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    Kevin T. Kunkel

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Mexico

MMS Cooperation with Mexico

History:

On June 9, 2000, Secretary of State Albright and Secretary of Foreign Relations Rosario Green of Mexico signed the U.S.-Mexico Maritime Boundary Treaty establishing a continental shelf boundary separating United States and Mexican jurisdiction in an area of the Gulf of Mexico known as the "western gap.”

• The U.S. and Mexico signed a maritime boundary treaty in 1978 (which entered into force in 1997) establishing boundaries extending from the 12-mile limit to the 200-mile limit in the Pacific Ocean and the Gulf of Mexico. However, the two boundary segments in the Gulf of Mexico created both an eastern and a western gap in areas beyond 200 miles from the respective coasts. This treaty defines the continental shelf boundary for the western gap area.
   
• The total area of the "western gap" is approximately 5,092 square nautical miles (17,467 square kilometers), an area slightly smaller than the state of New Jersey. The boundary divides the "western gap" continental shelf in such a way that the U.S. receives 1,913 square nautical miles (6,562 square kilometers, or 38% of the total) and Mexico receives 3,179 square nautical miles (10,905 square kilometers, or 62% of the total).
   
• This treaty establishes a small 1.4 nautical mile buffer zone on each side of the new boundary because both countries recognize the possibility that a trans-boundary oil and gas reservoir may exist. Within this small buffer area, Mexico and the U.S. have agreed to a 10-year moratorium on oil and gas exploitation. This provides time to learn more about the geology and geophysical characteristics of the zone. After the 10-year period, each country could permit drilling and exploitation of oil and gas in its respective buffer zone. Under the terms of this treaty, each side must notify the other when any of the buffer area is made available for oil and gas exploration and development.
   
• During the treaty negotiations, MMS has deferred offering 336 blocks (1,759,159 acres) in the western gap. All of these blocks lie in deepwater, mostly in depths greater than 2,500 meters. MMS received bids on some blocks in the area during a 1997 lease sale; however those bids were returned unopened.

Recent Developments:

The U.S. has a long standing relationship with Mexico through the International Committee on Regulatory Research and Development (ICRARD) with whom both the MMS and the Mexican Institute of Petroleum (IMP) are members. ICRARD focuses on transferring knowledge in the area of health, safety and environment in the petroleum sector. ICRARD's purpose is to coordinate research activities, to exchange information, and to promote research cooperation between these organizations (www.ICRARD.org). ICRARD seeks to establish ‘Terms of Reference’ to: provide a forum to advise on research and development activities funded by offshore regulatory authorities; exchange details of current research and development programs on a regular basis; make available reports from completed research and development programs to other authorities; co-sponsor research and development projects, when appropriate; and exchange information on research and development program strategy. Most recently, under ICRARD recently participated in a discussion regarding hurricane Katrina research with the Mexican Institute of Petroleum (IMP) and the Society of Earthquake Engineering (SMIS) during the 9th Symposium on Strategic Construction and Natural Hazards in Ixtapan de la Sal, Mexico from February 21st – 24th, 2007.

Initially sought in 2002 but resurrected in the last couple months, the MMS and the Secretaria de Energia of Mexico have been seeking to sign an MOU that will enable the Parties to share scientific and technical information related to offshore oil, gas and mineral activities including but not limited to information on risk perception, safety of personnel and offshore installations, environmental protection, pollution prevention, pipelines, and Floating Production Storage and Offloading facilities, accident/incident reporting and the development and evaluation of regulations in accordance with this Memorandum of Understanding (hereinafter referred to as "MOU") which establishes the procedure for cooperation. The purpose of this MOU is to establish a framework for the exchange of scientific and technical knowledge with respect to offshore oil, gas and mineral activities. Cooperative activities in may include exchanges of technical information, cooperative research, and exchange visits of individuals sponsored by either Party within the scope of programs of the Participants. Internal discussions with MMS are currently taking place to determine whether both Parties want to pursue a binding or non-binding MOU.

Next week (week of July 16th), senior MMS staff will be traveling to Mexico City to participate in a Study Group with Mexico energy representatives to discuss the issues related to oil and gas fields that straddle the boundary between U.S. and Mexico waters in the Gulf of Mexico. This goal is to review issues related to geologic, engineering, legal, and regulatory considerations. Recent discussions with oil and gas lessees active in the deepwater Gulf of Mexico adjacent to the U.S./Mexico offshore boundary, as well as recent reports in the Mexican press, indicate that cross–boundary reservoirs may exist in this area. Currently, the U.S. position regarding development of these reservoirs is the “rule of capture” – the first party to drill a well may produce all the hydrocarbons encountered in a reservoir including those that may migrate from another landowner’s leased area. Press reports indicate Mexican officials are concerned that they will lose resources to the U.S. (exploration is already underway on U.S. side, whereas Mexico is only now considering such ventures).