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Oil spill threats require "absolute quick response:" Senator Hulse

"If we don't have an absolute quick response, then we might as well just don't talk petroleum."

These are the comments of Senator Godwin Hulse, who on Tuesday night, July 2, pointed out that whereas there are concerns over plans for petroleum exploration offshore Belize on risks that an accident could devastate the world-famous coral reef, "We need to declare that our reef is at risk from an oil spill every week of the year."

According to the private sector senator, "For the last 50 years, there is a tanker coming through that reef bringing fuel into Belize."

Belize imports fuel, and since Belize Natural Energy also exports crude "through the reef," the risks of a spill already exist.

Official information published by the Ministry of Finance indicates Belize imported 32,200,658.7 million barrels of fuel in 2009. The Statistical Institute of Belize has indicated that petroleum exports in 2009 were in excess of 50 million gallons.

"The risk of a tanker breaking up, running aground or so is always there," said Hulse. "We could have the Exxon-Valdez kind of catastrophe."

Transshipment through the Gulf of Amatique, Honduras, also poses added risks: "Furthermore, there is also the risk from the tankers that pass beyond our waters - from Venezuela all the way up to the United States, from Guatemala, from Honduras that could also break up [in] the Gulf of Amatique and damage our reef. So I would like to suggest, that while we focus on ourselves here and how we would protect from damage we cause, that two things need to happen."

The first, he said, is for the Government of Belize, through the Ministry of Foreign Affairs, to convene a meeting of Ministers of Foreign Affairs of the Caribbean to look at the global picture to explore a global mechanism, perhaps further to the UN or some other international agency, that could not only do inspection but also provide mitigation and relief work.

"We are vulnerable any way you take it, and that is not going to stop unless you decide to move fuel over land and stop tankers from passing through our reef," he commented.

Perhaps Belizeans should be looking at pushing government not for an only international position, but also for a domestic position to have an absolute quick response.

"If we don't have an absolute quick response, then we might as well just don't talk petroleum. But I don't think we want to do that," he went on to say.

"Let's not fool ourselves," said Senator Hulse. "We don't have to bore out there to have a disaster. [The risk] is there - it's there whether we are doing it on land, whether we are doing it in a protected area or whether we are doing it offshore - it is there!"

It is a quick response that Belize needs to push for now and then "a sober addressing of the situation," he added.

He also cautioned against corruption: "What we have to do - even if it is on land - is to make sure nobody is in anybody's pocket; that we have all the provisions in place; everything intact, and then I think we could take that risk…."

Audrey Matura-Shepherd, attorney, vice president of Oceana in Belize and a spokesperson of the Belize Coalition to Save Our Natural Heritage, has informed that their coalition would meet Wednesday, July 7, with Minister of Natural Resources/Deputy Prime Minister Gaspar Vega.

She agreed with Senator Hulse that those risks from transportation do exist, and it is also something that concerns the Coalition. If drilling ever happens on or near the reef, then the country is increasing those risks, she noted.

"We can't even get [the Government] to comply with section 11 [of the Petroleum Act], in deciding who gets contracts; now we can expect them to regulate an industry that is so high risk?" she questioned.

She pointed out that the Environmental Pollution Control Board, required in existing law, has not been set up and the government department charged with monitoring does not even have a boat.

Three weeks ago, on June 15, Director of Geology and Petroleum, Andre Cho, said that the government has drafted regulations to establish a Common Fund, which will be for monies to address an oil spill. Those regs should be passed, he said, this year.

Cho noted that in the petroleum industry, the operator is responsible first and foremost. In the case of the only existing producer, Belize Natural Energy (BNE), Cho noted that BNE should immediately apply the company's oil spill contingency plan. The Government will oversee it, and if they [BNE] are not handling it properly, the Department of Environment (DOE) would apply its plan. Financing such efforts is the purpose of the Common Fund - which we note does not yet exist, according to the government rep.

Chief Environmental Officer, Martin Alegria, said that Belize does have a national emergency plan, specifically targeting oil spills: "We call it NEPPOS for short."

That plan, The National Emergency Preparedness Plan for OilSpills (NEPPOS), was finalized in 1996 but revised in 2005, said Alegria, with the assistance of CDERA, the Caribbean Disaster Emergency Response Agency, now CDEMA: the Caribbean Disaster Emergency Management Agency.

That NEPPOS, said Alegria, addresses both land and sea potential oil spills: "In the land aspect, we at DOE have responded to about four or five oil spills." The most recent one he reported was in Orange Walk with a crude tanker that had an accident while going over a speed bump. He also noted another on the Coastal Road, which was a spill of Bunker C fuel that was being transported to the Citrus Company of Belize. [This had made nearby water supplies temporarily undrinkable.]

Another spill had happened, Alegria said, near the police station at Sandhill when a tanker negotiating a steep curve flipped over. The DOE has had to implement NEPPOS on land but not on sea, he noted.

The Chief Environmental Officer pointed out that there are three tiers for the oil spill response plan (as depicted in the accompanying chart). The first tier, he said, is for 10,000 gallons or less - and Belize has the capability to respond to such a spill, Alegria told us. For 100,000 gallons or more, he said, Belize needs outside help.

"The worst case scenario of tier 3 [is] exactly what is happening in Gulf [of Mexico with the BP incident]," said Alegria, noting that BNE has arrangements with foreign counterparts with whom they have contracts to assist in responding to a major spill.

"There are current risks," he asserted, pointing to imports by Esso Belize of refined products, as well as exports from BNE of crude across Belize's territorial waters, twice a month, as Cho indicated.

"There is a high risk there, if we were not and are not on top of monitoring aspects and putting in minimum standards," the Chief Environmental Officer said.

If you look at the global picture for the last five to seven years, said Alegria, the first two to three incidents he would pick "right off the bat" were not caused by exploration but by transportation accidents. "The famous Exxon-Valdez was transportation."

"That is an issue that we have not lost sight of," he furthermore commented. "It is a reality that exists right now, and we are looking at ways of improving the monitoring aspects of it. And if there [are] any such spills, as Andre mentioned, we will not only leave it for BNE, or Esso, or Petrofuel, or whoever is the consignee of the product. We will need to be there [in] a supervisory role to ensure that things are done the way they should be done."

The Disaster Management and Contingency Plan, published by the DOE, notes that: "In order to respond rapidly and successfully to a spill, personnel responsible for containing and cleaning up the spill must know the steps that need to be followed during and after the spill."

We note that based on the categorizations provided in that document, the oil spill plan for offshore (marine) kicks in for a spill of 1,000 gallons or more. The company is responsible for handling - on its own - 10 times as big a spill offshore than it is responsible for handling onshore - 1,000 gallons onshore versus 10,000 gallons offshore. Beyond those levels, the Government and external partners are required to be called in for the clean-up efforts.

(Story based on the July 6, 2010, edition of "The Adele Ramos Show," as well as the June 15, 2010 edition.)

Amandala

Landowners' share of petroleum wealth "miniscule"

Petroleum has not helped the Government of Belize to balance the enduring budget deficit - much less spur any notable economic growth, and landowners certainly won't get rich from petroleum, as their share of petroleum wealth is indeed miniscule.

The meter for the sale of Belize sweet crude has surpassed $700 million, and there are still public concerns over how much financial benefits the Government and people of Belize are deriving and a lingering public sentiment that it is certainly not a big enough slice of the petroleum pie.

Over half-a-billion dollars of petroleum receipts (of over $720 million to date) have gone to pay BNE's expenses and to reward its joint venture take under its contract. Less than $150 million - or an estimated 23% of gross - has been received by the Government and people of Belize, according to the latest information to our newspaper from the Geology and Petroleum Department.

Furthermore, for at least the first year of production, the Government did not collect a single cent from the 1.5% production share to which it was entitled under the contract, our newspaper was told today by a well-informed Government source.

Amandala has learned that BNE is allowed to deduct 100% of whatever expenses it incurs, and recoverable expenses are not clearly defined, though we understand that the Government is being advised to submit this scheme to review.

For every two to three barrels of petroleum that BNE sells at current prices, all the landowners with interest in the oil field get $1.00 to share - and that's in Belize currency. This translates to less than 1% of revenues - 0.0375% to be exact.

Allan Reimer, chairman of Spanish Lookout, in response to a query from Amandala, reported that the village has received royalty payment of $2.2 million up to March 2010.

A royalty payment is a payment to the owners for the right to extract petroleum, paid to the state by exploration companies, and the state then pays landowners.

The Mennonite community at Spanish Lookout gets 93.95% of the total landowner royalties for the Spanish Lookout oil field. Amadeo River is entitled to 3.96% ($95,000), Roy Aldana - 1.28% ($30,000) and Domingo De La Rosa - 0.80% ($19,000).

One thing Reimer said he does not understand is what value the royalty is calculated on. "We need a legal mind to review the [Production Sharing Agreement]," he said.

According to Belize law, the rate of royalty is 7.5% straight off the top on gross revenues, and landowners get 5% of that. This squares with the official Government of Belize and company data that we have at our news desk.

Reimer stressed that while he is not saying that anything is wrong, Belizeans on the whole should realize that the petroleum money is everyone's business - a national concern.

"We want to be a part of the transparency deal," said Reimer, also expressing his wish for the public to be better informed.

If we don't monitor, said Reimer, Belize could become like Nigeria, where the oil is a curse to the poor. Our newspaper notes that Ghanaians today are trying to put the brakes on heavily skewed petroleum contracts before their industry gets off the ground. After the country discovered oil in 2007, Ghanaians are publicly pressuring their government to increase the royalty rate from the existing range of 4% to 12.5% to 20%, as they prepare to go into production later this year.

According to Business Week (Bloomberg), Ghana's agreements with oil companies allow them to own as much as 90 percent of any field discovered and a key activist contends that Parliament should increase the royalty rate for the benefit of the state.

Petroleum Accountant in the Belize Department of Geology and Petroleum (DGP), Dean Flowers, says that $649,378.87 has been paid by Belize Natural Energy for The Common Fund, while royalty payments to up to March 2010 were recorded at $48,394,047.64. The minimum royalty rate of 7.5% is applied here, though, as we have previously reported, certain contracts tag on a royalty of 15% of gross.

BNE exported $583 million worth of crude from 2006 to 2009, according to official GOB figures. Another addition to the figures is $10,252 in payment the Government received in January 2010 from BNE for petroleum produced back in November and December 2005, during what is described as the appraisal and testing phase.

A reported 4.8 million barrels were extracted up to the end of 2009, according to DPG, netting roughly $652.2 million, based on BNE's published figures. This averaged to around US$68 or BZ$136 a barrel.

Over half-a-million barrels had been exported for the first four months of 2010, valued, according to Central Bank data, at BZ$69.7 million, bringing the total to at least $720 million.

As of June 30, 2010, 5,506,142 million barrels of petroleum have been produced by BNE and of that, 5,300,079 barrels had been sold. Revenue figures are not current; however, the tally up to December 2009 was US$325,149,035 (roughly BZ$650 million) earned from the sale of 4,514,814 barrels of oil.

In its last published calculations claiming that the Government of Belize's take is 58%, BNE included the monies to The Common Fund as well as Surface Rental fees (payments ranging from 10 cents to 40 cents for each acre of the petroleum concession area), which the Department does not count as part of the government's take.

Flowers explains that 1% of gross revenues are set aside: 0.1% of that goes into the Common Fund (which would be the source of funds to finance an oil spill emergency operation), which the Government of Belize receives, while 0.9% goes to the BNE Trust Fund, which the company controls for investment in community projects.

Production from BNE is 4,300 barrels a day, according to company information.

Reimer told us that he does not want to point any fingers, but even though he realizes that petroleum operations are costly ventures, he is also concerned that opportunities exist for things to "get out of hand."

It is possible, said Reimer, for foreign oil investors to walk away with huge profits, and he pleas for Government officials to be more transparent and shed more light on the petroleum industry.

He also notes that while there are still some environmental concerns, there is currently nothing out of the ordinary, although they do question the long-term impact of petroleum exploration activities there on their individual health.

(Sources: Central Bank Monthly Economic Report for April 2010, BNE's Crude Facts 2010, SIB 1st Quarter GDP report, SIB External Trade Bulletins (2000-2008 & 2009), Geology and Petroleum Department, Bloomberg Business Week, July 8, 2010).
Royalty $48 million
============
10% working interest in field BZ$14 million

1.5% production share earned - BZ$1.5 million

Income Tax to Government - BZ$73 million

According to Flowers, another $6 to $7 million for Government's acquisition of the 10% stake from BNE is not factored into the figures. This would bring the tally to nearly $150 million.

Amandala

I believe Cho's and Alegria's comments on our ability to respond to an offshore spill are nothing more than fantasy and are only put forth to reinforce the GOB position but are without actual merit and lower the level of the discussion. This is equally true of Cho's claims of life changing wealth waiting for Belize if we will only start our offshore programs. Not one expert on any of our boards has concurred with the claims of huge petroleum reserves offshore Belize.
I offer that if we are going into offshore drilling we need much more capable individuals in charge of our petroleum department than we now have. We need more than a government lapdog.
I also must question Alegria's objectiveness in proclaiming us able to tackle an offshore spill. I would challenge him to an explanation. Saying there is a plan is different from having a working effective plan. I would like to hear just how they would react to a spill. Unfortunately the DOE has also become a lapdog of the govt. and development interests and seems to have lost it's credibility as an environmental agency.
I don't really expect an answer as I don't believe they have one nor really care to address the issue. They are much better at sidestepping them than at resolving them. We deserve much better from our government.
At least Hulse seems to realize that we have no response to a drilling accident but seems to think it's ok because there is already an existing risk because of the transshipment of petroleum through the area. This is not a logically sound argument.. I think I understood his comments but am not sure as they are less than precise.
Everyone in the government needs to remember that it is tourism that has brought Belize out of the dark ages and the tourism industry must be protected and developed as a national priority.

At a bare minimum, with regard to royalties, joint venture relationships, etc., the GOB should be looking for precedents and SOP of other countries and their government departments. In this regard, it would be hard to find better examples than Alberta, Canada. That said, it should be noted that the Alberta government's decision to significantly increase its share of revenue by increasing royalties paid to the government, was a poorly considered move. It has to be economically feasible for industry to proceed with petroleum development, ergo, royalty rates have to be reasonable.

Exactly, what seems to work best is National Oil Companies (NOC's)as they maximize benefits to their citizens and give better control. It becomes a beneficial project as the profit above all else mentality cannot exist in that context. Great good could come from a correct program, which we don't have.

So you want a national oil company the same as Nigeria? The one that has just been declared bankrupt?
Or do you want something like PetroEcuador that is going to do drilling in a pristine area, after going around cap in hand to other foreign governments with the tagline of "give us money or the rain forest gets it"?

So you think thats the best Belize could do, be anther Nigeria or Ecuador?

Coalition to Save our Natural Heritage ready to take govt to court

The Coalition to Save Our Natural Heritage was created in June. Since its formation, it has acquired membership from the Belize Tourism Industry Association, San Pedro's Mayor Elsa Paz, the Association of Protected Areas Management Organization, OCEANA and COLA amongst others. The fast growing group which is calling for the government to ban offshore oil exploration, is preparing to seek legal advice on six government awarded exploration contracts that it contends were handed out to companies that did not fulfill the requirements to receive them. But before that happens, one of the founding members of the coalition has just returned from the Gulf of Mexico where it received firsthand knowledge of the economic and environmental effects of the British Petroleum Oil Spill. News Five attended the coalition's conference this afternoon.

Jose Sanchez, Reporting
The Coalition to Save Our Natural Heritage indicated that in the next few months it should have about fifteen thousand signatures demanding a ban on offshore drilling, ready to be handed over to the government. The coalition's chairman highlighted many reasons why the situation is urgent.

Geovanni Brackett, Chairman, Coalition to Save Our Natural Heritage
"Why are we advocating even when there is not a rig out there at the present moment? It's because no sensible government blocks off its entire country without consideration, without having a no entry zone.

The other strong advocate in the movement is Oceana. Oceana's Vice President for Belize, Audrey Matura Shepherd, recently returned from her excursion aboard the Latititude, which sailed with scientists on an exploratory mission along areas affected by the BP Deep Horizon oil spill in the Gulf of Mexico.

Audrey Matura Shepherd, VP OCEANA Belize
"After I left my vessel I flew to New Orleans and then I went to a parish and what I did there I hired a small boat and went actually into the marshes in that area called Baratera Bay. I am telling you, that seventy-five percent of oil you may not see it again visibly from the air and on the surface of the water. But I saw many of it on the marshes. What has happened it washed up onto the marshes and the marshes are like these big islands of this special grass that they call the marshes. And what has happened the oil sucked into that and seeped into it. The bigger ones you don't see it so much, but the smaller ones, you saw the pictures I showed today. What has happened, the oil goes into these grasses, kills it and then when it dies, then of course once the grass has died it no longer has the ability for the roots to remain in the soil to hold the soil together so then it creates a form of erosion. But also, what the fishermen are telling me is that when the marshes die, what is happening, the habitat of three of the most important seafood industry is dying; that is their red snapper, their crabs and their shrimp. So when shrimp season opened Monday on the sixteenth, people weren't out shrimping. The fishing boats were out trying to help still clean some of the mess. So it is a lie. It has been so bad for them that now they are building a manmade island to be a barrier so that when the oil from under the water washes up on the marshes, this sand will suck it in and then hope to scrape the sand each time and replace it again."

Edilberto Romero, Chairman, APAMO
"Transportation of oil is a big problem, it's a huge risk. We now have it; I think there’s about a million barrels going out, exported and there's about three quarters of a million coming in that's imported that we use. The country is actually producing more oil than what we consume. But still the prices are not going down and they won’t go down because it's ruled by world prices. So don't think that the prices will go down. But it's a risk-transportation is a risk right now the government and DOE is praying that no accident happens. If an accident happens, we will not be prepared for it even if they have a draft plan, it's just a draft, it's not completed. We're not prepared for it. If we put more offshore oil exploration and drilling, we put pipes and we have boats coming in and out, the risk of accidents are gonna increase."

Audrey Matura Shepherd
"It has reached the point where we think Oceana needs to take the step forward, get all our legal issues intact, prepare out legal brief and the next thing is to file our claims in court. We have to take this serious and when I came back from my visit in Louisiana, I feel more motivated. What I have seen there cannot happen to people here. At least in Belize we had one brave mayor in San Pedro who said no to this and hopefully with time she will be joined by different ministers especially the Minister of Tourism, the Minster of the Environment and the Minister of Fisheries. But Belizeans we have the last say."

News Five

THE COASTAL ZONE MANAGEMENT AUTHORITY and BELIZE FISHERIES DEPARTMENT TO HOST FORUM ON OIL EXPLORATION IN BELIZE

Belize City, Belize, August 18, 2010 - The CZMA, along with the Belize Fisheries Department is hosting a half day forum with presentations by various stakeholders in the oil industry to open the discussion on some of the main aspects of this issue.

I. Purpose: To improve public awareness in regards to the status of oil exploration in Belize and its possible impacts on the environment

II. Objectives:

(i) To bring together various strata of society in an effort to improve their knowledge and understanding in regards to the extent of oil exploration in Belize, its impact on the environment and the possible mitigation measures that might be brought to bear;

(ii) To equip natural resource managers, conservation organizations and civil society in general with a rounded perspective on oil exploration and its impacts so that they can meaningfully participate in those conversations and decisions related to public policy on the issue;

(iii) To foster an ethic of constructive engagement among the media, academia, and the public in general in regards to any issue that would impact the quality of their lives and in general circumstances of economic livelihood.

This meeting is scheduled to be held on the 26th of August, 2010 at the CZMA Training Room at 9:00 am. All are welcome.

PM: Offshore Drilling Still Being Considered

And while we had him there, we also asked the Prime Minister about offshore oil exploration. "The Belize Coalition to Save Our Natural Heritage" held a press conference yesterday to re-iterate its opposition to offshore exploration in Belize. It also disclosed that it had generated a petition against offshore exploration with seven thousand names on it.

So is the government moved by this critical mass? Hardly. The Prime Minister shared his thoughts today, but for context we precede it with the comments of the coalition's co-chair Edilberto Romero.

Edilberto Romero, Co-Chair, Coalition
"Most important however is the fact that the environment and the people do not have adequate protection from impacts of offshore drilling and exploration. The risk is too high, the more we do our research, the more we are convinced that offshore drilling is too risky and that an oil spill will only be a matter of time. The risk far outweigh the benefits. If the government cares for the tourism industry; if the government cares for the fishing industry; if the government cares for the marine resources; if the government cares for the barrier reef, the coral and our unique atolls, the government should do the right thing, place a ban on offshore oil exploration and drilling and a ban on oil exploration and drilling in protected areas."

Hon. Dean Barrow, Prime Minister
"We will have to weigh very carefully the options and take into the account the views this coalition and the views of the general public but if you wish me to say from now that there will be any moratorium on offshore drilling I am not going to say that, I indicated that the matter doesn't come up for a practical determination for couple of years that's enough time to be able to think this thing through to see what the similarities are to what has happened abroad, see what the differences are and try to get expert advice, try to put in place safeguards in the event we are going to proceed with offshore drilling. I have said that there are commercial contracts to consider so I am not going to prematurely take opposition in favor of any moratorium on offshore drilling at this juncture; I am simply not going to do that."

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