End the moratorium: the Timor Gap Treaty as a model for the complete resolution of the Western Gap in the Gulf of Mexico.

• Author: Souster, Raymond

ABSTRACT

The United States and Mexico recently entered into a treaty to delimit the continental shelf in the Gulf of Mexico, allowing both countries access to explore and exploit valuable natural resources in the Western Gulf. Included in the treaty is a ten-year moratorium on oil production within a buffer zone that encompasses transboundary reserves.

This Note explores the issues surrounding the buffer zone and suggests a model to resolve the dispute over access to transboundary reserves that will benefit both the United States and Mexico. Part II describes the relevant international law governing the Gulf of Mexico. Part III outlines the background and most recent treaty addressing the Western Gap, and explains the source of each country's claims to the area. Part IV provides a model for resolution by detailing the history of the Timor Gap and introducing the major provisions of the Timor Gap Treaty. Finally, Part V recommends that the United States and Mexico implement a similar joint development scheme, using the Timor Gap Treaty as a model.

1. INTRODUCTION

   The United States faces a potential energy crisis. (1) Surging gasoline, natural gas, and electricity prices have been identified as "perhaps the greatest threat to future economic prosperity." (2) California has suffered power problems for several years as a result of the deregulation of the state's electric utility industry, with rolling blackouts required in some areas to ration limited power supplies. (3) Dependence on foreign oil has increased as well. (4) Politicians are arguing over the proper solutions to the nation's perceived energy problems, often engaging in public forum debates over who is responsible and expressing outrage at the existence of the crisis. (5) Even in the 2000 presidential campaign candidates argued over the ramifications of tapping into emergency reserves and the possibility of oil exploration in the wildlife preserves of Alaska. (6) Following the election, President Bush immediately outlined a legislative proposal that would open the Arctic National Wildlife Refuge to oil and gas drilling to increase domestic supplies in response to California's electricity crisis. (7) The general consensus is that the United States needs more power, specifically oil and natural gas, and preferably should get it from domestic sources.

   The United States has demonstrated an increasing dependence on foreign oil in recent decades to satisfy its energy needs. (8) The Organization of the Petroleum Exporting Countries (OPEC) tightly controls its production levels and, in turn, has substantial power to set the global price of oil. (9) Senator Chuck Hagel declared that "[w]e are more dependent on OPEC for our oil now than at any time in the history of this country." (10) He sees increased domestic production as a necessary step to reduce U.S. dependence on foreign oil. (11) Domestic consumption has increased, giving fluctuating prices the ability to significantly impact the economy as a whole. (12) As the trade deficit increases, energy consumption is expected to skyrocket. (13) Politicians have called for a reduced reliance on Middle East oil, despite the fact that it remains the cheapest available energy source. (14) They have also called for increased exploration and production within U.S. borders, hoping to decrease dependence on OPEC. (15)

   One possible area available to domestic producers is the deep-water areas of the Gulf of Mexico, which is believed to hold the fourth largest oil reserve in the world. (16) The Gulf of Mexico is approximately 3.9 million square miles and accounts for roughly ninety percent of U.S. offshore oil and gas production. (17) Although domestic oil companies have long explored the shallower depths of the Gulf of Mexico, it has not been technologically or economically feasible until recently to pursue oil and gas in the mineral-rich deep waters of the Gulf. (18) Furthermore, exploration of this area seems less likely to ignite as much political and environmental heat as development of the Arctic National Wildlife Refuge in Alaska has.

   This Note addresses the area known as the "Western Gap," or the "donut zone" or "donut hole," which lies approximately halfway between the Yucatan Peninsula and the United States and considers the potential for oil exploration and development of this area. (19) Parts of the Western Gap are ten thousand feet deep and were not accessible until major production companies made recent technological advances. (20) Given this new technology, many U.S. companies can now access the deep water--or least begin the exploration process--if they follow rigid federal guidelines. (21) Until June 2000, the Western Gap was located outside the boundaries of the treaty between the United States and Mexico and was functionally off-limits for diplomatic and scientific reasons. (22)

   In June 2000, the United States and Mexico entered into a treaty that delimited the continental shelf in the Gulf of Mexico, including the Western Gap. (23) The treaty includes all of the Western Gap, but leaves unresolved a buffer zone that runs along the equidistant line separating each country's portion of the Western Gap. (24) A ten-year moratorium is in effect on the buffer zone to allow both sides to determine the best way to divide the reserves that are believed to exist along the actual equidistant line. (25) This Note offers a potential resolution, beneficial to both the United States and Mexico, which would result in an equitable sharing of buffer zone reserves. The suggested solution is to create a zone of cooperation, allowing any and all companies to bid on drilling within the zone. The United States and Mexico would then share the royalties. (26) Such cooperation will inevitably be affected by the Mexican Constitution's current prohibition on private ownership of natural resources. (27) Nevertheless, this Note argues that the principles of the zone of cooperation may still be applied.

   A particularly good example of such a zone of cooperation is the Timor Gap Treaty, a joint development regime that controls the development of the deep boundary water in the Timor Sea. (28) The Timor Gap Treaty has been successful, both originally between Indonesia and Australia and as recently renegotiated between East Timor and Australia, and serves as an important model for the settlement of boundary disputes in international waters.

   This Note suggests that a joint development scheme, similar to the Timor Gap Treaty, presents a possible solution to the Western Gap buffer zone moratorium. Part II briefly describes the relevant applicable international law governing the Gulf of Mexico. Part III analyzes the background and most recent agreement governing the Western Gap and each country's claim to and interests in the area. Part IV discusses the background and history of the Timor Gap and introduces the major provisions of the Timor Gap Treaty. Finally, Part V recommends that the United States and Mexico implement a similar joint development scheme using the Timor Gap Treaty as a model, while maintaining consideration for the issue of Mexico's nationalized oil regime.

2. THE INTERNATIONAL LAW STANDARD

   The Western Gap is considered part of the Continental shelf of the Gulf of Mexico. (29) Because of its location, two international laws may apply. The first is the 1958 Geneva Convention on the Continental Shelf, to which both the United States and Mexico are parties. (30) Article 1 of the 1958 Convention provides that the continental shelf of a coastal state extends beyond the depth of two hundred meters where the depth of the superjacent waters admits the exploitation of the natural resources of the shelf. (31)

   The second body of international law possibly applicable to the continental shelf of the Gulf of Mexico is the 1982 United Nations Convention on the Law of the Sea (UNCLOS), adopted by the Third United Nations Conference on the Law of the Sea, (32) to which Mexico is a party. (33) The United States, however, refused to sign UNCLOS in 1982 because it contained what the United States considered to be "flaws in the regime it would have established for managing the development of mineral resources of the seabed beyond national jurisdiction." (34) President Reagan, while rejecting the Convention due to its stance on seabed mining, expressly recognized that the balance of interests achieved in the remaining parts of the Convention was in the interests of the United States and the international community as a whole. (35) Thus, the United States accepts that UNCLOS reflects customary international law in this respect and has acknowledged that UNCLOS provides a more scientifically based definition of a continental shelf. (36)

   Article 76 of the Convention provides that the continental shelf of a coastal state comprises the greater of (1) the area in which the seabed and subsoil of the submarine areas extend beyond a country's territorial sea throughout the "natural prolongation of its land territory to the outer edge of the continental margin;" or (2) "the area to a distance of two hundred nautical miles from the baselines from which the territorial sea is measured." (37) Under either UNCLOS measurement, the coastal state has exclusive control over the exploration and exploitation of the natural resources, including oil and gas, of the continental shelf. (38)

   With respect to the areas beyond two hundred nautical miles from coastal baselines, the 1958 Geneva Convention and UNCLOS provide that certain criteria must be met in order to qualify as a continental shelf. Specifically, a coastal state can establish the shelf's outer boundary to coincide with the outer edge of the continental margin. (39) This requires that the outer edge of the continental margin be physically located further than the two hundred nautical mile limit. (40) This is an exceptional submarine geological formation that is quite rare in the world. (41)

   While...