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Posted March 05, 2006 by publisher in Business In Cuba

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Nick Snow | Oil and Gas Journal

Cuba is moving to develop its offshore oil and gas resources, which would result in development closer to Florida’s coast than the US government allows, Rep. John E. Peterson (R-Pa.) warned on Mar. 2.

“Offshore oil and natural gas drilling, sanctioned by the Cuban government, occurs within 60 miles of Florida’s southern borders. Moreover, the drilling potential within the existing Cuban basin is such that oil wells will, in the near future, be as close as 35-40 miles from the Florida keys,” he said.

The island nation cannot develop its offshore energy resources itself, so it enlisted the help of Canadian, Chinese, Indian, Spanish, Venezuelan, and Norwegian companies, Peterson said.

With their help, Cuba has pumped $1.7 billion into its energy industry since 2004, he said at a breakfast sponsored by Dow Chemical Co. and The Hill newspaper.

The proposed 5-year Outer Continental Shelf leasing plan being developed by the US Minerals Management Service and a bill before the US Senate would establish a 100-mile oil and gas leasing buffer off Florida’s coast.

Most of the state’s congressional delegation supports another bill that its two US senators, Republican Mel Martinez and Democrat Bill Nelson, introduced on Feb. 1 that would effectively push new offshore exploration 260 miles from Tampa Bay (OGJ, Feb. 20, 2006, p. 24).

“Any way you slice it, Cuba, with the help of its foreign enablers, is drilling closer to sovereign American property than we are,” Peterson said.

‘Awash in gas’
Calling Florida “awash in gas” with the potential to be self-sufficient, he said, “I would never negotiate with one state at the expense of the country—especially one that uses 133 times the natural gas it produces.”

He and Rep. Neil Abercrombie (D-Ha.) have introduced HR 4318, a bill that would lift congressional and presidential bans on offshore drilling for natural gas. The measure has 133 cosponsors, including more than 20 Democrats, Peterson said.

Its cosponsors also include one member of Florida’s House delegation, Republican John L. Mica. “There are others who would like to, but they’re afraid the press would eat them alive,” said Peterson.

He told OGJ that he thinks his bill will move through the House Resources Committee with relative ease but face a harder test before the entire House.

Peterson also told OGJ that Senate Energy and Natural Resources Committee Chairman Pete V. Domenici (R-NM) “says that if we pass it by a big enough margin, it will give him the momentum to get it through the Senate.”

Peterson told the breakfast audience that winning the support of House members from urban districts could be the key to the House’s passing the bill by a large margin.

“If legislators from our cities realize the impact high gas prices have on their voters, this will happen,” he said.

Peterson said “a couple of dozen” more House members have indicated they would vote for the bill even though they are not cosponsors. “I’m going to push the [Resources] committee for a mark-up as soon as possible,” he said.

Opposes state options
He said his bill is preferable to proposals that would give coastal states the option to request lifting of federal moratoriums and withdrawals because that approach would take too long.

“This is a crisis. I don’t think giving states additional rights treats it that way. It delays the process,” he maintained.

His bill would extend coastal states’ jurisdiction from 3 to 20 miles, give them 40% shares of revenue from bonus bids and royalties from any new gas activity off their coasts, and phase in 40% revenue shares for coastal states over 4 years from existing offshore gas production.

Peterson also defended his bill’s exclusion of oil and focus on gas. “I’m sure the oil industry wasn’t happy with me when I proposed gas-only. But we’re doing nothing now. Why should we export billions of dollars to foreign suppliers when we have our own natural gas?” he said.

Excluding oil, he added, “put people at my side who wouldn’t be there otherwise.”

Peterson said he has nothing to gain personally by trying to get the US to develop more of its offshore gas resources. “I don’t remember ever owning an energy stock or making a dollar out of energy,” he said.

“My view is that we as a government are handicapping American business, American homeowners, and people who are just trying to survive by closing off these vital resources. Current prices and policies guarantee that America will continue to lose basic industries,” Peterson warned.

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