A historical agreement over development of resources in the Gulf of Mexico on either side of a new boundary between the U.S. and Mexico was signed on Jan. 20 in Los Cabos, Mexico.
“At a time when we are working hard to both secure energy supplies and shift to more environmentally appropriate means of extracting fossil fuels, but also adding immeasurably to our search for renewable energy, this agreement is a win-win. These reservoirs could hold considerable reserves that would benefit the United States and Mexico alike,” said Secretary of State Hilary Clinton.
“This Transboundary Agreement removes uncertainties regarding development of transboundary resources in the resource-rich Gulf of Mexico. As a result of this agreement, nearly 1.5 million acres of the U.S. Outer Continental Shelf will now be made more accessible for exploration and production activities,” stated Department of the Interior (DOI) Secretary Ken Salazar. “Estimates by the DOI’s Bureau of Ocean Energy Management (BOEM) indicate this area contains as much as 172 million barrels of oil and 304 billion cubic feet of natural gas.”
There is a higher level of interest in the western Gulf of Mexico since the region is oil-prone. Shell Oil’s Perdido development provides some of the closest infrastructure in the area.
According to a DOI statement, the Transboundary Agreement establishes a framework for U.S. offshore oil and gas companies and Mexico’s Petroleos Mexicanos (Pemex) to jointly develop transboundary reservoirs. The agreement also opens up resources in the Western Gap that were off limits to both countries under a previous treaty that imposed a moratorium along the boundary through 2014.
“The Obama Administration is committed to the responsible expansion of domestic energy production,” Salazar said. “This agreement makes available promising areas in the resource-rich Gulf of Mexico and establishes a clear process by which both governments can provide the necessary oversight to ensure exploration and development activities are conducted safely.”
Mexican President Felipe Calderon watched the signing of the agreement by Clinton and Mexican Minister of Foreign Relations Patricia Espinosa. Salazar and Mexican Minister of Energy Jordy Herrera were also present at the ceremony.
The agreement is designed to enhance energy security in North America and support the shared duty of both countries to exercise responsible stewardship of the Gulf of Mexico. It is built on a commitment to the safe, efficient, and equitable exploitation of transboundary reservoirs with the highest degree of safety and environmental standards, the agencies noted.
Originally, the United States and Mexico jointly announced their intention to negotiate a transboundary hydrocarbons agreement on June 23, 2010, following the joint statement adopted by Presidents Brack Obama and Calderon at the conclusion of the latter’s visit to Washington, D.C., on May 19, 2010.
The agreement establishes a cooperative process for managing the maritime boundary region that promotes joint utilization of transboundary reservoirs.
It also provides a legal framework for possible commercial activities at the maritime boundary and sets clear guidelines for transboundary developments. It establishes incentives for oil and gas companies to voluntarily enter into arrangements to jointly develop any transboundary reservoirs.
In the event such an arrangement is not achieved, the agreement establishes a process by which U.S. companies and Pemex can individually develop the resources on each side of the border while protecting each nation’s interests and resources. U.S. companies will also be able to explore new business opportunities and carry out collaborative projects with Pemex.
Joint inspections teams will be able to ensure compliance with applicable laws and regulations. Both governments will review all plans for the development of any transboundary reservoirs.
“This agreement creates new opportunities. And for the first time, American companies will be able to collaborate with Pemex, their Mexican counterpart. In tough times like these, we need to make the most of every opportunity to create jobs, to foster economic growth and energy security, while managing our resources and our environment responsibly for future generations,” Clinton emphasized.
After signing, both countries will work through their domestic systems to bring the agreement into force, according to DOI.
It will likely be several years before permitting begins and drilling can start. The area has not been considered for an offshore lease sale and environmental impact assessments have probably not been done.
This will be an opportunity for Pemex to add to its knowledge of ultra-deepwater drilling and production operations that can be used to develop fields offshore Mexico.