US and Mexico Sign Gulf Oil Deal

(The Wall Street Journal) - The US and Mexico have reached an agreement that would allow oil and gas drilling on more than 1.5 million acres in the Gulf of Mexico, resolving a dispute that has lasted more than a decade.

The agreement was signed Monday by US Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico.

It establishes a legal framework for US companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations' maritime border.

The acreage runs due east from the US-Mexico border to a point more than 200 miles south of the mouth of the Mississippi River, and includes areas where the water is almost 11,000 feet deep.

The agreement also allows US and Mexican safety officials to work together to ensure the projects meet the safety standards of both nations and sets the groundwork for more cooperation to develop uniform safety guidelines for offshore energy development.

The safety agreement is particularly important as Pemex prepares to drill a site near the US maritime border in 9,000 feet of water, nearly twice as deep as the well drilled by the doomed Deepwater Horizon rig in 2010.

Officials on both sides of the border have expressed concerns about Pemex's ability to safely handle such a complex project since it has done relatively few deep-water projects compared with operators in US waters -- and none as deep as 9,000 feet.

"We're moving forward with Mexico to make sure we have a common set of safety protocols," US Secretary of the Interior Ken Salazar said.

Mexico is America's No. 2 oil supplier behind Canada.

Read more: The Wall Street Journal