Puerto Rico's Oil - For Whom?

September 25, 2007

A strong movement has come
forth in Puerto Rico in recent years
to oppose the exploitation of non-
reusable natural resources-par-
ticularly nickel, cobalt and iron in
the west; copper, silver and gold in
the central areas; and hydrocar-
bons in the north-by foreign
capital. The most alert en-
vironmental, political and religious
groups have postulated and
defended the position that all non-
renewable resources should be
exploited for the benefit of the
Puerto Ricans, caring that no
harm is done to the environment
and their health. The consensus of
these groups is that to further
those aims the exploitation has to
be under the control of the Puerto
Ricans.
In the last four years one of the
main battles fought in Puerto Rico
has taken place in the economic,
social and political arena of oil ex-
ploration and exploitation. In par-
ticular, since 1975, a struggle has
been going on in Puerto Rico to
keep Mobil and Exxon from
finishing the exploration and start-
ing the exploitation of potential oil
and natural gas deposits on-shore
and off-shore in the north central
portion of the Island. Also a strug-
gle is still going on to force the
U.S. government to recognize the
Puerto Rican ownership of any oil,
natural gas, minerals and other
natural resources present within
Mar/Apr 1980
the twelve mile territorial limit and
the 200 mile economic zone sur-
rounding this Caribbean country.
The struggle has been waged by
organizations like the Puerto Rico
Bar Association and by pro-
Commonwealth and pro-Indepen-
dence leaders and parties.
Many countries are nowadays
involved in the process of wresting
the control of the exploration, ex-
ploitation, commercialization and
industrialization of hydrocarbons
and other non-renewable re-
sources from the big transnational
companies that have traditionally
benefitted from those activities.
Puerto Rico is no exception to this
general trend. The essence of this
economic and political struggle is
the recognition by the traditional
producers of raw materials that
the unequal exchange between
them and the transnationals has
led to their impoverishment while
constituting an enriching process
for those companies where their
headquarters are based.
Potential oil and natural gas
traps were discovered in Puerto
Rico in 1973. The discovery was a
by-product of seismological and
geological studies made to locate
areas for the construction of
nuclear plants to generate elec-
tricity. The studies were made by
Fugro and Western Geophysical,
two U.S. companies under con-
tract by the Puerto Rican Water
Resources Authority (PRWRA).
The PRWRA is a public utility
under U.S. and Puerto Rican laws.
Around $7 million dollars were
used by PRWRA to conduct these
studies, which extended for more
than a year and a half.
Right after the discovery of
these potential oil and natural gas
traps, a debate arose within the
government and later within the
whole society as to who should
finish the exploration undertaken
by the Puerto Rican government
and who should be in charge of
the exploitation of any oil and/or
natural gas that might be found.
The debate has not ended and no
end to it is foreseen in the near
future. On one side there are those
who maintain that private com-
panies such as Mobil and Exxon
should finish the exploration of any
hydrocarbons found. On the other
side are those who maintain it is
the Puerto Rican people who
should control the exploration and
exploitation of such resources.
What is at stake in this whole
discussion?
THE EVIDENCE
The seismological studies
undertaken up to the present show
the presence of two potential
hydrocarbon traps-one in Tor-
tuguero off-shore, and one in
Dorado off-shore that quite prob-
ably extends on-shore. Both poten-
tial traps are located west of San
Juan in the north central region. A
third potential trap could be
located off-shore northeast of the
Old San Juan area, possibly ex-
tending below the city and the San
Juan Bay.
The evidence suggesting the
presence of oil and natural gas is
as follows:
41update * update . update * update
(1) An anomaly in the transmis-
sion of the sound waves called a
"bright spot" has been found in
the Dorado area. The experience
in the oil industry is that whenever
a bright spot is found there is a
50% chance of finding natural
gas. The San Juan and Tortuguero
potential traps, on the other hand,
are portions of the same discon-
tinuous geological formation found
in Dorado.
(2) The presence of fluid con-
tacts suggesting the presence of
natural gas, oil, and salt water
have been detected through seis-
mological studies. These results
increase the probability of finding
oil and natural gas in Dorado
above 50 percent.
(3) The organic carbon content
of the San Sebastian Formation
just above the potential hydrocar-
bon traps is almost twice the world
average for this type of tertiary for-
mation where, as a matter of fact,
90% of oil has been found up to
now. The presence of organic car-
bon in such amounts is another in-
dication of good hydrocarbon
potential.
(4) Based on these results and
on additional work done by Mobil
scientists between 1975-76, some
of them have privately conceded
that Puerto Rico indeed shows
great promise for finding oil and
natural gas. This information and
conclusions led Mobil to submit an
official proposal for oil exploration
and exploitation to the Puerto
Rican government in October
1976. The exploration would cover
1,000 square miles of off-shore
and on-shore areas. Exxon also
submitted a less detailed and
thorough proposal around the
same time.
42
o
In the 1960s, the centerpiece of the new development strategy was a $3 billion
petrochemical industry. In 1976, CORCO, Puerto Rico's largest refinery declared
bankruptcy.
(5) In 1975, after more than
three quarters of a century of its
political and economic presence
in Puerto Rico, the U.S. govern-
ment reversed its traditional posi-
tion of recognizing Puerto Rico's
ownership of its off-shore natural
resources and declared such re-
NACLA Reportupdate * update, update * update
sources federal property. Scarcely
four years before, the U.S. govern-
ment had recognized the right of
Puerto Rico to extend an explora-
tion permit to Oceanic Exploration
which went as far as 25 miles off-
shore. Evidently the U.S. govern-
ment has concluded that there is a
high probability of finding oil and
natural gas in Puerto Rico. What
other explanation could there be
for its 1800 turn on the matter of
the off-shore titles and rights of
Puerto Rico?
THE STAKES
At stake in this controversy are
between 4 and 6 billion barrels of
recoverable oil. So has concluded
Degolyer and McNaughton, a very
respected firm within oil circles,
which studied all the data available
at the end of 1974 under contract
for the Puerto Rican government.
These theoretical calculations only
include the Tortuguero and
Dorado regions, leaving out the
San Juan and any other off-shore
or on-shore areas with oil poten-
tial.
In 1978, after three years of
public and private debate over
who should explore and exploit the
hydrocarbons that could be found
on-shore and off-shore the Island,
the Puerto Rican government
decided to continue on-shore oil
exploration by itself. Right away
companies such as Mobil and Tex-
aco offered to do the exploration
under contract for the government
with supposedly no strings at-
tached. The pressure brought for-
ward by Industrial Mission (an en-
vironmental group) and other
groups prevented the government
from handing over oil exploration
to Mobil and other companies.
However, Mobil's proselytes
within governmental circles are
MarlApr 1980
still in favor of Mobil's bid for a
takeover of oil exploration and ex-
ploitation off-shore. The rationale
used by Mobil and its cohorts in
this controversy does not differ
much from the traditional ideology
used time and again in other coun-
tries rich in exploitable non-
renewable natural resources.
Their arguments can be sum-
marized in the statement: these
countries lack the economic,
technological and human
resources to explore and exploit
their natural resources so they are
better off when they invite private
capital to be in charge of those
endeavors. Such arguments could
be contested in the followng man-
ner. Oil activities can be divided in-
to three general phases: explora-
tion, quantification and exploita-
tion, the first being the least expen-
sive activity.
In Puerto Rico, $7 million have
already been invested in
seismological and geological
studies. Approximately $10 million
more are needed to complete this
first phase both off-shore and on-
shore, including exploratory drill-
ing. Ten million dollars is around
one twenty-fifth of one percent
(0.25%) of the annual budget of
the Puerto Rican government.
With such a relatively small
amount of money, Puerto Rico
could possibly discover from five
to six billion barrels of recoverable
oil with a potential value of $80 to
$120 billion dollars.
Even the exploratory activities
are based on step-by-step deci-
sions. The decision as to where
drilling will be done or even
whether drilling should take place
at all will depend on the results of
the seismological studies. If drilling
takes place and oil is or is not
found, then additional decisions
have to be made as to future ac-
tions.
In Puerto Rico the plans call for
additional seismological studies
on-shore and off-shore. If hydro-
carbons are found, or if the infor-
mation obtained in the drilling
leads to the conclusion that hydro-
carbons could be found in relative-
ly nearby areas, additional drillings
will be undertaken.
After finding hydrocarbons a
decision must be made on
whether to go ahead with the
quantification process. Only after
this phase is completed is it decid-
ed whether to go ahead with the
exploitation as such.
Hydrocarbons are one of the
dearest economic assets any
country could have these days. If
hydrocarbons are discovered in a
country they can be used as col-
lateral to obtain economic and
technological resources to quan-
tify and later on exploit them. The
main threat to the well-being of
Puerto Rico in this area has been
Mobil Oil Corporation, which has
tried to impose its political will and
economic conditions upon the
government and the Puerto Rican
people in general. The struggle is
just beginning. To overcome this
and other threats Puerto Ricans
will need all the power that a con-
scious people can muster and all
the help from progressive forces in
the U.S. and elsewhere.

Tags: Puerto Rico, Oil, exploitation, US control


Like this article? Support our work. Donate now.