MISSION, RGV – Having participated in a major celebration of oil and gas exploration in Tamaulipas, U.S. Rep. Henry Cuellar says he is more convinced than ever that U.S. energy firms can do business in the Burgos Basin.
Cuellar spoke at the 70th anniversary of Activo Integral Burgos, hosted by Pemex at the Centro Cultural in Reynosa on Wednesday. It was in April, 1945, that the first well was drilled in the Burgos. It was called Mission 1. Since then, it has become a major producer of gas for Mexico.
“Congratulations on the 70th anniversary of the Activo Integral Burgos, which ignited the growth of the oil and gas industry in the part of Mexico,” Cuellar said in his remarks. “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.”
Cuellar said that with excitement over shale technology, currently in the testing phase in Mexico, there is great anticipation 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 growth opportunity after energy reform,” Cuellar said. “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.”
Cuellar said that like its other reforms, the energy reform is aimed at boosting 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.”
Cuellar said the U.S. 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.”
Cuellar said he is 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.”
Later on Wednesday, Cuellar met with Rio Grande Valley reporters at his Mission district office. He said the key message he wants to get across in the United States is that Mexico will soon be open for energy business and U.S. companies should start preparing for the opportunities that will arise.
“I said to my hosts that there are four challenges facing Mexico. One, how good is the infrastructure? You cannot just drill. You need roads to get where you need to go. Second, Mexico needs to offer security. Third, you need to have rules and regulations in place so everyone knows where they stand. Fourth, you have need to have enough water to do the drilling and the fracking,” Cuellar said.
“The message I bring back from Mexico is that they are excited about developing good working relationships with American companies. They are saying, if you guys don’t come, China is here, other countries are going to come in. The worst thing we want, here we are right next to Mexico and we are talking about Donald Trump instead of talking about how we can invest in Mexico as they really go in (and drill).”
Cuellar then produced a report showing that when crude, condensate and natural gas production is combined, Mexico is No. 10 in the world for production. The U.S. is first, Saudi Arabia second and Russia third. “That shows you the potential Mexico has. If Mexico and the U.S. and Canada work together we will be the new Middle East of the world,” Cuellar said.
Asked by a reporter how economically viable the Burgos Basin will be, Cuellar said: “Unfortunately, as they passed these historic reforms on energy prices went down so it slowed things down. I have talked to a lot of folks and everyone tells me it is cyclical. Prices are going to go up. It might not go up to 100 but I think if we hit about $70 per barrel, what are we at? 58, 59? I think if you start getting that, for us, in Texas, it will be good. For the Mexicanos, they can probably do (it at) $60. They said they would like to see $70 also. While the prices are down and we are waiting, this is the perfect time for us to be getting together with the Mexicanos so we can talk about partnerships.”
Cuellar added: “The problem here in Texas is that, sometimes, we look north. We don’t look south to the great potentials we have in Mexico. They are excited. They want to do something. They would rather do something with us than with other countries. If we do not come and work with them they are going to find other countries.”
As for security, Cuellar said big energy producers, such as Mobil, will not be afraid of working in Mexico. He said small- and medium-sized companies, such as those that have worked in the Eagle Ford Shale, may have concerns.
“The Mobiles of this world just got into the first round (of bidding in Mexico). They are in more dangerous places than Mexico. The small and medium sized companies that do not have that kind of experience those are the ones who are thinking about this a little bit more. You have got some exceptions like Lewis Energy, for example. They have been there for a few years. You have got some exceptions but generally speaking when I have talked to the heads of the associations, for example, Todd Staples, head of Texas Oil and Gas, they would love to go down there, want to know more. They know what the potential is but they don’t know how to take advantage of that potential. We need to get people together to talk about that.”
Cuellar said he has also spoken with independent producers and national associations in the oil and gas industry. “They are all interested in Mexico. But the big boys, they go anywhere in the world. The small and medium size firms are the ones that are creating most of the jobs at the Eagle Ford right now. Those are the ones we want over there.”
Asked if his message is, ‘Consider Mexico, there is great potential,’ Cuellar said, “Absolutely.” He said the Mexican energy officials he spoke with in Reynosa, both from Pemex and the private sector, said: “We would rather deal with somebody right across the border. They come here, some of them live here. Last night we had dinner with some of the Pemex officials. They live here. The executives from the big companies live here but work over there in the day. They know our country. They have studied over here. They would rather deal with us. They are saying, come, come over here. I know the prices have gone down but they will go back up. This is the time to start looking at it.”
Asked if there were any other comments he wanted to make about his participation in the Activo Integral Burgos celebrations, Cuellar said: “Do not underestimate the Mexicano companies that are there and the experience they have. They have been doing this continuously for 70 years. There are a lot of opportunities but I do not want anybody to underestimate the Mexicanos. They have got a lot to offer but we have a lot to offer on this also.”
Editor’s Note: Reporter Dayna Reyes contributed to this story from Reynosa, Mexico.
