve of oil in the deep waters off its northern shore.  It is estimated that drilling wouldn't resume off Cuba's north coast for at least five to ten years.

The next well is to be drilled near the western province of Cuba, Pinar del Rio.

Keep your fingers crossed. The further west they drill, the longer the distance a spill would be carried by the Gulf Stream towards South Florida, and the larger the threat to the Florida Keys.

Below is a chart, put together by Center for Democracy in the Americas’ Cuba Program, showing the drilling "casino" map of Cuba:

(click map for larger version)

Update (5/29/2012):  According to Reuters, the Chairman of Repsol said they are likely done with drilling in Cuba!  Here is the story:

May 29 (Reuters) - Spanish oil firm Repsol is considering pulling out of Cuba after its first well in an oil exploration project off the island came up dry, its chairman said.
"We're not going to drill any more ... I'm almost certain we won't do any more activities there," Chairman Antonio Brufau said at a news conference to present the firm's 2012-2016 strategy on Tuesday. 

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