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Posted April 17, 2006 by publisher in Business In Cuba

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BY LESLEY CLARK | Knight Ridder Newspapers

A Pennsylvania congressman who wants to drill for natural gas just 20 miles out from the nation’s shoreline has found a most unusual model: Fidel Castro.

Rep. John Peterson, a Republican who is trying mightily to lift the presidential and congressional bans that protect much of the U.S. coastline from offshore drilling, is citing Cuba’s fledgling energy-exploration program - and its proximity to Florida’s coastline - as a reason the United States should explore its own coast for natural gas.

“It’s astounding we’re going to sit here and say `We’re not going to produce,’ and, meanwhile, our good friend Fidel Castro is going to suck it up under our noses,” Peterson said in a phone interview, citing reports that show Cuba is moving aggressively to explore waters northeast and northwest of Havana, some parcels about 50 miles from Key West.

Cuba has signed agreements with companies in several countries, including Spain, Canada and China, to explore potential oil and gas fields offshore - where industry analysts have suggested there are at least 1.6 billion barrels of crude-oil reserves. So far those exploration efforts have proven disappointing, but efforts continue.

Under a 1977 treaty, Cuba’s “exclusive economic zone” - where it has free rein to extract resources - extends about 50 miles from its own coast, halfway between Cuba and Key West, in the Florida Straits, said Kirby Jones, president of the U.S.-Cuba Trade Association, which promotes the expansion of trade with Cuba.

Peterson is aiming his argument directly at Florida’s 27-member congressional delegation, which he singles out for blocking efforts to expand U.S. offshore energy exploration.

“Imagine what Castro is thinking as we spend our time quarreling over whether we should produce American energy 100, 150 or 250 miles from the Florida coast while he makes arrangements to set up shop hundreds of miles closer,” Peterson wrote in a letter to The Miami Herald. “He must love that we’ve allowed emotion to win out over reason, facts to be dwarfed by fear and our nation’s energy policy to be driven by unreasonable environmental concerns.”

But Peterson’s gambit has made little headway with the Florida delegation, which opposes efforts to allow drilling in the Gulf of Mexico on the grounds that drilling could mar Florida’s beaches and the state’s tourism-dependent economy.

“That’s all the more reason we need protection,” Cuban-born Florida Sen. Mel Martinez, a Republican, said of Castro’s energy exploration. “What it does, it redoubles my efforts to try to prevent it, not only from drilling here, but from Castro.

“The insanity of someone suggesting that in the state of Florida you should be drilling within 20 miles, that is crazy, that is just completely off the wall,” Martinez said, suggesting that Peterson only bolsters the Florida delegation’s call for a no-drill zone around the state.

“He fortifies our position from the standpoint of saying `This is why we’ve got to have a permanent buffer around the state of Florida,’ to keep these people from Pennsylvania from coming down here,” Martinez said.

With energy costs soaring, Peterson’s push represents at least the third serious bid to open up Florida waters to drilling: The Bush administration’s Interior Department has proposed leasing more than two million acres of Florida waters in the Gulf of Mexico to energy companies and a Senate proposal would open up an even greater section of the Gulf.

Martinez and his Democratic counterpart, U.S. Sen. Bill Nelson, are pushing legislation that would open up a smaller area in exchange for a 150-mile buffer and Nelson has threatened to block the Senate pro-drilling legislation, as well as the Senate’s confirmation of Interior Secretary nominee Dirk Kempthorne.

Peterson, who argues that the United States has some of the highest natural-gas prices in the world, has filed legislation to lift the current moratorium on drilling off the Outer Continental Shelf and open it up to natural-gas exploration outside 20 miles.

“Twelve miles is out of sight,” Peterson said of oil rigs, “so 20 miles is a cushion.”

Environmentalists are watching Peterson’s bill warily, noting it has more than 150 co-sponsors from both parties, and Peterson has been granted a hearing by the chairman of the House Resources Committee.

“The Florida delegation is united against it, as are most coastal states, but he has a promise it will be heard, so we’re not taking it lightly,” said Mark Ferrulo, director of the Florida Public Interest Research Group. “We’re thinking it might only be a starting position for him.”

According to the U.S.-Cuba Trade Association, the island nation in 1999 began to seriously develop its own domestic-energy program, leasing exploration rights in its territorial waters to foreign companies because it does not have the technology to drill offshore.

According to the U.S. Department of Energy’s Energy Information Administration, Cuba’s mostly onshore oil production is on the rise: from 18,000 barrels a day in 1992 to 84,000 barrels currently.

U.S. companies are prevented from doing business with the island nation by the U.S. embargo against Cuba, though food and medicine is regularly sold. But Jones said Cuba has made it clear it has “no reluctance to sit down and talk with any U.S. company interested in exploring.”

And many are: Executives from U.S. giants including ExxonMobil Corp., Caterpillar and Valero Energy Corp., one of the largest refiners in the United States, each paid close to $2,000 to attend a meeting in Mexico in February to learn more about Cuba’s potentially lucrative reserves.

“As Florida has been debating a buffer for the last year, all of that could be moot,” Jones said. “In Cuban waters there may be oil platforms within 52 miles of Key West.”

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