REYNOSA, Tamaulipas – U.S. Representative Henry Cuellar spoke last Wednesday at a ceremony to celebrate the 70th anniversary of Activo Integral Burgos at the Centro Cultural in Reynosa.
More than 500 people attended the celebration, many of them oil and gas professionals. Thirty eight mayors or their representatives attended the event, 12 from Nuevo Leon, 12 from Coahuila, and 14 from Tamaulipas. In addition to Cuellar, the other top speaker at the event was Placido Reyes, production subdirector for the northeastern region of PEMEX.
Here are Cuellar’s prepared remarks in English:
Thank you for having me. And thank you to PEMEX for hosting, and particularly to Mr. Julian de la Garza, Deputy Liaison for Sustainability, for organizing this event and inviting me to speak here today.
And also it’s good to be here with Mr. Placido Reyes, the Production Subdirector for the Northeastern Region…who has been a leader at PEMEX for growth of the energy in this region.
I would also like to thank Congressman Rafael Reyes Montemayor for joining us, and for the academic and business community here with us today.
Congratulations on the 70th anniversary of the Activo Integral Burgos, which ignited the growth of the oil and gas industry in this part of Mexico with its first well, “Mission 1,” which started operating in April 1945.
Since 1945, Activo Integral Burgos has grown to become a key part of the Mexican energy infrastructure with production of over 200 million cubic feet of gas, making it the biggest producer of gas in the country.
I’d also like to acknowledge the willingness of A.I.B. to address the environmental issues related to fossil fuel energy production including reforestation, damage compensation, and complying with industry best practices…this responsibility shows leadership in this field.
And I want to recognize how A.I.B. has taken the lead in the industry with engaging foreign investors, and making efforts to build cross-border relationships.
With the excitement over shale technology, currently in the testing phase in Mexico, there is great excitement about the Burgos Basin and its potential to produce shale fuels.
The Burgos Basin’s production has been going steady for 70 years, and the Basin will continue to thrive, especially with the growth opportunity after Energy Reform.
The current Mexican administration has passed an impressive series of economic and political reforms, culminating with legislation to completely reform the energy sector.
These laws open the sector to foreign participation and create independent regulatory bodies for the hydrocarbon and electricity sectors, with the intent of increased transparency in energy governance.
Like its other reforms, the energy reform aims to boost Mexico’s economic competitiveness. Given the close links between the United States and Mexican economies, these reforms will likely strengthen North American competitiveness as a whole.
The United States already enjoys a strong energy partnership with Mexico…but now we are going further, identifying and implementing new ways that our governments can work together to ensure that North America’s energy sector becomes the most competitive in the world.
I am certain that after Energy Reform, investors from the U.S. side of the border will be excited to work with the Mexican private sector, and to build cooperative agreements to build capital on both sides of the border.
Energy Reform is a turning point for the expansion of the energy sector in Mexico, and these reforms could allow for the growth of infrastructure through revenues from the increased volume of production and this infrastructure development will, in turn, spur greater investment from foreign investors seeking a stable place to finance new production.
According to the University of Texas at San Antonio, the oil and gas industry in the Eagle Ford is estimated to have generated total impacts of nearly $72 billion in the core 15-county area in 2013, supporting almost 115,000 full-time equivalent jobs, while contributing just over $2 billion both to local governments and to the state government.
UTSA calculated that 3,311 wells were completed and actively producing in 2013. The 21-county area, which includes the 15 core counties and 6 surrounding counties, is estimated to have generated over $87 billion in economic output, employed nearly 155,000 people, and provided over $2.2 billion to both the local governments and to the state government.
In talking to American investors, they are looking for four main things:
1) Reliable roads and other infrastructure… 2) Security…3) A clear regulatory framework and 4) Enough water to drill and hydraulically fracture each well and, as neighbors, I believe we can count on our Mexican counterparts here to work with them to address all of these.
In Texas, the state and federal governments have successfully cooperated with the private sector to pursue opportunities in the Eagle Ford basin on the U.S. side of the border.
We have made strides toward energy stability through the shale oil boom, and through cooperation we can see this being replicated on the other side of the border.
From our lessons on the U.S. side, we hope to share the knowledge of our experience, so that PEMEX and other companies can thrive as they pursue shale exploration.
We continue to have a strong bilateral relationship between the US and Mexico there can be no doubt that the border is a distinct region to itself, strongly culturally linked, and a thriving place for commerce and for industry.
And we hope to continue to build on our bilateral relationship this with the recent progress of trade legislation in the U.S. and you may know that I’m a key supporter of these trade efforts as they move through the US Congress.
With Trade Promotion Authority opening the door to future pro-trade agreements like the TPP, there will be new opportunities to export oil and gas from the U.S. and Mexico to international markets. This is an exciting time to be in the energy industry.
And I also want to mention another piece of legislation I have introduced, H.R. 2060, which will help foster the U.S.-Mexico economic partnership, in the areas of energy, entrepreneurship, and academic exchange.
H.R. 2060, which I am currently pushing through Congress, will specifically build opportunities for companies who operate in the Eagle Ford basin, to help train Mexican workers who will be building shale infrastructure on this side of the border.
American companies have the experience of working with the Eagle Ford basin from our side of the border, and can help flatten the learning curve for PEMEX and other private sector companies operating in the region.
In Congress, I have successfully added language to the Fiscal Year 2016 State and Foreign Operations appropriations bill, which “supports expansion of programs to increase U.S.-Mexico academic exchanges at the high school, college, and post graduate level.
Universities in Texas are seizing the opportunities provided by the development of the Eagle Ford shale play. In Laredo, Texas A&M International University and Laredo Community College have created oil and gas specific courses to meet the industries demand for skilled workforce.
Together these two institutions can provide all the levels of oil and gas training from the formative/orientation stages; thru certification and technical programs provided by Laredo Community College; and ultimately from TAMIU graduating and training engineers and corresponding social scientists.
Additionally, Texas A&M University has partnered with Chevron to attempt to get more students at two-year colleges to study engineering.
Mexican Universities should form partnerships with American universities, to leverage their knowledge and experience in the development of the Eagle Ford shale play.
TAMIU already has agreements with several Mexican universities including the Autonomous University of Nuevo León (UANL), the third largest university in Mexico. This will facilitate training of Mexican oil and gas workforce.
We have also been working to expedite an oil swaps agreement between the U.S. and Mexico, and I am personally speaking with the Under Secretary Eric Hirschhorn of the Department of Commerce to move this along.
This kind of oil swaps agreement just makes sense. It would be the first such arrangement in decades, and will allow for the more efficient processing of oil in both of our countries.
In conclusion, I’ve looked at the studies and reports about the A.I.B. over the last few years, and I can see that the potential is there, without a doubt, to create long-term growth in the energy sector here in Mexico.
With continued respect and cooperation from both sides of the border, I know that these two culturally linked regions, in Mexico and Texas, can continue to work together toward progress.
I thank you again for having me, and I thank PEMEX for hosting the event.