McALLEN, RGV – When Congressman Filemon Vela invited Mexican energy expert George Baker to give a presentation at a forum in Brownsville a few months ago he stole the show with his entertaining, absorbing and insightful analysis.
Now, residents in the upper Rio Grande Valley have the chance to see and hear Baker in action. He has been asked to open Futuro McAllen’s Fall Breakfast Series at Texas A&M Health Science Center in McAllen on Friday, Sept. 26.
Baker’s presentation runs from 8 to 9 a.m., with an opportunity for questions from the audience afterwards. The subject of the presentation is “Mexico’s Energy Reforms and What They Mean for the Rio Grande Valley.”
Baker is a scholar and expert at Rice University’s Baker Institute for Public Policy, and the publisher of Mexico Energy Intelligence, an industry and policy newsletter published in Houston. He told the Guardian he is pleased to be visiting the Valley again. On his last visit he toured the Port of Brownsville and predicted it would play a big logistical role as energy production gets underway in the Burgos Basin of northern Mexico. He said the same is true for the Valley as a whole.
“There will be a demand for goods and services and people that are qualified from South Texas. There will be a need for them in Mexico because of the lack of people that are qualified in shale operations. The goods and services that go with shale development in Texas will be needed in Mexico. They are in short supply,” Baker said.
Baker is publisher and editor of Energia.com, an internet reporting and documentation center where analysis, reports and documents related to the energy sector in Mexico may be accessed. He was the first Fulbright Exchange Scholar at Mexico’s national university – Universidad Nacional Autónoma de México (UNAM). His articles in English have appeared in Oil & Gas Journal, World Oil, Journal of Energy & Development and Mexican Law Review, among others. His articles in Spanish have been published in Reforma, Energía a Debate, Expansión and Letras Libres, among others.
The Burgos Basin is said to have eight times as much oil shale as the Eagle Ford Shale play in South Texas. Asked about the potential impact on the Valley, Baker said: “There will be the opportunity to create new businesses, not only existing services but new business opportunities, such as services that are provided here in Texas as a matter of routine that are not available in Mexico,” Baker said. “There is an opportunity for entrepreneurs to say I want to start a new business that either has to do with bringing goods and services and people into Mexico or set up in Mexico to provide goods and services and people to the companies that will be operating there.”
Asked if the Valley might become a staging post for U.S. and multinational oil companies working in the Burgos Basin, Baker said: “Logistic support will be needed from the Texas side of the border. There will be people pulled in from around the world to attend to the cross border logistics function. We should alert everyone to say that people who live here will have to compete for jobs on the Texas side. They will not be given to them on a platter because they happen to live here.”
Another aspect of the energy reforms that will impact South Texas, Baker said, will involve higher education institutions. “One of the assets on the Texas side of the border that is in scarce supply on the Mexican side is technical education in the various disciplines that will be needed, such as engineering, and science,” he said. Examples of institutions that have already set up agreements with counterparts in Mexico to train students for the energy sector are South Texas College and Texas A&M International University.
Baker said he wished to publicly thank Eddie Campirano, the executive director of the Port of Brownsville, for giving him a tour of the port back in June.
“The Port of Brownsville will offer opportunities for Mexican companies to have a U.S. base – a logistics point – that is under U.S. law. Under U.S. law means something very important in Mexico. It means predictability. Not necessarily fairness in every case but at least predictability and a sense that the system is not going to be rigged in some way. We can imagine that the major Mexican companies can have an interest in making more investment in the port of Brownsville,” Baker said.
Another interesting aspect of the energy reforms is the impact they may have generally on security issues in Mexico. “Some people turn to crime in the absence of better opportunities. The collateral benefits of the energy reform are that they give people work opportunities. Given the choice, we presume people would rather earn a living honestly than otherwise. Some people have speculated that the situation of violence in the northeastern Mexico will be self-correcting as the energy reform is implemented. It is an interesting idea.”
Baker said that while all the legislation to deregulate the energy sector in Mexico has now taken place, many questions remain unanswered. For example, he said the legal transformation of Pemex and CRE from state agencies to state companies could take another two years. “What that exactly means, no one is quite sure,” Baker said. CRE, or the Comisión Reguladora de Energía, is Mexico’s power utility agency.
“This is a very important point. The energy reform has been passed but there are a lot of things that still have to be decided. For example, the reforms have to be put into English, in a straightforward manner without any of Mexico’s peculiarities. The language of the world’s oil industry is English, for historical reasons.”
Currently, Baker is working on an article loosely titled Post Reform Blues. The piece will look in depth at what all the energy reform jargon means. “There are a lot of conservative things in the legislation in that it tries to preserve the original narrative and the original narrative is that all the oil belongs to the Mexicans, even oil that is discovered by Exxon. I do not want to rain on the party because it is really a great breakthrough in many respects. At the same time there is a lot of pomp and circumstance and when you look closer at it, you can say, hey, wait a minute, how is that going to work?”