McALLEN, RGV – Former Texas Land Commissioner Jerry Patterson is hearing of plans to construct a natural gas generation plant in the Rio Grande Valley, using shale gas extracted from the Eagle Ford play north of Laredo.
The natural gas could be exported to Mexico at a competitive price, thus lowering energy costs in that country, Patterson said, in an exclusive interview with the Rio Grande Guardian.
Patterson left office on Jan., 2 and gave his last interview as a statewide elected official to the Rio Grande Guardian. He said intends to stay involved in the energy arena.
“Natural gas-fired generation is a really good idea. Frankly, you could generate electricity in the U.S. and you could put it in the grid in Mexico and do so cheaper than the electricity that is being provided in Mexico today,” Patterson said.
“The energy reforms enacted by President Peña Nieto allow for both wholesale competition and retail competition. CFE (the federal electricity commission) will no longer be a monopoly. Pemex will no longer be a monopoly. So, you have got to do that right. There will be a lot of opportunities and hopefully there are not a lot of false starts. There is some discussion about some generation here in the Rio Grande Valley, newly constructed natural gas generation plants that use natural gas from the Eagle Ford.”
Asked to expand on what he knows about a natural gas generation plant being built in the Valley, Patterson said: “There is discussion about generation being located in the Valley, with the Eagle Ford play and more and more emphasis on not flaring gas. It is bad for the environment. You have a natural resource that is finite, in this case natural gas, and you do not want to be flaring it. It adds value, even though that value is down around $3/MMBtu right now. It is very, very, low. But it still has value.
“It is a shame to flare it and if we don’t have the infrastructure and the collection capabilities at these various well heads in South Texas and in the Eagle Ford play. It is longer and more expensive to pipe natural gas to some of the generation facilities in Houston or Dallas than it is to send it across the Rio Grande. Mexico is closer. It just makes sense. It is a model that will work. The devil is in the detail.”
While running the General Land Office, Patterson was responsible for an agency that negotiated and enforced leases for mineral rights on millions of acres of land owned by the State of Texas. The GLO was also host to the annual U.S.-Mexico Border Energy Forum, which take places in one of the ten U.S.-Mexico Border States every year. Patterson said the forum, which is now in its 21st year, is a great platform for multinational cooperation.
“The Border Energy Forum was started by Commissioner Mauro, I believe. We have an annual meeting every year in one of the Border States. Last year’s event in Monterrey was a very successful event. The attendance set a record, not surprisingly because of the energy reforms by the Peña Nieto government. They finally recognized that the way they were doing business was not allowing them to develop their resources and that this was extremely important for the Mexican economy and therefore for the U.S. economy, frankly,” Patterson said.
“I am one of those who says if you want to help solve the immigration problems we have to create more jobs in Mexico. This (expanded energy production) will to do it. I intend to have a continued involvement in that. There are a lot of opportunities, both for Mexico and the U.S. Right now, Pemex and CFE need help and we want to provide it.”
Patterson pointed out that Texas and Mexico already import and export electricity to each other.
“Mexico actually provided electricity to ERCOT, to the grid in Texas, during the time a couple, three months ago when we were approaching rolling blackouts here in Texas because of demands on the grid and demands on generation. Mexico was able to send us electricity. It saved Texas from going into rolling blackouts so we are already importing and exporting both natural gas and electricity to a small degree and there is an opportunity to do even more of that. I hope to be involved in that as a go forward.”
Patterson’s comments echoed those he made at the 21st Annual Border Energy Forum held in Monterrey last October. Interviewed by the Rio Grande Guardian after his speech at the forum, Patterson said there needs to be more energy connections between Texas and Mexico.
“We need more cross-border DC (direct current) ties. The company that works with the Land Office on our electric program is Cavallo Energy. They are interested in doing more cross-border DC ties. This is only one. There is probably room for four or five companies that could do that.”
By way of an example, Patterson pointed to Monterrey. “There is not enough electricity here in Monterrey and it is expensive. As Mexico transitions off of fuel oil and onto natural gas, which is cheaper and more environmentally friendly, Texas can help fill the void. Mexico generation can be a backup when we have a problem and vice versa.”
At the forum, Patterson said he planned to stay active in the energy arena.
“I plan to do whatever I can to make folks in Texas and the U.S. understand that we need to be very supportive of the bold, risky step that Mexico is taking. It is unusual for politicians to stick their neck out like the politicians in Mexico have done and they should be commended for that leadership,” Patterson said.