As part of President Obama’s all-of-the-above energy strategy to continue to expand safe and responsible domestic energy production, Secretary of the Interior Sally Jewell and Bureau of Ocean Energy Management (BOEM) Acting Director Walter Cruickshank has announced the award of the first three oil and gas leases in the Gulf of Mexico boundary area subject to the U.S.-Mexico Transboundary Hydrocarbons Agreement.
The Transboundary Agreement removes uncertainties regarding development of transboundary resources in the Gulf of Mexico. As a result of the agreement, nearly 1.5 million additional acres of the U.S. Outer Continental Shelf will now be made more accessible for exploration and production activities. Estimates by the Department of the Interior’s BOEM indicate this area contains as much as 172 million barrels of oil and 304 billion cubic feet of natural gas.
“With the Agreement now in full force, we can make additional oil and gas along the resource-rich boundary between the United States and Mexico available and we have a clear process by which both governments can provide the necessary oversight to ensure exploration and development activities are conducted safely and responsibly,” said Secretary Jewell. “These leases represent a significant step forward in U.S.-Mexico cooperation in energy production and pave the way for future energy and environmental collaboration.”
The three leases were awarded to Exxon Mobil Corporation, which submitted bids for the blocks located or partially located within three statute miles of the maritime and continental shelf boundary with Mexico (the U.S. - Mexico Transboundary Area) at Western Planning Area Sale 233, which was held in August, 2013. Congress approved the agreement in December 2013, and was signed into law by the President on December 26. BOEM opened the three sealed bids, totaling $21,333,850, during the Eastern and Central Planning Area Sales held on March 19, 2014.
The leases are located in the Alaminos Canyon Area, approximately 170 miles east of Port Isabel, Texas, and will be subject to the terms of the Agreement when it becomes effective on July 18, 2014.
The Agreement creates a new level of certainty for U.S. and Mexican firms operating in the Gulf border regions and makes additional areas accessible for exploration and production activities. The Transboundary Agreement sets clear guidelines for the development of oil and natural gas reservoirs that cross the maritime boundary. Under the Agreement, U.S. companies and Mexico’s Petroleos Mexicanos (PEMEX) will be able to voluntarily enter into agreements to jointly develop those reservoirs. In the event that consensus cannot be reached, the Transboundary Agreement establishes the process through 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.
The Transboundary Agreement also provides for joint inspection teams from the Bureau of Safety and Environmental Enforcement and the Mexican Government to ensure compliance with applicable laws and regulations. Relevant agencies on both sides of the boundary will review all plans for the development of transboundary reservoirs, and additional requirements may be set before development activities are allowed to begin.
On July 17, blocks within the 1.4 nautical mile buffer area north of the Continental Shelf boundary in the Western Gap, previously deferred and containing approximately 158,584 acres, will become available for development. Beginning with Western Planning Area Sale 238 scheduled for August 2014, they may be available for leasing.