After drilling a dry well in Cuban waters, Spanish oil company Repsol is calling it quits. However. that doesn’t mean the U.S. should let down its spill guard. The Chinese-built semisubmersible Scarabeo 9 is now working for other operators, but a little farther west.
“We’re very unlikely to drill another well there,” spokesman Kristian Rix said after Repsol earlier announced a dry hole in the area 50 to 60 miles from Key West, Fla. A well drilled in 2004 in the same general area had very few traces of hydrocarbons. It’s estimated that four out of five exploratory wells result in dry holes offshore.
Repsol has spent more than $100 million in Cuba since 2000.
“I wouldn’t be surprised if just like BP after Deepwater Horizon they refocused on other investments in which the risk-reward ratio is much higher than a frontier country like Cuba,” said Jorge Piñon, research fellow at the University of Texas at Austin Center for International Energy and Environmental Policy and an oil industry veteran. Areas with more promise include Alaska, Brazil and West Africa.
Repsol also is dealing with a major headache caused by Argentina’s seizure in April of its YPF subsidiary, the country’s biggest oil company.
The Scarabeo 9 has since moved to blocks west of Repsol’s and was drilling for Malaysia’s Petronas and Russia’s Gazprom, Piñon said. It was also expected to drill for Venezuela’s PDVSA.
Successful oil exploration would eventually reduce Cuba’s $3 billion in oil imports each year. The block where Repsol drilled in the Florida Straits represents just a fraction of the Cuba’s offshore potential. The U.S. Geological Survey estimates undiscovered reserves of about 5 billion bbls. in waters north and west of Cuba.
So someone’s likely to find something someday, raising the possibility of a spill. And while the U.S. can’t go into Cuban territorial waters, it needs to keep contingency plans in place no matter how limited the options.
Here’s a sobering reminder of how long a disaster response could take with no diplomatic acrobatics required: The Deepwater Horizon blowout two years ago just 50 miles off Louisiana’s coast killed 11 rig crewmembers, released 5 million bbls. and took 85 days to cap.