Florida in cross hairs of US hunt for oil

Cuba's offshore plans rouse debate in US over whether to ease trade restrictions and drilling ban.

Less than 50 miles from Key West, below the waters of the North Cuban Basin, are potentially billions of barrels of oil and trillions of cubic feet of natural gas.

It's an opportunity Cuba can't pass up. So late last year, Fidel Castro's government started contracting out 59 lots in Cuban waters for exploratory drilling.

That, in turn, has tapped into a gusher of controversy in the United States – especially since in nearby American waters, the federal government maintains a moratorium on any oil drilling.

China, Canada, Spain, and India are among the countries that have snapped up Cuba's lots, while the US oil industry has stood by unhappily, abiding by America's decades-old trade embargo with the communist nation. This comes on top of the industry's frustration with the US offshore drilling moratorium – though legislation passed by the House last week is a controversial first step toward lifting the ban.

Environmental groups, meanwhile, are concerned that even if the US moratorium stays intact, drilling in Cuban waters will have a noticeable effect on Florida's 663 miles of beaches.

Also pressing against any oil-industry deals with Cuba is the influential Cuban-American voting lobby in Florida, which is steadfastly opposed to the US conducting business with their former homeland while Mr. Castro is in charge.

These factors present a delicate situation for President Bush, who is mindful not only of his brother's presence in the Florida governor's mansion, but also of increasing pressure to ease America's energy problems at a time of rising gasoline prices.

"He doesn't want to do anything to affect his brother's state, or anything that could be a death knell for his political career," says Jonathan Benjamin-Alvarado, associate professor of political science at the University of Nebraska at Omaha and an expert on Cuban energy issues. "Presiding over any changes during his brother's watch is not what he wants to do."

Since 1977, an informal boundary agreement between the US and Cuba has bisected the Straits of Florida, which are 90 miles wide at the narrowest point. The Cuban side contains at least 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas, estimates the US Geological Survey. No detailed study has been done on the US side, according to the federal Minerals Management Service, which would have that responsibility.

Unless Cuba agrees not to drill, Congress may move forward with a proposal not to renew the boundary agreement. Until now at least, the agreement has been renewed biennially.

Congress is already considering a flurry of other measures from both sides of the debate. Sen. Bill Nelson (D) of Florida has introduced a bill seeking visa restrictions against executives of foreign oil companies that do business with Cuba. And twin bills introduced into the House and Senate respectively by Rep. Jeff Flake (R) of Arizona and Sen. Larry Craig (R) of Idaho seek to exempt US oil companies from the trade embargo.

"Are we supposed to sit by and let China drill in our backyard?" said Sen. Pete Domenici (R) of New Mexico, chairman of the Senate Energy Committee.

Moreover, the House voted last week to allow drilling outside of 50 miles of the US coastline. Any state could decide to opt out and maintain the 100-mile exclusion, but those that agree would be eligible for a share of $3.2 billion in royalty incentives from the oil industry that would otherwise go to the federal government.

Mr. Bush has not said whether he would veto any such legislation but, in an apparent nod to the 1 million or so Cuban-American voters in Florida who could be crucial to the outcome of the midterm elections, he has said he opposes drilling off the state's coast.

As for Gov. Jeb Bush, who supports the moratorium, he can do little but try to wield influence over Florida's congressional representatives. But his own future political aspirations, and the Republican Party's standing in the state, could take a hit at the ballot box if giant oil rigs begin to sprout within sight of the Florida coast or if trade routes to Cuba open up.

Such trade routes would hardly be welcomed by many Cuban-Americans. But some of them believe any drilling could be a long way off.

"Like most things associated with Cuba, this is much more smoke than actual fire," says Joe Garcia, a board member of the Cuban American National Foundation. "We can't drill near Florida's beaches ourselves because of worries over fishing and tourism, and in this context you've got to ask whether we're really going to allow Castro, a megalomaniac who has destroyed his country and all of his own resources, to do so."

Indeed, the environmental impact of any drilling is a key concern. "A major oil spill in the Straits of Florida would be carried into the Gulf Stream and right on to our most economically important beaches," says Mark Ferrulo, director of the Florida Public Interest Research Group. "Just routine toxic pollution from drilling will have an effect."

But Professor Benjamin-Alvarado, a regular visitor to Cuba to research the country's efforts to develop a sustainable energy development program, says the US oil industry believes it would be in America's interests to be able to invest. "About 38 percent of our refining capability is in the Houston channel, and another direct hurricane hit all but devastates the US oil economy," he says.

"The infrastructure in Cuba is decrepit and crumbling before our eyes, and regardless of who's in charge there, it will be a multibillion-dollar endeavor to put it right – a cost that will be almost entirely borne by the US."