If you listen carefully, that howl you hear is probably coming from Florida and it's the reaction to President Bush's call to end the offshore drilling ban. Let's clarify something first -- there areactually two prohibitions on offshore drilling, one imposed by Congress and signed into law by President Reagan and another by executive order signed by Bush's father in 1990. Both prohibit E&P operations along the East and West coasts and the Gulf Coast of Florida. This is where it gets tricky. Florida's political leaders, including former Gov. Bush (the current president's brother) are against lifting the ban for any reasons. One, U.S. Sen. Bill Nelson, a Democrat, wants the U.S. to scrap a treaty it signed with Cuba in 1977 that carved out economic development zones in the Gulf. In January he sent a letter to the Bush administration asking the White House to reject the treaty. Up until now, Cuba hasn't been mentioned a lot in the energy producing world. It did have its Varadero oil field that was discovered with the help of the former Soviet Union in 1971. This reservoir, about five miles off Cuba's northern coast, currently yields about 75,000 barrels per day of poor quality, heavy, sour crude that is strictly for domestic use. Jump to 2004. The Soviet Union is no more and Cuba, with the help of Repsol and more seismic technology finds five gas and oil fields inside their waters and about 50 miles from Key West. The area, known as the Deep Cuba Basin has potential reserves of 4.6 billion to 9.3 billion barrels of oil and from 9.8 trillion to 21.8 trillion cubic feet of gas depending on who gives you their estimate. Cuba has 59 leases covering 74,000 square miles of the Gulf and they put out the welcome mat for the world' energy industry. Without any U.S. companies, though. The Cuba trade embargo, a relic of the Cold War, keeps U.S. businesses from doing work in Cuba. So, while U.S. firms are watching from the sidelines, an international lovefest is brewing in Havanna. Already signed up to take part in exploring the Deep Cuba Basin are Petrobras, Petrovietnam, India's Oil and Natural Gas Corp., Repsol, Norways StatoilHydro, Malaysia's state-run Petronas, Canada's Sherritt International and China's Sinopec. A senior Cuban official said seismic studies have been conducted and the consortium of companies could begin drilling as early as spring 2009. Other officials have hinted that if the finds are as expected, Cuba could become an exporter by 2011. Cuba's drilling plans are too close, Nelson wrote to the president. "Soon there will be drilling rigs within 50 miles of the Florida Keys and the Florida Keys National Marine Sanctuary," Nelson wrote. "And, as the Gulf Stream flows, an oil spill or other drilling accident could desecrate part of Florida's unique environment and devastate its $50 billion, tourism-driven industry." Some marine scientists who have studied the Gulf and its unique currents question the senator's claim. First, any drilling would be anywhere from 40 to 50 miles off the coast. Currents, they said, would carry any spills not to Florida's beaches, but more likely to Alabama or Mississippi. The White House, by the way, never responded to Nelson's letter. It's unclear, after several calls to his Washington office, if he will try again when the new administration comes into power next year. What is clear: Cuba expects drilling to begin by next spring and Nelson will continue demanding that another nation stop developing its natural resources. –John A. Sullivan, News Editor, Oil and Gas Investor, www.OilandGasInvestor.com, email@example.com
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