First Leases Awarded Under Transboundary Hydrocarbons Agreement

by | Friday, June 06, 2014 |

This week, Secretary of the Interior, Sally Jewell, and Bureau of Ocean Energy Management Acting Director, Walter Cruickshank, announced that the first three oil and gas leases in the Gulf of Mexico boundary area have been awarded, subject to the United States-Mexico Transboundary Hydrocarbons Agreement.

Part of President Obama’s strategy to expand safe, responsible domestic energy production, the Transboundary Agreement takes away the uncertainty of the development of Gulf of Mexico transboundary resources. Because of this Agreement, approximately 1.5 million acres of the U.S. Outer Continental Shelf are more accessible for production and exploration; in fact, estimates indicate that the area may contain as much as 170 million barrels of oil (or more), and over 300 billion cubic feet of natural gas.

Said Jewel, “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.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 leases were awarded to ExxonMobil, who submitted its bids for an area located within three miles of the maritime and continental shelf boundary with Mexico.Exxon acquired the blocks at an auction back in August, 2013.The Agreement was approved by congress in December of 2013, and signed into law by President Obama on December 26th.

The Transboundary Agreement provides a level of increased certainty for United States and Mexican firms that operate in the Gulf border areas, and it also allows additional areas to be accessible for production and exploration. It sets guidelines for developing oil and natural gas reservoirs that cross the boundary, and United States companies and Mexico’s PEMEX can voluntarily enter into agreements that jointly develop the reservoirs.

Additionally, the Transboundary Agreement assures that joint inspection teams from both the Bureau of Safety and Environmental Enforcement and the Mexican government can enforce compliance with any applicable laws and regulations.Both sides will review any plans for developing transboundary reservoirs, and may establish additional requirements prior to allowing development activities to begin.

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