Patrice Hill, THE WASHINGTON TIMES 954 words 24 July 2006 The Washington
Times A01


ServiceLine C 2006 Washington Times Library


Cuba is drilling for oil 60 miles off the coast of Florida with help from
China, Canada and Spain even as Congress struggles to end years of
deadlock over drilling for what could be a treasure trove of offshore oil
and gas.


Republicans in Congress have tried repeatedly in the past decade to open
up the outer continental shelf to exploration, and Florida's waters hold
some of the most promising prospects for major energy finds. Their efforts
have been frustrated by opposition from Florida, California and
environmental-minded legislators from both parties.


Florida's powerful tourism and booming real estate industries fear that
oil spills could cost them business. Lawmakers from the state are so
adamantly opposed to drilling that they have bid to extend the national
ban on drilling activity from 100 miles to as far as 250 miles offshore,
encompassing the island of Cuba.


Cuba is exploring in its half of the 90-mile-wide Straits of Florida
within the internationally recognized boundary as well as in deep-water
areas of the Gulf of Mexico. The impoverished communist nation is eager to
receive any economic boost that would come from a major oil find.


"They think there's a lot of oil out there. We'll see," said Fadi Kabboul,
a Venezuelan energy minister. He noted that the oil fields Cuba is
plumbing do not respect national borders. Any oil Cuba finds and extracts
could siphon off fuel that otherwise would be available to drillers off
the Florida coast and oil-thirsty Americans.


Canadian companies Sherritt International Co. and Pebercan Inc. already
are pumping more than 19,000 barrels of crude each day from the Santa
Cruz, Puerto Escondido, Canasi and other offshore fields in the straits
about 90 miles from Key West, and Spain's Repsol oil company has announced
the discovery of "quality oil" in deep water areas of the same region, the
National Ocean Industries Association said.


Cuba's state oil company, Cubapetroleo, also has inked a deal with China's
Sinopec to explore for oil, and it is using Chinese- made drilling
equipment to conduct the exploration.


That compounds the frustration for U.S. oil companies and other businesses
that have lobbied to open up the estimated 45 billion barrels in oil
reserves and 232 trillion cubic feet of gas reserves in banned drilling
areas of the Gulf - enough to fuel millions of cars and heat millions of
homes for decades.


U.S. companies, which have the best deep-water equipment, cannot
participate in the Cuban drilling because of the 45-year economic embargo
against Fidel Castro's communist regime.


If oil is found in commercially viable quantities, Cuba could be
transformed from an oil importer into an exporter, ending chronic energy
shortages on the island and generating government revenue.


That prospect and the involvement of China and Venezuela in exploration
activities have attracted the attention of the CIA and other national
security agencies, even if congressional opposition to offshore drilling
has not budged.


Sterling Burnett, a fellow at the National Center for Policy Analysis, a
conservative think tank, said Cuba's activities show that the
quarter-century ban on offshore drilling is putting the U.S. at a
strategic disadvantage at a time of increasingly scarce energy resources
and record high oil and gas prices that are hampering economic growth and
stoking inflation.


"Canada and even economically backward Cuba are moving forward with plans
to drill in offshore areas that abut U.S. coastal waters," he said. "Since
pools of oil do not respect international boundaries, it is almost
certainly true that Canada and Cuba will be accessing oil that could
otherwise be developed by and for the benefit of Americans."


More than half of the nation's untapped offshore oil and gas reserves lie
within the Gulf, much of it within Florida's protected waters. In the
latest attempt to exploit the reserves, the House last month passed a bill
that would allow coastal states to decide whether to open the first 100
miles of their waters for exploration.


The bill allows states such as Florida and California to vote for a
permanent moratorium on drilling but also includes a powerful enticement
to allow exploration: half of the hundreds of billions of dollars in
royalties and fees from drilling that otherwise would go to the federal
government.


The bill's authors are calculating that the public will support drilling
more when people are able to share in the revenues. That is the case in
Alaska, for example, where drilling faces little opposition because each
resident receives a prorated check for thousands of dollars in oil
royalties each year.


Although coastal states stand to benefit greatly from the revenue- sharing
provision, the Office of Management and Budget said the drain on federal
revenues would amount to hundreds of billions of dollars.


The White House particularly objected to extending the revenue- sharing
provision to Louisiana, Texas, Mississippi and Alabama, which already
allow drilling offshore, and said revenue should be shared only in new
drilling areas.


A bill that the Senate is scheduled to debate this week is far narrower in
an attempt to attract Democratic votes. It focuses on allowing drilling in
a key area in the eastern Gulf thought to contain large reserves, while
ensuring that Florida still enjoys a 125-mile no-drilling buffer zone.


The Senate bill's more targeted revenue-sharing provision would authorize
states that already allow drilling to start earning a one- third share of
royalties in 2017. The provision was added to attract support from Sen
Mary L. Landrieu, Louisiana Democrat.