AUSTIN, Texas – Following a similar move in the House by Speaker Joe Straus, Lt. Gov. David Dewhurst has asked a Senate panel to study the potential impact of Mexico’s energy reforms on Texas.
Dewhurst has charged the Senate Committee on Natural Resources chaired by state Sen. Troy Fraser with “examining the economic impact of the recent expansion of oil and gas production in Northern Mexico.”
Last month, Straus gave a joint charge to the House Committee on Energy Resources and the House Committee on International Trade & Intergovernmental Affairs to “examine the impact on Texas’s economy and businesses of the recent expansion of oil and gas production in Northern Mexico” and “assess opportunities for economic growth in Texas and collaboration between Texas businesses and Mexico resulting from Mexico’s energy reform, including Mexico’s efforts to recover shale gas from the Eagle Ford Shale.”
The charge issued by Dewhurst has been welcomed by two South Texas members on the Senate Committee on Natural Resources – state Sen. Judith Zaffirini, whose district includes much of the Eagle Ford Shale play, and state Sen. Juan Hinojosa, who has been named chairman of a subcommittee that will look at the impact of Mexico’s decision to expand oil and gas production.
“I am pleased Lt. Governor Dewhurst charged the Senate Natural Resources Committee with studying the impact Mexico’s recent energy reforms will have on Texas. I am also honored that Chairman Fraser has appointed me chairman of the subcommittee examining this issue,” said Hinojosa, D-McAllen.
“The recent expansion of oil and gas production in Northern Mexico is expected to top $1 trillion in investment and create a new energy paradigm for North America. By combining the United States, Canada, and Mexico, oil and gas production in North America will be bigger than OPEC.”
Hinojosa said no region stands to gain more from Mexico’s energy reforms than the Rio Grande Valley.
“With the Eagle Ford Shale to the north and the Burgos Basin, also known as the Eagle Ford Shale south of the border, the Rio Grande Valley is at the epicenter of this energy revolution happening in Texas and Mexico,” Hinojosa said.
“I look forward to studying how Texas and our local communities can capitalize on the economic boom Mexico’s energy reforms will have on South Texas and the entire State.”
Zaffirini, D-Laredo, has just been named to the Senate Committee on Natural Resources by Dewhurst. In a news release, Zaffirini pointed out that her district is in the heart of the Eagle Ford Shale and includes the majority of rigs, the majority of production and the shale’s highest-producing counties. Zaffirini set up the 29-member Eagle Ford Shale Legislative Caucus to find short- and long-term solutions to the impacts of the shale on transportation, education, public safety, housing, and the environment.
“As development continues in Texas’ energy-producing regions, we must work collaboratively to manage our natural resources responsibly, including not only our tremendous oil and gas reserves, but also our air and water,” Zaffirini said.
Zaffirini told the Guardian she was grateful to Lt. Gov. Dewhurst for naming her to the Senate Natural Resources Committee and delighted that he has charged the committee with examining the economic impact of the recent expansion of oil and gas production in Northern Mexico.
“Mexico’s natural resources are vast, and oil and gas development there has the potential to have a positive economic impact on both sides of the border,” Zaffirini said.
Zaffirini said that as it pursues energy reform and develops its oil and gas industry, “Mexico likely will continue to look to Texas as a model and to Eagle Ford Shale oil and gas operators for expertise and so Texas companies will benefit.”
What’s more, Zaffirini said, creating new jobs in Northern Mexico “could reduce or disrupt drug-related violence in that region, which in turn could help rejuvenate the tourism industry along the Texas-Mexico border.” Accordingly, she said, “Texas should prioritize working collaboratively with our southern neighbor to promote best practices in the oil and gas industry and wise stewardship of all our natural resources, including air and water.”
Zaffirini said she hopes Mexico’s energy reforms will provide new opportunities not only for economic development in the Texas-Mexico border region, but also for cross-border collaboration. She pointed out that Texas businesses, nonprofits and higher education institutions already are playing an important role in furthering international dialogue on issues related to the oil and gas industry.
“The Binational Center at Texas A&M International University, for example, is a leader in sharing scientific research related to oil and gas development and production, and the Eagle Ford Shale Consortium has launched a Binational Committee to facilitate communication among businesses, government officials and institutions in the United States and Mexico,” Zaffirini said.
“As the senior senator for the border region and a member of the Higher Education and Natural Resources committees, I look forward to continuing to work with my colleagues and stakeholders to promote these important partnerships.”
This week, Mexico’s Congress agreed to end a 75-year state monopoly by opening up the energy industry to competition and private investment. A cornerstone of President Peña Nieto’s campaign, the reforms are expected to lead to lower energy costs, create 2.5 million jobs by 2025, and increase Mexico’s GDP by two points, also by 2025.
According to the U.S. Energy Information Administration, Mexico’s technically recoverable shale resources are estimated at 545 TCF (trillion cubic feet), which is enough for a century or more of natural gas. Its 13 billion barrels of shale oil are potentially larger than Mexico’s proven conventional reserves.
At an energy forum in Laredo in May, U.S. Rep. Henry Cuellar said the Eagle Ford Shale play in South Texas does not stop at the Rio Grande. “Mexico is currently the ninth largest producer of oil in the world, holding an approximately 11.4 billion barrels of oil reserves. However this figure does not tell the whole story, since it does not factor in Mexico’s untapped energy potential. It is currently estimated that, in total, Mexico may have the 5th largest collection of shale oil resources on the planet, totaling 13 billion barrels,” said Cuellar, D-Laredo.
“And The Burgos, Sabinas, Tampico, Veracruz Basins, as well as the Tuxpan Platform, are estimated to house 545 trillion cubic feet of natural gas, potentially larger than Mexico’s proven conventional reserves. In total the U.S. Energy Information Administration has assessed Mexico’s tight oil and shale gas resources to be the 4th highest globally.”
South Texas is likely to be a staging post for multinational oil companies working in the Burgos Basin, according to Dr. George Baker, a policy analyst at Rice University and editor and publisher of Energia.com. Baker spoke at an energy forum hosted by Congressman Filemon Vela in Brownsville in May titled “Positioning Deep South Texas to Take Full Advantage of the Energy Revolution.”
In his speech, Baker said he had been invited to speak at an energy forum in Tokyo, Japan. “They wanted to know about Mexican energy reform and they wanted to know if the Texas dynamic in shale could be exported to Mexico. The eyes of Tokyo and the whole Pacific Basin are on the dynamic here and how big can it get. There is a global interest in South Texas,” Baker said.