Caribbean nations search for oil amid spill fears

Posted on Sunday, 03.31.13

Caribbean nations search for oil amid spill fears
By DAVID McFADDEN
Associated Press

KINGSTON, Jamaica -- The turquoise waters that have long brought
treasure seekers to the Caribbean now are drawing a new kind of explorer
as countries across the region increasingly open their seas to oil
exploration.

From the Bahamas and Cuba down to Aruba and Suriname, international oil
companies are lining up to locate potentially rich offshore deposits in
the Caribbean. The countries hope drilling could lead to a black-gold
bonanza, easing demand for imported oil and diversifying their economies.

It's a longstanding dream for many. As the Dominican songwriter Juan
Luis Guerra once sang, "If petroleum sprang from here, oh but there
would be light and hope."

So far, the twin-island nation of Trinidad & Tobago is the only major
hydrocarbons producer in the Caribbean, and its waters are crowded with
offshore platforms. The country sits just about seven miles (11
kilometers) off the coast of Venezuela, which has the world's largest
proven oil reserves. It's pushing hard into deep-water drilling and has
signed production-sharing contracts with British oil company BP for new
exploration blocks.

A growing number of other Caribbean nations are also authorizing or at
least aggressively pursuing offshore exploration.

The Bahamas recently announced it would try offshore exploratory
drilling and said it should have enough information by late 2014 to
decide whether it can move forward with production. A voter referendum
would first have to decide the matter. Bahamas Petroleum Company CEO
Simon Potter said a rig will drill to subsea depths of roughly 22,000
feet (6,705 meters) in some 1,600 feet (488 meters) of water adjacent to
Cuba's offshore territory.

Barbados and Jamaica have also been seeking well exploration in their
seas, while the Anglo-Dutch group Shell announced in December it was
preparing to sink its third offshore well in nearby French Guiana, an
overseas French department, with other companies also exploring in deep
waters there.

"What once was a trickle is fast becoming a stream in the Caribbean,
with new announcements of expanding deep-water exploration lease
offerings and drilling permits being issued," said Lee Hunt, a
Houston-based consultant who retired last year as the longtime president
of the International Association of Drilling Contractors.

The push for exploration has been fed partly by worries that Venezuelan
President Hugo Chavez's nearly two-year-long cancer fight and March 5
death would affect a Venezuelan aid program called PetroCaribe that
sells petroleum to 17 Caribbean countries on preferential terms.

PetroCaribe provided $14 billion worth of Venezuelan oil to the region
last year, with Cuba being the principal beneficiary. Chavez's successor
Nicolas Maduro hasn't said he would stop the aid, but his challenger in
April 14 elections, Gov. Henrique Capriles, has pledged to cut off
subsidized oil to Cuba and reevaluate the PetroCaribe program if elected.

Keeping the oil flowing is crucial. Caribbean countries generate nearly
all their power from imported oil although the region is blessed with
solar, wind and other alternative energy opportunities.

Nonetheless, many people across the region fear their famed clear water,
fringing reefs and white-sand beaches could end up a casualty to any
future oil boom, threatening the tourism bonanza that many countries
already depend on. Even with the possibility of a windfall still
distant, regional officials have begun to discuss how they would
cooperate in the event of a major accident, such as the 2010 Deepwater
Horizon oil spill in the Gulf of Mexico.

"First, we have to prevent any kind of spill. And second, if something
happens, we have to make sure everyone is working together," said
Ernesto Soberon Guzman, the Cuban ambassador to the Bahamas, during
regional talks about oil spill preparedness in the Bahamaian capital of
Nassau this month.

Ocean currents practically assure that a big spill in one Caribbean
nation would significantly affect neighbors, possibly even the U.S. East
Coast. Many Gulf communities are still recovering from the Deepwater
Horizon accident, the country's largest offshore oil spill.

"If oil rises to the surface and gets to the surface currents, it would
start flowing towards our waters and our shores," said Capt. John
Slaughter, chief of planning, readiness, and response for the U.S. Coast
Guard's Miami-based 7th District. "We're going to take every action we
can to prevent that from happening."

Adding to complications, the overall Caribbean region, with the
exception of Trinidad & Tobago, is still an uncertain frontier for
offshore oil and gas, said Jorge R. Pinon, a Latin America and Caribbean
energy expert at the University of Texas in Austin.

Cuba, for example, authorized exploratory drilling for ultra-deep
deposits estimated to hold 5 billion to 9 billion barrels of oil, but
its dreams were put on hold last year when three initial exploratory
wells were unsuccessful and the massive platform that drilled them
sailed away, with no scheduled return date.

"Lots of work remains to be done in seismic studies to really understand
the complexity of the region's geology and to see if the possibility of
commercial hydrocarbon reservoirs exists," Pinon said.

Such doubts, however, have mostly been cast aside in the face of oil
prices topping $100 a barrel. And Caribbean governments are trying hard
to lure more oil companies to take the expensive gamble of dispatching
offshore drilling rigs, which can cost up to $500,000 per day to operate.

In Guyana and Suriname, officials are busy licensing deals and offering
concessions in a long-ignored basin the U.S. Geological Survey last year
estimated to have "significant undiscovered conventional oil potential."

Exploratory drilling in deep waters has already begun off Guyana, where
last year an international consortium moved to cap a high-pressure well
at a subsea depth of 16,000 feet (4,876) meters over safety concerns.
Several oil companies still believe the area is promising, and Spanish
energy company Repsol and the U.K.'s Tullow Oil PLC are negotiating new
licenses, according to Guyana Natural Resources Minister Robert Persaud.
Exploratory wells also were sunk last year in waters off the Caribbean
coast of Colombia.

"I can tell you now that the basin is getting very, very crowded. But we
have some unused blocks to give," Persaud said.

With so many countries hoping to strike it rich, Hunt forecasts interest
by major oil companies only will be growing.

"The Caribbean is no longer kind of the forgotten basin," he said. "I
think it is going to become a prominent player in deep-water drilling."

---

Jeff Todd in Nassau, Bahamas, and Peter Orsi in Havana contributed to
this report.


David McFadden on Twitter: http://twitter/com/dmcfadd

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