Data Ready When Gap Close

Boundary Treaty 22 Years in the Making

The historic "western gap" treaty, signed this summer by the U.S. and Mexican governments after more than 22 years of waiting, already is redefining priorities in Gulf of Mexico exploration.

Seismic companies, especially, are showing considerable interest in pursuing data acquisition in the area, which had been in limbo as the two countries sought to define territorial boundaries.

One seismic company acquired Western Gap data in 1998 and was ready to advertise the fact almost immediately following the signing.

Oil companies, some of which submitted bids for several blocks in the Western Gap in 1997, will be anxious to view the results.

Most of the blocks in the area are in water depths of 2,500 meters and greater.

The western gap story dates back to 1978, when the United States and Mexico signed a maritime boundary treaty establishing boundaries extending from the 12-mile limit to the 200-mile limit in the Pacific Ocean and Gulf of Mexico.

The Mexican Parliament ratified the treaty in 1979, but the U.S. Senate delayed action on the agreement for 19 years, finally accepting the boundary lines in 1997.

However, the two boundary segments in the Gulf of Mexico created both an eastern and western gap in areas beyond 200 miles from each country's respective coastlines. The treaty signed June 9, 2000, establishes a continental shelf boundary separating the countries that finally allows the United States to offer tracts in the western gap area.

Perhaps one reason the U.S. Senate didn't take quicker action is that the industry did not then have the capability to drill in 2,500 meters (about 8,200 feet) of water. But that has changed. The water depth record for an exploratory well presently is about 9,200 feet offshore Brazil.

It was reported that Shell Oil was one of the companies that supported the treaty ratification as negotiations rekindled in 1997. Shell, of course, is a premiere deep water operator in the Gulf of Mexico, with numerous development projects in water as deep as 5,200 feet.

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The historic "western gap" treaty, signed this summer by the U.S. and Mexican governments after more than 22 years of waiting, already is redefining priorities in Gulf of Mexico exploration.

Seismic companies, especially, are showing considerable interest in pursuing data acquisition in the area, which had been in limbo as the two countries sought to define territorial boundaries.

One seismic company acquired Western Gap data in 1998 and was ready to advertise the fact almost immediately following the signing.

Oil companies, some of which submitted bids for several blocks in the Western Gap in 1997, will be anxious to view the results.

Most of the blocks in the area are in water depths of 2,500 meters and greater.

The western gap story dates back to 1978, when the United States and Mexico signed a maritime boundary treaty establishing boundaries extending from the 12-mile limit to the 200-mile limit in the Pacific Ocean and Gulf of Mexico.

The Mexican Parliament ratified the treaty in 1979, but the U.S. Senate delayed action on the agreement for 19 years, finally accepting the boundary lines in 1997.

However, the two boundary segments in the Gulf of Mexico created both an eastern and western gap in areas beyond 200 miles from each country's respective coastlines. The treaty signed June 9, 2000, establishes a continental shelf boundary separating the countries that finally allows the United States to offer tracts in the western gap area.

Perhaps one reason the U.S. Senate didn't take quicker action is that the industry did not then have the capability to drill in 2,500 meters (about 8,200 feet) of water. But that has changed. The water depth record for an exploratory well presently is about 9,200 feet offshore Brazil.

It was reported that Shell Oil was one of the companies that supported the treaty ratification as negotiations rekindled in 1997. Shell, of course, is a premiere deep water operator in the Gulf of Mexico, with numerous development projects in water as deep as 5,200 feet.

Conventional wisdom suggested that if Shell was interested in the ratification of the treaty and the eventual offering of blocks in the western gap, there must be something worth looking for there.

Setting the Boundaries

The total area of the western gap is about 5,092 square nautical miles, an area slightly smaller than the state of New Jersey.

The boundary gives the United States 1,913 square nautical miles, about 38 percent of the total, and Mexico receives 3,179 square nautical miles (62 percent).

The treaty also establishes a small 1.4-nautical-mile buffer zone on each side of the new boundary, "because both countries recognize the possibility that a trans-boundary oil and gas reservoir may exist," according to the Minerals Management Service (MMS).

The countries agreed to a 10-year moratorium on oil and gas exploration and production in the buffer area. Following the moratorium, each country may permit drilling in its respective buffer zone, but must notify the other when any buffer area is made available for drilling.

During the treaty negotiations, the MMS deferred offering 336 blocks in the western gap.

"Some bids were received by the MMS during a 1997 lease sale," said Barney Congdon with the MMS in New Orleans, "but they were returned unopened."

Congdon declined to name names.

"No decision has been made regarding when tracts north of the buffer area will be offered for lease," said MMS director Walt Rosenbusch.

However, Congdon said "approximately 10 percent of the western gap is actually in the central Gulf planning area, and this area could be offered for lease as soon as the next Central Gulf Lease Sale in March (2001)."

At this time, however, no seismic data exists for the blocks in the central planning area.

Close to the Vest

Several seismic acquisition companies said "no comment" when asked about their interest in acquiring data in the western gap area.

Given the interest of oil companies, however, it appears that most seismic companies are interested - and one company has a head start on the others.

Geophysical Pursuit and PGS acquired seismic surveys in 65 blocks in the Western Gap in 1998. This includes approximately 55 fully imaged blocks and numerous partially imaged blocks that account for the remaining 10 blocks.

Geophysical Pursuit has already advertised its western gap data coverage, starting in the July EXPLORER, published just days after the treaty was signed.

"At the time it was actually permitted legally by Geophysical Pursuit and PGS," said Ron Brinkman with the MMS data acquisition unit of resource evaluation. "At the time there was no ongoing discussions with Mexico concerning the gap, so they acquired the data legally and under MMS permit."

When the U.S. State Department reopened negotiations with Mexico regarding the western gap, it requested that the MMS not permit the acquisition of additional data within the gap.

"Their (Geophysical Pursuit and PGS) acquisition had been complete by the time they reopened negotiations," Brinkman said, "but they agreed not to market the data they acquired within the gap.

"Their actual survey was about 75 percent outside the gap and a smaller portion within the gap area, so their acquisition was completely legal," he continued, "but when the State Department requested it, we sent out notice that we're no longer accepting permits within that gap area until the treaty was signed.

"Now we have opened up the area for permitting again."

But Geophysical Pursuit was not the only seismic exploration company wanting to work in the area, according to the MMS.

"We could not permit them because we were in negotiations with Mexico at the time," said Harshad Patel with the MMS. "We did not want to jeopardize negotiations with Mexico."

There may be some additional seismic data available in the Western Gap area soon. "Companies apply for permits all over the Gulf," Patel said, "and this area is not an exception."

"We were two years ahead of the game," said Jeff Springmeyer, president of Geophysical Pursuit, "but we were the only ones that suffered because we had to sit on our data and investment for two years. Now others can go shoot and sell data right away."

Nobody saw the Geophysical Pursuit data until the treaty was signed - not even the company's clients.

"We were concerned they were going to be angry, but they understood the situation," Springmeyer said.

"We have had a lot of inquiries concerning the data," he added, "but people are more focused on the Central Gulf sale now."

And although about 10 percent of the western gap is in the Central Gulf Planning Area, Geophysical Pursuit's data is exclusively in the western portion of the Gulf of Mexico. It remains to be seen just how much seismic data becomes available in the Western Gap.

"The (seismic) exploration business is terrible," Springmeyer said. "Few companies are buying seismic." Instead, he said, they are collecting their profits and drilling in areas where seismic exploration has already been performed.