Elgin ran lots of drills. He's left the Jerry West Coast and currently headed south.
Mexico eyes deeper oil drilling in shadow of Gulf disaster
Tue Aug 17, 12:37 pm ET
SONDA DE CAMPECHE, Mexico (AFP) – Firefighters leapt forward with a gushing hose on a Gulf of Mexico oil rig as fake victims were stretchered off in a practice run following BP's Deepwater Horizon disaster.
The Mexican drill came amid fears of a repeat catastrophe, and as producers like Mexico chase reserves into deeper and more dangerous waters.
One of the world's top oil producers, Mexico currently churns out some 2.6 million barrels of oil a day. A third comes from the Ku Maloob Zaap field where the Ku-S rig lies.
But with output plunging in its shallow-water oil fields, Mexico could begin importing oil -- which finances a large chunk of the state budget -- within the decade.
State-run Pemex oil company presents the mega-structure of the Ku-S rig as a model of stringent security measures as it takes on the challenge of digging deeper for oil.
But the rig, weighing more than 14,000 metric tons, only extracts the black gold at some 60 meters, far from the 500 meters (1,640 feet) considered deep waters.
Touring the massive structure, rig director Francisco Contreras said he feared no BP-scale disaster on his watch.
Some 4.1 million barrels of oil spewed into the Gulf before BP could this month contain its ruptured well, 1,500 meters below the surface, after an April explosion that killed 11 workers.
"Thanks to the security systems we have in the oil and gas lines, in the case of any change, we'd detect it and our automatic shut-off system would kick in," Contreras said.
There have been no accidents in more than 1,000 days, Contreras said, demonstrating three alarm systems.
Oil was discovered in the Ku-Maloob Zaap field eight years ago, shortly before production started declining at the giant Cantarell field.
Efforts to develop the Chicontepec field, onland near the Gulf coast, have struggled to take off, adding to the urgency for Pemex to drill deeper.
"We're going to double our deepwater drilling capacity for next year," said Carlos Morales Gil, Pemex's director of exploration and operations.
Mexico's congress passed an overhaul of Mexico's oil law in 2008, putting new controls on Pemex as it seeks to exploit what it claims are a possible 50 billion barrels buried deep in the Gulf of Mexico.
But the Deepwater Horizon blowout proved that systems do fail.
"If there's something that we can learn from the BP spill, I think it is basically that there are no technologies that are completely safe and there are no technologies that are useful when there is an explosion and a spillage," said independent energy analyst David Shields.
Aside from its lack of experience in deep-water exploration, Mexican law still prevents Pemex from freely working with foreign partners, despite the oil reform.
So it has to take on more risks, as well as the enormous costs, of using new technology and security procedures, Shields said.
Pemex should suspend its deepwater plans in the Gulf until it comes up to speed with the safety, he added.
Environmentalists would like countries to go even further, and switch to greener energy sources in light of the BP spill.
"As long as we keep on relying on this type of technology, well, in all likelihood we're going to keep on having oil spills," said Alejandro Olivera, from Greenpeace Mexico.
But the state-run Mexican company, which has been a symbol of national pride for decades, is determined to press ahead.
In November, Pemex will set up one of three semi-submersible exploration platforms in the south of the Gulf of Mexico in a well reaching 940 meters (3,000 feet) down.
Once workers are familiar with the rig, it will move to the Maximino well in April 2011. The well, which is not far the US maritime border, is the deepest ever to be drilled by Pemex at 2,600 meters (8,530 feet).
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Cuba plans 7 Gulf of Mexico oil test wells - U.S. group
– Tue Aug 17, 9:37 pm ET
HAVANA (Reuters) – Cuba plans to drill seven exploratory oil wells in its Gulf of Mexico waters over the next two years, according to a U.S. organization that visited the Communist-ruled island to discuss energy development.
Sarah Stephens, executive director of the Center for Democracy in the Americas, said meetings between energy experts she brought to the island in July and Cuba's state oil monopoly Cubapetroleo (CUPET) left no doubt about the Caribbean nation's determination to develop its offshore oil reserves.
"Repsol, a Spanish oil company, is paying an Italian firm to build an oil rig in China that will be used next year to explore for oil off the shores of Cuba," she told Reuters in a written response to questions.
"Whether it's available in commercially viable amounts we do not yet know. We were told by sources in Cuba that seven such wells will be drilled over 2011-2012. If this drilling finds significant oil, you could have production taking place as early as 2014 and as late as 2018," Stephens said.
Her non-profit group, based in Washington D.C., says it works to improve U.S. policy toward the Americas including Cuba. It opposes existing U.S. sanctions against the island.
Cuba's government has declared its interest in developing the country's offshore oil resources but rarely gives details of its plans in public.
The energy analysts on the trip to Havana included Michael A. Levi, Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations, Ronald Soligo from Rice University, and Lisa Margonelli, Director of the Energy Policy Initiative at the New America Foundation.
Cuba estimates it has up to 20 billion barrels of oil in its offshore areas, but the U.S. Geological Survey has estimated a more modest 4.6 billion barrels and 10 trillion cubic feet of gas.
Mexico and the United States, which share the Gulf of Mexico with Cuba, have been producing oil and natural gas from under its waters for decades.
Cuba currently produces about 60,000 barrels of oil per day (bpd), all from onshore wells. It receives about 115,000 bpd from ally Venezuela on favorable terms.
OIL EXPLORATION MOVES
Speculation about Cuba's deep water exploration plans and statements concerning imminent drilling have increased since Repsol YPF drilled the only offshore well in Cuba's untapped waters in 2004. It said at the time it had found hydrocarbons, but not in a commercially viable amount.
Industry sources blame delays in further oil development on problems with financing and fear of sanctions under Washington's 48-year-old trade embargo on Cuba, which also put a 10 percent cap on use of U.S. technology on the island.
But they say it appears serious exploration will finally get under way next year.
Part of Cuba's Gulf of Mexico zone is within 50 miles (80 km) of Florida, where U.S. politicians have raised fears that Cuban drilling could lead to an accident like the huge BP oil spill off the Louisiana coast.
Norway has been training Cuban personnel for offshore oil exploration for a number of years.
U.S. President Barack Obama's administration has said it would allow U.S. companies that handle accidental oil spills to operate in Cuban waters should the need arise.
The China-built drilling rig is expected to arrive in Cuban waters early next year and companies have begun preparations to drill once the Scarabeo 9 rig gets to the island.
Preparatory work was moving ahead at the port of Mariel, just west of Havana, the staging area for drilling operations, diplomatic and industry sources said.
Cuba has divided its share of the Gulf into 59 blocks, 21 of which are already under lease to seven companies.
Repsol has announced that its consortium with Norway's Statoil and ONGC Videsh Ltd, a unit of India's Oil and Natural Gas Corp, will drill at least one well early next year. The Indian firm has started accepting bids to sink another well on two blocks it is exploring separately.
Diplomats in Havana have said Malaysia's Petronas is also planning to use the China-built rig.
Petronas, which has four Cuba exploration blocks, has conducted seismic work and built offices for a battery of employees who will come to Cuba for the project.
Venezuela's state oil company PDVSA has said it plans to sink its first exploratory well in Cuba's offshore next year.
Other companies with blocks there are Vietnam state oil and gas group Petrovietnam and Brazil's Petrobras, while firms from Russia, China and Angola are in the process of negotiating exploration rights.
(Editing by Pascal Fletcher and Jim Marshall)
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