Cuba's oil, our potential mess

MiamiHerald.com
Posted on Sat, Jun. 25, 2011
By Cammy Clark

In about five months, Spanish oil giant Repsol is scheduled to begin a risky
offshore exploration in Cuba's North Basin, about 60 to 70 miles from Key West and
even closer to ecologically fragile waters of the Florida Keys National Marine
Sanctuary.

From a $750 million semi-submersible rig arriving from Singapore, Repsol will drill
through 5,600 feet of seawater with strong currents and another 14,000 or so feet
of layered rock at high pressure.

It's just the start of Cuba's big push to find and produce what geologists believe
is an undiscovered energy treasure trove of oil and natural gas reservoirs. The
prospects are so promising that seven international consortiums involving 10
countries have partnered with the communist nation.

In the Florida Keys and up the East Coast, the prospect of potential oil spills so
close to precious coral reefs, fisheries and coastal communities is frightening.
Federal, state and local agencies have been scrambling to update contingency
response plans using the many lessons learned from last year's economically and
environmentally devastating BP Deepwater Horizon blowout, which took 85 days to
contain.

"Deepwater Horizon was 450 miles away and we saw the impact for the Keys," said U.S. Coast Guard Capt. Pat DeQuattro, commander of Sector Key West. "This is much, much closer and Cuba is a sovereign nation."

Cuba also is a nation that the United States has embargoed for nearly 50 years, with
bitter relations dating to the Kennedy Administration.

As it stands now, a lot of U.S. containment equipment, technology, chemical
dispersants and personnel expertise would not be allowed to respond to a spill where
it likely would be needed most - "at the faucet," said oil industry expert Jorge R.
Pinon, a visiting research fellow at the Cuban Research Institute at Florida
International University.

Politics also would prevent relief wells in Cuban waters from being built by U.S.
companies or with U.S. resources.

"The clock is ticking for the U.S. to rethink its policy," said Dan Whittle, Cuban
program director for the nonprofit Environmental Defense Fund. "Hoping [Cuban oil
exploration] goes away is not good policy."

Even the final report issued in January from the National Commission on the BP
Deepwater Horizon Oil Spill and Offshore Drilling recommended U.S. cooperation with
Cuba's oil industry to protect "fisheries, coastal tourism and other valuable U.S.
natural resources" that could be put at great risk.

The report said it is in our country's national interest to negotiate with Cuba on
common, rigorous safety standards and regulatory oversight. The countries also
should develop a protocol to cooperate on containment and response strategies and
preparedness in case of a spill.

But direct discussions have not happened, due primarily to a powerful voting bloc of
pro-embargo Cuban-Americans. Among them is U.S. Rep. Ileana Ros-Lehtinen, a
Republican who represents the Florida Keys and Miami-Dade County and is chairwoman of the House Foreign Affairs Committee.

"You can't trust that evil, awful Castro regime," Ros-Lehtinen said in a recent
phone interview. "It would be dangerously naïve."

Ros-Lehtinen has spearheaded efforts to stop oil drilling in Cuban waters.

Last month, she introduced the Caribbean Coral Reef Protection Act, the third
version of legislation she also tried to get passed in previous Congresses. It would
impose penalties against companies that spend $1 million or more developing Cuba's
offshore petroleum resources and deny U.S. visas to their foreign principals.

"I know it will be hard to pass; I have no delusions of success," she said. "But
it's important to take a stand. We cannot allow the Castro regime to become the
oil tycoons of the Caribbean."

U.S. Rep. Vern Buchanan, R-Sarasota, also is pushing legislation that would deny
U.S. oil and gas permits to companies that do business with Cuba. But of the 10
companies that have agreements with Cuba to drill offshore, only private company
Repsol also has leases in the United States.

U.S. Sen. Bill Nelson , the Florida Democrat, has been fighting to stop Cuban oil
exploration for years.

But all the American efforts to stop drilling in Cuban waters have been
unsuccessful. The best the United States has been able to do is push for safety.
Last month, Interior Secretary Ken Salazar met with Repsol officials in Madrid. He
reportedly used leases in U.S. waters as leverage to obtain assurances the company
would follow the same American safety standards in Cuba. Repsol also has been in
contact with the U.S. Coast Guard regarding how it would deal with a potential
spill.

Repsol and the other international companies involved have ample reason to believe
drilling in Cuban waters will be highly profitable. In 2004, the U.S. Geological
Survey estimated that underneath Cuba's North Basin lie 5.5 billion barrels of oil
and 9.8 trillion cubic feet of natural gas - roughly the same amount as Ecuador's
and Colombia's reserves.

MORE BILLIONS

Cuban geologists also estimate there is another 10 to 15 billion barrels of
undiscovered oil in their deeper territorial waters in the middle of the Gulf.
However, the amount of recoverable oil and gas is always much less than what's
available.

On June 5, Cuban President Raul Castro watched as Cuba's national oil company,
Cupet, signed an expanded oil agreement in Havana with China's state-owned oil
company. Cupet also has agreements with state-owned companies from Norway, Russia, India, Vietnam, Malaysia, Canada, Angola and Venezuela.

U.S. Coast Guard Rear Adm. William D. Baumgartner, commander for the southeastern United States, said much effort has gone into planning for a possible spill. But he added: "The diplomatic situation will make our job more difficult in planning and execution."

Some companies already have special licenses issued by the U.S. Treasury Department and U.S. Commerce Department to send staffing and other resources to Cuba in the event of an oil spill. "We've been talking with them to see what their capabilities are," Baumgartner said.

And if those companies did respond to a spill, Baumgartner said the Coast Guard
would be "well aware of what they are doing inside Cuban waters and complement what they are doing."

Clean Caribbean Cooperative of Fort Lauderdale was issued both special licenses in
2003, the last time exploration wells were imminent in Cuban waters. The 33-year-old
nonprofit cooperative of 42 oil companies was a major player in the Deepwater
Horizon cleanup and has a stockpile of about $10 million to $12 million worth of air
mobile equipment, a cadre of oil spill response supervisors and a network of
contractors, according to cooperative president Paul Schuler.

Pinon, a former oil company executive, said it is imperative that Cuba be allowed to
participate in the "MexUS" joint contingency plan regarding oil spill response
between the United States and Mexico. It was put together following the Ixtoc spill
in 1979 that lasted for months and tarred Texas and Mexican coastlines.

'JUST ONE GULF'

"The U.S. has worked efficiently with Cuba on hurricane tracking, narcotics and
immigration issues," Whittle of the Environmental Defense Fund said. "No one is
talking about allowing Houston oil companies to develop oil and gas in Cuba,
although an argument could be made for that. But it's not on anyone's mind at this
moment."

Brian Petty, senior vice president of government affairs for the U.S.-based
International Association of Drilling Contractors, argues that cooperation is
crucial because: "It's just one Gulf. Everybody should be on the same page."

The Bahamas Petroleum Company announced plans earlier this year to begin exploratory drilling in 2012 in an area just north of the Cuban/Bahamas maritime boundary.

It's also an area where a spill could threaten the Florida Keys and other locations
up the East Coast.

But the immediate threat comes from Cuba. After several delays, which included
fixing a major leak, the semi-submersible rig called SS Scarabeo 9 is scheduled to
leave Singapore for Cuba this month.

It will take between three and seven years before any commercial oil can be produced.

The National Ocean and Atmospheric Administration is in the process of updating
computer tracking models of a spill coming from Cuban waters that were done in 2004 by another agency.

"Even with what the models tell you, you still want to be prepared for any
possibility," said Sean Morton, superintendent of the Florida Keys National Marine
Sanctuary.

Several factors play a part in where oil could go, including the moving Gulf Stream,
two major eddies in the Keys, winds and storms - including hurricanes.

"We've had markers and mooring buoys break lose in Keys waters and they have ended up as far north as Scotland and also in Alabama," Morton said.

Wright-Patt overseeing $30B in foreign arms sales

Dayton Daily News
Sales have been a boom for base with 103 nations.
By John Nolan, Staff Writer
Updated 1:05 PM Monday, June 27, 2011

Sales of U.S. military weapons and equipment to other countries and international
organizations are booming, making life busier at Wright-Patterson Air Force Base.

The Air Force's foreign military sales, managed by the Air Force Security Assistance
Center at Wright-Patterson, has seen a 15 percent increase in the number of foreign
nations it works with in recent years and now serves 103 countries.

The Defense Security Cooperation Agency, a Defense Department organization that
oversees all foreign military sales, says foreign sales have averaged $30 billion
for each of the last three years. That is nearly triple the levels of 2005-08, as
the United States finds more customers for its defense hardware and military
expertise. Air Force foreign military sales, managed at Wright-Patterson, have
increased by 15 percent.

The foreign sales help promote U.S. interests, Air Force officials said. They also
keep production lines running at U.S. defense contractors, said Loren Thompson, a
defense analyst with the Lexington Institute in Arlington, Va.

"It's good for the U.S. because it creates jobs, reduces our trade deficit and
supports the domestic production of weapons," Thompson said. "The United States is
now ... the biggest seller of weapons in the world."

The sales also mean more people at Wright-Patterson are devoted to foreign military
sales than in past years.

Thirty-one foreign liaison officers representing 28 countries work with AFSAC at
Wright-Patterson. The center works with other Air Force agencies to procure
equipment that U.S. allies want.

Roughly 670 people, or about 12 percent of the 5,500 people in acquisition jobs at
the base's Aeronautical Systems Center, work full-time on foreign military sales, a
sharp increase from years earlier, Air Force officials said.

The customers are buying everything from modern fighter aircraft and bombs to
snow-removal equipment and, in a few cases, parts and services to keep 1940s-era
planes flying. The customers pay up front in U.S.-maintained trust funds that pay
for the equipment and the military and civilian personnel who support the
transactions.

"We're providing the entire spectrum, and we stand behind what we're selling," said
Brig. Gen. Arnie Bunch, commander of the Air Force Security Assistance Center. "We
have technologies and capabilities a lot of nations would like to have."

The State and Defense departments work together to define the allies and friendly
governments that are allowed to participate in the program. The U.S. government
determines what level of technology to sell to other countries, which receive the
weapons on the understanding they are to be used for legitimate self-defense.

AFSAC and its counterparts in the other armed forces negotiate, execute and service
the deals, which can last for years. At Wright-Patterson, AFSAC works closely with
the Aeronautical Systems Center, which manages key Air Force weapons and aircraft
programs, to acquire what the foreign customers are buying.

The United States offers the program to build working relationships with other
governments that could be vital in times of joint military or humanitarian
operations, Bunch said.

"If we can't talk on the radio together, we can't deliver packages together into
Haiti," he said.

Changing world threat levels and an increase in governments seeking to defend
themselves are helping drive the demand for U.S. military hardware, Bunch said.

As a result, the Defense Security Cooperation Agency is looking for ways to speed up
deliveries to foreign buyers. That includes possibly making decisions in advance
about technologies that countries might request, and buying some of the
highest-demand goods in advance so they can be delivered faster, agency officials
have said.

The Arms Export Control Act, which gives the president authority to control the
export of defense articles and services, says the U.S. cannot make or lose money on
foreign military sales. Participating countries and international organizations buy
the goods and services at prices that recoup this country's actual costs. That
includes a fee (currently 3.8 percent of the actual cost , in most instances) to
cover the cost of administering the program.

The national space policy, one year later

The Space Review
by Jeff Foust
Monday, June 27, 2011

The space community often treats the release of new policies as major milestones,
the end of a long process largely conducted behind closed doors. A prime example was the release of the Obama Administration's national space policy, one year ago this week. Immediately after its release, industry, media, and other observers closely
examined both the language and tone of the policy, looking for what had changed and
what had remained the same, congratulating the administration for its insights or
lamenting the policy's oversights (see "A change in tone in national space policy",
The Space Review, July 6, 2010).

However, the release of a policy, while the end of one, largely private process, is
more importantly the beginning of a much more public process: its implementation.
Like the reports of countless blue-ribbon committees over the years that provided
recommendations on the future of the nation's space efforts, only to collect dust on
bookshelves, policy documents run the risk of being little more than words on paper
unless those words are backed by government actions. A year after the release of its
overarching national space policy, what has the administration done to carry out
this policy?

A report card on implementing the policy
A panel of experts from inside and outside government debated that question at a
forum in Washington earlier this month held by the Secure World Foundation. Their
assessment, not surprisingly, is that the administration's implementation of the
policy is very much a work in progress, with clear efforts underway in some areas
but lacking in others.

Marquez said the efforts of the administration, in concert with industry and foreign
governments, to "fight off" LightSquared were an "A-plus moment for the
implementation of the president's space policy".  "Implementing the policy is far more difficult" than writing it, said Peter Marquez, who in his previous position as director of space policy for the National Security Council led the development of the national space policy. A new policy often comes in conflict with existing programs, a situation he analogized with a person who says he'll start a diet tomorrow, only to have that plan run afoul of a business lunch or other exigency. "The president knows that full well when he signs on to the document: that that is my desire, but that sometimes desires don't match up with reality."

Marquez, who left the government last fall to become a vice president at Orbital
Sciences Corporation, offered his assessment of how the administration was
addressing various elements of the policy. He said the administration is making
progress in areas like assured access to space, with work starting on a revamp of
the national space transportation policy that dates back to 2004. The government is
also taking steps to address ongoing problems with space procurement, examining
alternative approaches ranging from block buys of systems to hosting government
payloads on commercial satellites. "DOD is, by and large, the most prolific procurer
of capabilities, and DOD is aware that they have a problem, which I think is a key
first step," he said.

He also singled out the administration's policy on positioning, navigation, and
timing (PNT), citing a specific issue he said has become "one of the greatest time
sucks" in recent months. That issue, which has gained broader attention only within
the last few weeks, involves plans by one company, LightSquared, to deploy a
wireless broadband system using a combination of terrestrial and satellite
infrastructure. Other companies warned that LightSquared's system could interfere
with GPS receivers, effectively jamming them, a conclusion backed by test results
released in recent weeks.

"The recent activity with LightSquared has taken the majority of everybody's time
who works space issues, whether they're at State, whether they're at DOD, or whether
they're at the White House," Marquez said. He said the efforts of the
administration, in concert with industry and foreign governments, to "fight off"
LightSquared were an "A-plus moment for the implementation of the president's space
policy", whose provisions include a call to "invest in domestic capabilities and
support international activities to detect, mitigate, and increase resiliency to
harmful interference to GPS."

He added that among the recent recommendations regarding LightSquared by the
National Space-Based PNT Advisory Board-on which he serves-was that the company's
spectrum allocation be moved away from any global navigation system, not just GPS.
"It was an awareness by the US's advisory board that the foreign PNT systems were
just as valuable as US domestic PNT systems, again, reflecting back to what was in
the president's policy," he said.

In other areas of the policy, though, the administration has made little progress to
date. The government "has not done a very good job at the SSA [space situational
awareness] portions and orbital debris directives that are in the national space
policy," Marquez said. While SSA is critical to safe and responsible space
operations-one of the central tenets of the overall policy-it's not adequately
funded, he said. Export control reform is another area that has seen little
progress, given disagreements between the White House and Congress. "I don't really
know if there's going to be any move forward on export control," he said.

"I think we're doing a good job with implementing the policy," Marquez said. "I
think we're doing the right things and it's moving in the right direction."
Marquez also noted some mixed messages about another aspect of the policy, involving "mission assurance" of space capabilities. While key military officials have
expressed their support for this, he said, they may not be interpreting that concept
the same way as originally intended. "When the term 'mission assurance' was put into
the policy, my intent was not to mean assuring the satellite's function," he said.
"That was the last thing in my mind. What was really meant there was to assure the
satellite's reason for being." In other words, if that space-based system failed,
there was some backup system, be it in space or on the ground, to carry out that
role. "So far we've been wrapped around the axle of how to gold-plate a satellite so
that it functions in all conditions, and that was the wrong approach."

While NASA policy, specifically its human spaceflight plans, predated the overall
national space policy by several months, Marquez addressed its implementation as
well. "The NASA rollout was about as bad as it possibly gets," he said of the
decision to unveil those plans as part of the agency's budget request in February
2010. "It's still very vague as to what the actual direction is," he said, an issue
which he says is not the fault of NASA but instead the White House. "I just don't
think the White House gave appropriate leadership for an agency that was crying for
it."

Overall, though, Marquez is satisfied with the pace of implementation of the policy.
"I think we're doing a good job with implementing the policy," he said. "I think
we're doing the right things and it's moving in the right direction."

International reaction and codes of conduct
One major difference widely cited between the current administration's space policy
and the one released by the George W. Bush Administration in 2006 has been its tone.
The Obama Administration's policy has been more open to international cooperation on various issues, although it retains language from previous policies that puts strict
guidance on when the US should sign onto space arms control measures.

Previous US views on space issues, including space arms control, "was not received
well by the international community," said Ben Baseley-Walker, advisor on security
policy and international law for the Secure World Foundation. "It was seen as
inconsistent, it was seen as antagonistic, and it was seen as isolationist." That
view can't be immediately changed, he said, but the new space policy takes steps in
that direction. "What the national space policy has done is to start to rebuild
trust, start to rebuild consistency, and start to rebuild the reliability of the US
as an internationally-engaged partner."

Just how willing the US is to be a better international partner will depend on not
just the words in the policy, but other forces, notably funding, that force the US
to engage more with other nations. "The US has not been put into a situation
financially, or on specific limitations on the goals it wants to achieve, to have to
deal with international partners," he said. That could change down the road, he
noted, such as when-at some time after 2020-the International Space Station is
retired, at which time it's possible the only space station in orbit is Chinese.

More recently, the national space policy has been wrapped up in debates about a
proposed "Code of Conduct" for outer space activities promulgated by the European
Union (see "Debating a code of conduct for space", The Space Review, March 7, 2011). The document seeks to provide a set of best practices dealing with space activities, including avoiding the creation of orbital debris and minimizing the risk of
collisions.

"What the national space policy has done is to start to rebuild trust, start to
rebuild consistency, and start to rebuild the reliability of the US as an
internationally-engaged partner," said Baseley-Walker.  Many of the elements of the EU Code are closely aligned with themes of the new US national space policy, which puts a new emphasis on space sustainability and ensuring access to space for all who wish to use it peacefully. This has raised speculation that the US might soon sign on to the EU Code: although so far there has been no formal move by the US to do so, there have been discussions between American and European officials about aspects of the proposed code of conduct.

Baseley-Walker noted that proposals like the EU Code can be "an asset to national
security in the long-term", and that the national space policy does endorse the use
of such "transparency and confidence-building measures" to, in its words, "encourage
responsible actions in, and the peaceful use of, space." However, he said the US
should proceed with caution when it comes to the EU Code in order to encourage wider adoption of the code, or something like it, by other nations. "Being very careful
with our diplomatic strategy and working out our timing and how best we can build
the foundations for long-term success for this issue" is preferable than expending
political capital on signing onto this particular document, he said.

Andrew Palowitch, the director of the Space Protection Program, a joint effort of
the US Air Force and the National Reconnaissance Office, said his personal view was
that any such code of conduct needs to be a truly international document, not an EU
one, with involvement from Russia, China, and "space wannabe" nations. Such an
approach makes any code more difficult to do, "but harder is not necessarily
'wronger'; you want to do this because it's the right thing to do."

Marquez said that while the national space policy is aligned to some degree to the
EU Code, that doesn't mean that the US should sign onto it. "You can say that the
intent of the EU code of conduct is in line with the US national space policy, and
that I would wholeheartedly agree with," he said. But interpretation of that
language can differ even within the US, let alone with an international audience,
raising the risk of "the law of unintended consequences."

"I don't think the US signing up to an EU code of conduct shows a form a
leadership," he said. "We're already doing these things, we've signed up to doing
them on our own. Leadership is gained through experience and knowledge, not through following."

How much does the new policy matter?
While panelists discussed details about implementation, and its affect on
initiatives like the EU Code of Conduct, they also weighed in on a bigger question:
just how influential has the new policy been? Some questioned how big of an impact
it's had, at least so far.

"Everything that happened in this last year, and everything that's going to happen
in the next year, is completely independent of that national space policy," said
Palowitch. His rationale is that it takes years to plan and carry out major space
programs, and thus a new policy has little effect on programs already in some phase
of development and operations. "Changes do not happen rapidly in space."

Government activities in the last year, from the surge in national security
satellite launches to the impending retirement of the Space Shuttle, had their roots
in decisions made long before the policy's release, he noted, while commercial
activities are largely independent of national space policy and are based on
economic rationales. Even discussion about the EU Code, he argued, had their basis
outside of the policy.

"Everything that happened in this last year, and everything that's going to happen
in the next year, is completely independent of that national space policy," said
Palowitch. "Changes do not happen rapidly in space." Palowitch also offered a corollary to his argument about the independence of actions from the national space policy: "our actions, our reactions, and our inaction has been the actual policy that we have shown for the past year and will do for the next year." That's particularly true regarding international perceptions of US policy, he said. "What we did action-wise over the year was 1,000 times more important than what we actually wrote down on a piece of paper."

However, despite questioning its near-term impact, Palowitch called the new national
space policy "fantastic" and expects to see results from it in the next 18 to 24
months. He said a number of government agencies are moving forward with implementing aspects of the policy, but those efforts take time. "We're not going to see those in the next 12 months," he said, citing the constraints of coordinating changes among government agencies.

Marquez disagreed with the claim that the policy hasn't changed anything in the last
year. "It is somewhat false if you look at political initiatives and international
relations initiatives," he said. "What we've been doing on the international front
has dramatically changed in the past year."

It's clear that the space policy's impact, whatever it turns out to be, will be
measured over the long haul and not based on what's been accomplished in its first
12 months. The policy, said Baseley-Walker, has created "intellectual foundations"
that agencies within the government are still grappling with. "Which is," he added,
"what the space policy should do: it should lay down long-term direction for
building sound, extensive national and international policy."

The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce is responsible for regulating the export of most commercial items, often referred to as “dual-use” items which are those having both commercial and military or proliferation applications. Relatively few exports of dual-use items require obtaining an export license from BIS prior to shipment.

Dual use export licenses are required in certain situations involving national security, foreign policy, short-supply, nuclear non-proliferation, missile technology, chemical and biological weapons, regional stability, crime control, or terrorist concerns. The license requirements are dependent upon an item's technical characteristics, the destination, the end-use, and the end-user, and other activities of the end-user. Even if a license is not required, there may be additional requirements you must satisfy prior to exporting. Before shipping your product, make sure you understand the concept of dual use and the basic export control regulations, including end-user and end-use based controls.

Is an Export License Required?

The first step in establishing whether a dual-use item (i.e. commodity, software or technology) requires a license is to determine the product’s Export Control Classification Number (ECCN) on the Commerce Control List (CCL). ECCNs identify reasons for control which indicate licensing requirements to certain destinations. Other reasons an export license may be required for your shipment relate to concerns about the parties to the transaction and the end-use of the item.

If your item falls under U.S. Department of Commerce jurisdiction and is not listed on the CCL, it is designated as EAR99. EAR99 items generally consist of low-technology or consumer goods and do not require a license in many situations. If your proposed export of an EAR99 item is to an embargoed country, to an end-user of concern or in support of a prohibited end-use, you may be required to obtain a license.

Screening Your Customer

• Denied Persons List - A list of individuals and entities that have been denied export privileges. Any dealings with a party on this list that would violate the terms of its denial order is prohibited.
• Unverified List -A list of parties where BIS has been unable to verify the end-user in prior transactions. The presence of a party on this list in a transaction is a “Red Flag” that should be resolved before proceeding with the transaction.
• Entity List - A list of parties whose presence in a transaction can trigger a license requirement under the Export Administration Regulations. These end users have been determined to present an unacceptable risk of diversion to developing weapons of mass destruction or the missiles used to deliver those weapons and contrary to U.S. national security and/or foreign policy interests. Inclusion on the list may also be a result of activities sanctioned by the State Department and activities contrary to U.S. national security and/or foreign policy interests.
• Specially Designated Nationals List - Alphabetical master list of Specially Designated Nationals and Blocked Persons compiled by the Treasury Department, Office of Foreign Assets Control (OFAC).
• Debarred List - A list compiled by the State Department of parties who are barred by §127.7 of the International Traffic in Arms Regulations (ITAR) (22 CFR §127.7) from participating directly or indirectly in the export of defense articles, including technical data or in the furnishing of defense services for which a license or approval is required by the ITAR.