2. OFFSHORE DRILLING:

Senators seek approval of U.S.-Mexico boundary agreement in lame duck

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Democrats and Republicans on the Senate Energy and Natural Resources Committee have proposed that the chamber approve an agreement between the United States and Mexico allowing the joint development of oil reservoirs that straddle the countries' maritime boundary in the Gulf of Mexico, a Senate GOP aide said.

ENR members have issued a "hotline" request to see if the motion could be approved by unanimous consent in the lame duck. If no senators object, the measure could be attached to a moving piece of legislation almost immediately.

The agreement announced in February by the Interior and State departments would create a framework for U.S. offshore drilling companies and Mexico's Petróleos Mexicanos, or Pemex, to jointly develop an area nearly the size of New Jersey that is believed to contain 172 million barrels of oil (Greenwire, Feb. 20).

Oil and gas in the "western gap" area, which is beyond each country's 200-mile exclusive economic zone, have been off-limits to both countries under a treaty that runs through 2014.

The agreement, which Mexico has already ratified, would allow U.S. companies and Pemex to voluntarily partner in the development of oil and gas reservoirs straddling the maritime boundary.

Interior Secretary Ken Salazar in April said the agreement was among three measures Congress should pass before adjourning, in addition to the extension of clean energy tax incentives and codification of organizational and safety reforms Interior implemented in the aftermath of the Deepwater Horizon spill (E&ENews PM, April 25).

Interior included the area in its June oil and gas lease sale in the Gulf.

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 in March.

The National Ocean Industries Association, which represents offshore drilling firms, said the agreement would provide certainty needed to explore the area.

"A ratified transboundary agreement provides the U.S. oil and gas industry more certainty that leases along the U.S.-Mexico international boundary can be explored and possibly developed," said Nicolette Nye, a spokeswoman for NOIA. "The agreement also offers some sense of assurance that the tremendous investments necessary to look in these areas would not be lost in an international dispute."

The agreement also would establish an inspection regime that would allow officials from each country to inspect activities taking place on the other side of the border.

"In sum, the agreement provides a much needed mechanism to facilitate the safe and efficient exploration and exploitation of hydrocarbon resources along the maritime boundary and provides new opportunities for U.S. companies," Interior said on its website.

Senate Republicans proposed that the measure be included as an amendment to a Northern Mariana Islands bill currently pending before the Senate.