The Obama administration today announced an agreement with Mexico that could make significant deposits of offshore oil and gas available for exploration by U.S. firms.

The transboundary agreement signed this morning in Los Cabos, Mexico, creates a framework for U.S. offshore drilling companies and Mexico's Petróleos Mexicanos, or Pemex, to jointly develop reservoirs along the countries' maritime boundary in the Gulf of Mexico, officials said.

If ratified, the agreement would expand access to oil and gas in the U.S. outer continental shelf by an area roughly the size of Delaware. It will open up resources in the so-called "Western gap," an area slightly smaller than New Jersey that is not included in either country's 200-mile exclusive economic zones.

Resources in the area have been off limits to both countries under a treaty that runs through 2014.

"The Obama administration is committed to the responsible expansion of domestic energy production," said Interior Secretary Ken Salazar. "This agreement makes available promising areas in the resource-rich Gulf of Mexico and establishes a clear process by which both governments can provide the necessary oversight to ensure exploration and development activities are conducted safely."

The Interior Department's Bureau of Ocean Energy Management estimates that the area contains as much as 172 million barrels of oil and 304 billion cubic feet of natural gas. In total, the Gulf contains about 48 billion barrels of undiscovered, technically recoverable oil and 219 trillion cubic feet of natural gas, according to BOEM's most recent assessment.

Today's agreement allows U.S. companies and Pemex to voluntarily partner in the development of oil and gas reservoirs straddling the maritime boundary. Interior will include the area in its June lease sale in the Gulf, but bids will be held until the agreement is finalized, it said.

"There's a strong incentive towards voluntary unitization," said BOEM Director Tommy Beaudreau, referring to the process by which oil and gas firms cooperatively allocate ownership of resources. "The agreement provides commercial certainty that will spur investment."

If cooperation cannot be reached, the agreement would allow U.S. companies or Pemex to individually develop resources on their respective sides of the border. Development would protect each nation's resources, Interior said.

The agreement would also allow joint inspections by Interior's Bureau of Safety and Environmental Enforcement and the Mexican government to ensure compliance with applicable laws.

New oil and gas drilling off the shores of Cuba has raised alarm in the United States, which has no authority to police the operation despite its proximity to the Florida shoreline. The Spanish firm Repsol, which runs the Cuba project, voluntarily allowed U.S. officials to inspect its drilling rig earlier this year (E&ENews PM, Jan. 9).

Richard McLaughlin, a professor of marine policy and law for Texas A&M University's Harte Research Institute, said there are likely significant oil and gas resources straddling the U.S.-Mexico border in the Gulf, but that Mexico's constitution may complicate cooperation with the United States.

"It would be unconstitutional to allow any U.S. oil and gas interest to take any Mexican resources," McLaughlin said. "It creates a very sensitive political environment to work in."

But the issue has risen in importance as companies like Royal Dutch Shell PLC drill closer to Mexican waters, raising concerns that resources could be siphoned away, he said.

Today's agreement "will be more important, and perhaps more controversial, in Mexico than it will be in the United States."

Salazar said Mexican officials expect "quick action" in that nation's Senate, and Interior is pursuing multiple strategies for ratification in the United States.

Shell is already producing significant quantities of oil at its Perdido project near the maritime boundary, and available infrastructure should speed development in the newly available waters, Salazar said.

Meanwhile, an "Eastern gap" in the Gulf shared by the United States, Mexico and Cuba remains largely a "wild, wild West" of the open sea, McLaughlin said. Resolution of transboundary issues there will be complicated by the prickly relationship between Cuba and the United States and the challenges of resolving three countries' claims rather than two, he said.

Additional boundary disputes linger along the U.S.-Canadian border in the Arctic, a region believed to be flush with oil resources.