June 01, 2014

United States and Mexico Open Offshore Transboundary Hydrocarbon Reservoirs to Development

Timothy H. Baker and Aloise Bozell Vansant

A new chapter in United States (US) and Mexico energy cooperation opened when President Obama signed the Bipartisan Budget Act, Pub. L. No. 113-67, 127 Stat. 1165 (2013) (Budget Act), on December 26, 2013. Among its many provisions, the Budget Act provided for final approval of the Agreement between the United States of America and the United Mexican States Concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico (Agreement). See Budget Act § 303. Approval of the Agreement means that for the first time, US lessees and the Mexican national oil company, Petróleos Mexicanos (Pemex), are able to enter into cooperative arrangements to explore for, develop, and produce hydrocarbons from reservoirs that are near or cross the US-Mexico maritime boundary in the Gulf of Mexico (GOM). These cooperative arrangements will be shaped by the Agreement, which creates a new legal framework governing oil and gas exploration and development activities along the GOM maritime boundary. Essential to the new framework are amendments to the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C.S. §§ 1331–1356(b), also contained in the Budget Act. Section 304 of the Budget Act added Section 32 to OCSLA, which significantly expands the authority of the Secretary of the Interior (DOI) and, for the first time, allows for the development of US hydrocarbon resources through activities taking place outside US jurisdiction.


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