Saturday, June 30, 2012

Another Oil Rig Plans to Drill in Cuba

Songa Mercur - Russian oil rig

Last month, it was reported that Cuba's first attempt at deep-water oil drilling had resulted in a very expensive dry well.  Good news.

Unfortunately, four other international oil companies are lined up to rent the highly specialized drilling rig, Scarabeo-9, and take their chance at hitting oil in Cuba.  For Florida and the Florida Keys, drilling for oil in deep water so close to its shores threaten the region's beaches and eco-system.

The US embargo against Cuba makes Scarabeo-9 the only drilling rig able to not violate the rules of the embargo.  To not violate the embargo, a drilling rig must not have more than 10% of its onboard equipment come from US companies.

But now it has been announced that the Russians are coming with their own rig and, despite violating the US embargo, will be drilling offshore of Cuba.

In a press release recently released from Songa Offshore, the drilling rig owner stated:
"Songa Offshore SE is pleased to announce that a firm contract for the use of Songa Mercur has been agreed and signed with Zarubezhneft, a public joint stock company of Russia. The contract covers the use of the Songa Mercur for Zarubezhneft's upcoming drilling campaign offshore Cuba.
The contract will commence 1 July 2012, at which point the rig will depart Malaysia after completion of intermediate SPS activities.  The rig will remain in Trinidad at a standby rate until the drilling program commences late November 2012.  The firm contract is for 325 days with minimum aggregate total revenue of approximately $88 million, inclusive of mobilization elements.  The revenue value may increase depending upon the actual operational commencement date and any extension of the drilling program for well testing or other operational considerations. "
Map of areas planned to be drilled by Russian rig
According to Jorge Pinon of the University of Texas and an expert on Cuba's oil industry, "the Songa Mercur is loaded with US technology, including five Caterpillar generators, General Electric mud pump motors, and cementing equipment made by Halliburton. That will likely leave Russian operator Zarubezhneft in violation of the US’ Cuba sanctions."

Apparently the Russians don't care about the embargo, and there is little the US can do about it.

The only good news is the rig, known as Songa Mercur, can only drill in water depths up to 1200 feet, and will drill in areas further east and fairly close to shore, between Cuba and the Bahamas.
Map of ocean currents in the region

Should an oil spill occur, ocean currents and the Gulf Stream would likely spare the Florida Keys from oil impacting its shores.  As for mainland Florida, the eastern coast of the US, and the Bahamas, all would both likely be in harms way.

You can read more about the rig here.
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