Make Repsol "bleed" if Cuban well leaks: lawmaker

MIAMI Mon Jan 30, 2012 7:19pm EST

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MIAMI (Reuters) - Since the United States couldn't stop Repsol from drilling for oil off Cuba's coast, it should make the Spanish oil giant pay dearly for damages from any spill that threatens neighboring Florida, a congressional Republican said on Monday.

"We need to figure out what we can do to inflict maximum pain, maximum punishment, to bleed Repsol of whatever resources they may have if there's a potential for a spill that would affect the U.S. coast," Representative David Rivera, a Florida Republican, told a congressional subcommittee that oversees the U.S. Coast Guard.

The House of Representatives subcommittee met at a Florida hotel with a panoramic view of the waves breaking over an Atlantic beach dotted with sunbathers, to conduct a hearing on the potential impact on Florida's 800-mile (1,290-km) coastline from the first major oil exploration in Cuban waters.

Repsol is working on the project in partnership with Norway's Statoil and ONGC Videsh, a unit of India's Oil and Natural Gas Corp. The oil rig leased for the project, the Scarabeo 9, arrived off Cuban waters earlier this month and is expected to begin drilling any day now.

The rig is 60 miles from the Cuban coast and 80 miles from Florida, in a spot where the Gulfstream and other powerful ocean currents could rush any spilled oil to Florida beaches within five to 10 days.

"The significance of these strong currents is that they can move oil very quickly, potentially up to 70 to 80 nautical miles in a 24-hour period," said oceanographer Debbie Payton, who heads the emergency response division of the National Oceanic and Atmospheric Administration.

A spill would have catastrophic effects on Florida tourism, which accounts for a third of the state's economy, and on its fisheries, panelists said. Such an accident would devastate the state much as BP's Deepwater Horizon spill in the Gulf of Mexico in 2010 devastated other coastal areas.

Those powerful currents would make it harder to contain and burn or scoop up any oil on the water's surface, but they would make oil dispersants more effective by mixing them up with the water, panelists said. Booms and the anchors needed to hold them in place would likely do more harm to Florida's fragile coral reefs than the oil itself, they said.

The United States has no diplomatic relations with Cuba, which is considers a state sponsor of terrorism, and no oversight over companies that operate in its waters.

Repsol has said it will voluntarily adhere to U.S. safety and environmental regulations and international industry standards. It allowed U.S. authorities to inspect the rig off the coast of Trinidad and Tobago last month, including an examination of its construction, drilling equipment, blow-out preventer and other safety systems.

Based on the inspection and on information Repsol provided, the inspectors concluded that "the well could be safely capped using existing methods," said Lars Herbst, Gulf of Mexico regional director for the Interior Department's Bureau of Safety Environmental Enforcement, or BSEE.

BSEE has no authority to endorse or certify the rig but it "found the vessel and the drilling safety equipment including the (blow-out preventer) to be entirely consistent with existing international and U.S. standards by which Repsol has pledged to abide," Herbst said.

UNSAFE WELDING

He said the inspectors found unsafe welding and incomplete wiring of safety systems, which Repsol pledged to repair. Asked if the agency could certify the rig had it been in U.S. waters, Herbst said it could not without confirming those repairs had been made.

Rear Admiral William Baumgartner, commander of the Coast Guard district that includes Florida, said there was a low probability of a spill, "but if it does happen, especially a complete well blowout, there would be high consequences."

"There are multiple safety provisions in any drilling operation. I'm not promoting, you know, business in helping Cuba develop oil, but this is a brand-new oil drilling rig, Norwegian designed, much of it is very much state-of-the art as I understand, so it should be capable," he told Reuters after the hearing.

The Norwegian-designed, Chinese-made rig is owned by an Italian company and flagged in the Bahamas, Baumgartner said.

Repsol and its partners are subcontractors, Herbst said, and the United States would have no way to hold them responsible for any oil spill damage, Herbst said.

"The Cuban government must have the full responsibility for any oil spill," Herbst said. "In this case it is Cuba that's doing the contracting and we have no control over that."

Rivera, a Cuban American from Miami, has sponsored a bill that would make foreign oil companies responsible for clean-up costs if a spill from their operations reaches U.S. shores.

He urged the panel to look into whether a Repsol subsidiary that operates off the U.S. continental shelf could be made to pay or stripped of its license if there was a spill from the Cuban well. Herbst said afterward that it could not.

The United States has maintained an economic embargo against Cuba for five decades in order to put pressure on its communist government. But the U.S. Treasury and Commerce departments have already issued licenses to U.S. companies that would work under Coast Guard direction to contain and clean up any spill in Cuban waters, Baumgartner said.

Representative Ileana Ros-Lehtinen, a Cuban-American Republican from Florida, said the United States should impose sanctions against nations that help Cuba develop its oilfields.

She and other Republicans on the panel suggested that by failing to halt the project, the Obama administration was helping make oil tycoons of Cuban President Raul Castro and his brother, former President Fidel Castro.

Subcommittee Chairman John Mica said he was "a little bit shocked" that President Barack Obama had rejected the Keystone XL pipeline project from Canada while "doing everything we can to help the Cuban regime and we're going to get stuck with both the damage and also the clean-up cost."

(Editing by Cynthia Osterman)

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