Budget deal opens new swaths of Gulf for oil, gas drilling

The budget deal working its way through Congress includes provisions that will open up vast new territories in the western Gulf of Mexico for oil and gas drilling. The budget deal allows for the development of oil and gas reserves that cross national boundaries, and sets up a framework for their joint development. 

Dario Lopez-Mills/AP/File
The Centenario deep-water drilling platform stands off the coast of Veracruz, Mexico in the Gulf of Mexico. If the Ryan-Murray budget deal is approved and the Transboundary Hydrocarbon Agreement goes into effect, US companies will be allowed to partner with Petróleos Mexicanos, Mexico’s state-owned oil company.

The emerging budget deal put together by Congressman Paul Ryan and Senator Patty Murray includes provisions that will open up vast new territories in the western Gulf of Mexico for oil and gas drilling. The bill, which will fund the government through the fall of 2015, approves the U.S.-Mexico Transboundary Hydrocarbons Agreement, originally signed between those two countries in 2012.

The agreement allows for the development of oil and gas reserves that cross national boundaries, and sets up a framework for their joint development. The deal would open up 1.5 million acres, an area that may hold 172 million barrels of oil and 304 billion cubic feet of natural gas, according to the Bureau of Ocean Energy Management (BOEM).

If the Ryan-Murray deal is approved and the treaty goes into effect, U.S. companies will be allowed to partner with Petróleos Mexicanos (Pemex), Mexico’s state-owned oil company. This would be a significant change, as Mexico’s constitution forbids private sector contracts. Mexico is also separately considering a larger overhaul of its energy sector, and on December 10 the Mexican Senate approved of legislation that would allow for production sharing agreements with private companies. The Transboundary Agreement included in the Ryan-Murray deal would only affect areas along the maritime border, known as the Western Gap. (Related article: Russia Readies to Take Shale Oil Lead

Mexico already approved the Transboundary Agreement last year, but it has thus far been languishing in the U.S. Congress. At issue was the House’s inclusion of language that would exempt oil and gas companies from a provision in the Dodd-Frank law that requires disclosure of payments to foreign governments. President Obama and Senate leaders opposed the exemption, and in the final version of the Ryan-Murray deal, the exemption was dropped, paving the way for approval.

The Transboundary Agreement has apparently garnered bipartisan support in part because of a January 17, 2014deadline, after which a moratorium on drilling in the Western Gap expires. Sen. Ron Wyden in particular argued that if the U.S. failed to approve the agreement, Pemex could rush in to develop the area without the standards of the treaty to guide responsible development.

The administration also seems to believe that the Transboundary Agreement is a small step to a larger strategy of North American energy security. At a hearing before the Senate Energy and Natural Resources Committee on October 1, the Special Envoy for International Energy Affairs Carlos Pascual argued that the Transboundary Agreement will provide a positive signal to the Mexican government, encouraging them to liberalize their oil sector and thereby allowing private oil companies to make inroads into Mexico. (Related article: Looking North: Mexico and the US)

In an exchange with the Committee Members, he laid out the logic of how the agreement improves U.S. energy security, “The intent, the objective, is to be able to create a hub in North America for energy security…the Transboundary Agreement is the first down payment of the potential that we could see from cooperation between the United States and Mexico. That cooperation in the past was previously prohibited by law. By having this Transboundary Agreement it allows in the interim the ability to create a framework where American companies and Mexican companies can begin to work together to demonstrate the impact that those American companies can have on greater productivity in Transboundary areas. In doing that, we set the foundation for something which is even bigger that can come. How north America together and Mexico and the United States can be a foundation for energy supplies.”

The Transboundary Agreement is buried in the Ryan-Murray deal, tying its fate to the ability of Democrats and Republicans to put together a budget the coming days.

Original article: http://oilprice.com/Energy/Energy-General/Budget-Deal-Opens-up-Parts-of-Gulf-of-Mexico-for-Drilling.html

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Budget deal opens new swaths of Gulf for oil, gas drilling
Read this article in
https://www.csmonitor.com/Environment/Energy-Voices/2013/1213/Budget-deal-opens-new-swaths-of-Gulf-for-oil-gas-drilling
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe