The US appears inconsistent in border drilling diplomacy. Canada, Mexico, the Bahamas, and now Cuba have asserted their rights to drill in territorial waters bordering or near the US-to mixed responses from their neighbor.
Talisman Energy Inc. and others have been drilling and producing from Canadian waters of Lake Erie for more than 40 years, while US states maintain a moratorium against drilling in the Great Lakes.
Ontario’s Ministry of Natural Resources oversees production from 500 natural gas wells and 22 oil wells in Lake Erie (OGJ, Sept. 26, 2005, p. 48).
But in 1985, the governors of eight Great Lakes states signed the Statement of Principle against Oil Drilling in Lake Erie, and in July 2005, the US Congress permanently banned drilling under the US waters. The US never challenged Canada’s right to drill and produce across the maritime border.
Doughnut holes
The sovereignty of the “doughnut hole” in the western Gulf of Mexico-a 6,500-sq-mile area outside the 200-nautical-mile limit defining sovereign territorial waters-was only recently resolved.
On Oct. 23, 1997, the US Senate finally ratified a 1978 treaty defining the maritime boundaries between the US and Mexico in the Gulf of Mexico and the Pacific Ocean. In early 2001, Mexico and the US signed an agreement ceding 60% of the western doughnut hole to Mexico and 40% to the US but added a 10-year moratorium on drilling.
The eastern doughnut hole involves Cuba as well as the US and Mexico but has not been considered for exploration. The international marine boundaries between Cuba and the US and Mexico define a broad triangular swath.
Cuba, Florida
In 1977, the US and Cuba signed a treaty that evenly divided the Florida Straits, renewable every 2 years. Under the treaty, the island nation has the right to explore in its exclusive economic zone, extending halfway into the Florida Strait, about 50 miles from its northern shoreline.
Since 1999, Spanish, Canadian, Indian, and Chinese oil companies have negotiated agreements with the Cuban government to explore for oil and natural gas, among them Repsol YPF SA, Pebercan Inc., Sherritt International Corp., and Sinopec. In June 2004, the Miami Herald reported comments by Juan Fleites, vice-president of state-run Cubapetroleo (Cupet), at a conference in Havana. He said 16 foreign oil companies had signed contracts to explore and drill in Cuba, including 10 of the 59 blocks in the Gulf of Mexico. Repsol YPF Cuba SA began drilling 18 miles off Cuba’s northwestern coast in 2004 with the Norwegian-owned Eirik Raude semisubmersible and found oil.
Successful exploration off Cuba would increase pressure to lift the US trade embargo. John Kavulich, president of the US-Cuba Trade and Economic Council, told the Financial Times that it was “difficult to imagine how the US oil industry could stay on the sidelines for long if there is a commercial find.”
In early February, representatives from ExxonMobil Corp., Valero Energy Corp., the Louisiana Department of Economic Development, and the Texas Port of Corpus Christi met with Cuban oil industry officials in Mexico City to discuss investment opportunities in Cuba.
According to numerous news reports, the US Treasury Department pressured the Hotel Sheraton Maria Isabel, adjacent to the US Embassy in Mexico City, to oust 16 Cubans on Feb. 1, saying that hosting the Cuban delegation at a US-owned hotel was in conflict with the 45-year-old US trade embargo. This triggered a public outcry in Mexico, where politicians denounced the expulsion as a violation of Mexican sovereignty.
In an apparent attempt to stop Cuba’s offshore program, US Sen. Bill Nelson recently introduced legislation that would prohibit renewal of the 1977 treaty. He was joined by at least 14 other senators. US Rep. John E. Peterson called Nelson’s bill an “attempt to control the national energy policy of Cuba.”
Bahamas
Cuba isn’t the only nation to license drilling off the coast of Florida. In December 1985, Tenneco Inc. drilled the first wildcat off the Bahamas, about 150 miles southwest of Nassau and only 50 miles north of Cuba.
Tenneco Oil Co. left a more popular legacy even closer to the Florida coast. The company sent several decommissioned oil platforms through the Florida Straits in October 1985 and sank them in an east-west line off Hallandale Beach as part of Florida’s artificial reef program. “Tenneco Towers” is the largest artificial reef in southern Florida, just north of the Dade-Broward county line.