This opinion piece presents the opinions of the author.
The U.S. Bureau of Offshore Energy Management (BOEM) has awarded the first three oil and gas leases in the Gulf of Mexico that are subject to the U.S.-Mexico Transboundary Hydrocarbons Agreement. This development is an important step for deepwater oil and gas development in Mexico. It follows the recent Constitutional changes in Mexico that open the door for international oil and gas companies to develop Mexico’s vast hydrocarbon resources.
Last December the agreement was approved by Congress and signed by President Obama. The goal is to make 1.5 million additional acres on the Outer Continental Shelf (OCS) more accessible by creating clear guidelines for developing oil and gas reservoirs that sit on both side of the US-Mexico maritime boundary. It creates a process by which US companies and the Mexican National Oil Company, Petroleos Mexicanos (PEMEX) can develop resources on their respective sides of the boundary in a way that protects the interests and resources of both countries. It give the Bureau of Safety and Environmental Enforcement (BSEE) and the Mexican government the ability to establish joint inspection teams to regulate compliance with laws and regulations.
The three leases were awarded to ExxonMobil in the Alaminos Canyon, about 170 miles east of Port Isabel, Texas and some of which are within three miles of the Mexico maritime boundary. BOEM believes the area could hold as much as 172 million barrels of oil and 304 billion cubic feet of natural gas. US Interior Secretary Sally Jewell called the issuance of the leases “a significant step forward in U.S.-Mexico cooperation in energy production and pave the way for future energy and environmental collaboration”
The awarding of these leases come at an excellent time in terms of momentum for oil and gas opportunities in Mexico. In December, Mexico's Congress voted to open up its energy assets to foreign companies last December following a 10-year decline in output. Mexico’s Congress is poised to begin debate on legislation that would create the framework the reform of hydrocarbon laws and an opening to foreign oil and gas companies for the first time in 75 years. President Peña Nieto has sent the Congress a proposal of eight new laws and amendments to 13 existing laws and it includes a mandate for a 20 percent participation by PEMEX in cross border field projects in the deep water Gulf of Mexico.
While contentious debate and political posturing in the Congress are ongoing, support for reforms remain strong and an agreement is expected.
That optimism and enthusiasm is evident on both sides of the US-Mexico border, and around the world, as companies analyze the enormous opportunities for oil and gas exploration and development both offshore and onshore. It seems that every day more companies are lining up to seek oil and gas investment opportunities in Mexico. Japan’s Mitsui & Company is the latest in a long list of companies to announce it is eyeing opportunities in the Mexican oil and gas sector. Mexico is believed to have enormous oil and gas resources in several potential shale plays, some of which are extensions of active plays in South Texas. And the opportunities go beyond oil and gas exploration. Mexico will have a great need for infrastructure development as the industry modernizes from field services to gas processing and transportation, liquids transportation, storage and marketing.
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