MISSION, RGV – State Rep. Terry Canales announced Thursday a new interim charge from House Speaker Joe Straus – studying the impact Mexico’s much anticipated energy reforms will have on Texas.
Canales, a member of the House Energy Resources Committee, made the announcement at a legislative scorecard luncheon hosted by the RGV Hispanic Chamber of Commerce at the Cimarron Club in Mission. He said Mexican energy reform is a huge issue the Texas House will soon be dealing with.
“The Speaker has granted my request to have a joint hearing regarding this issue. I believe it is going to transpire in Edinburg, Texas. We are working on the details and we will keep you posted. We asked for it to be close to the Border because that is where the people need to congregate to discuss this issue. We can get representatives from Pemex, we can get the power players that be to come and discuss the issues so that we can be prepared to capitalize on one of the greatest energy reforms that’s ever going to transpire in the Americas,” Canales, D-Edinburg, said, in his legislative update.
Canales pointed out that the Mexican Congress is putting the final touches on its constitutional reforms for the energy industry. The plan is to break up the monopoly Pemex has had on energy production and allow foreign investment. Canales said the reforms will “allow Mexico to be energy independent and the U.S. prosper.” He went on to say: “So goes Mexico, that’s the way we go. If Mexico does what it says it is going to do… South Texas is going to boom. You can’t say they are going to make a trillion dollars right across the Rio Grande and it is not going to affect us. We need to be on the ball.”
The joint interim charge approved by Speaker Straus was sent to House members on July 1. The Speaker is asking the House committees on Energy Resources and International Trade & Intergovernmental Affairs to:
<I><B>Examine the impact on Texas’s economy and businesses of the recent expansion of oil and gas production in Northern Mexico. 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. </I></B>
At an energy forum in Laredo in May, U.S. Rep. Henry Cuellar spelled out what the energy potential of Mexico is. He was joined at the forum by a number of Pemex executives. “At this very moment, the United States, Mexico, and Canada stand poised to become the next ‘Middle East’ of the world. And, because of this, it is imperative that stakeholders from a myriad of backgrounds come together to discuss the future of energy production in our region,” Cuellar said.
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,” Cuellar said.
“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.”
Cuellar concluded his remarks by saying: “When combined with the energy reform proposals introduced by the Peña Nieto Administration, and currently being debated within Mexico’s Congress, we are on the cusp of increased production, a rise in infrastructure investment, and the creation of thousands of new jobs just across the border.”
In a recent news release, Rep. Canales referenced analysis from BBVA titled “Opportunities from Mexico’s Energy Reform.” The analysis concluded the potential effects on the South Texas border economies and quality-of-life would be enormous.
“Faster economic growth in the border will narrow the socio-economic disparities between Texas’ border cities and big metro areas like Houston, Dallas, or Austin. If these border towns effectively seize the opportunity, the U.S.-Mexican border could see one of the most dramatic transformations in its history. The upside for Mexican border towns could be even greater if economic prosperity allows them to eradicate the bad reputation created by drug-trafficking and other illegal activities,” the BBVA economic report noted.
The BBVA report, published in January, also said:
“Mexico’s energy reform will offer abundant opportunities to U.S. and foreign companies across energy and non-energy industries. Mexico is expected to regain its position as one of the top producers of hydrocarbons in the world. This has positive implications for the U.S. as it strengthens macroeconomic stability and energy security in North America. The multiplier effect of energy investments will give a boost to the Texas-Mexico border area, generating $1.2 trillion dollars in economic activity over the next 10 years. Last but not least, the success of the reform will depend on the quality of the implementation process.”
Rio Grande Valley business and economic development leaders have welcomed Speaker Straus’ decision to issue a joint interim charge on the impact Mexico’s energy reforms will have on Texas. They are looking forward to the joint hearing.
“The time is ripe for a historic transformation of Mexico’s energy sector. Mexico is the United States’ largest trading partner, so economic growth in Mexico is of great importance to the United States. Because the oil industry accounts for a significant portion of government revenues, PEMEX’s economic competitiveness directly impacts Mexico’s overall economic development,” said Gus Garcia, executive director of Edinburg EDC.
“The more jobs Mexico creates, the more discretionary money people will have and the more they will come over and shop at our stores. Governments should aim to deepen economic ties and strengthen competitiveness to ensure North American companies are positioned to succeed in an increasingly competitive global market. Expanding offshore oil production would strengthen the energy trading relationship between Mexico and the United States.”
After listening to Rep. Canales’ remarks at the RGV Hispanic Chamber event, Rio Grande Valley Partnership President Julian Alvarez said: “Increased oil and gas production in northern Mexico is going to be a very big deal and it is going to have a direct impact on everybody on this side and the other side of the Rio Grande.”
Keith Patridge, president of the McAllen EDC, told the Guardian that Eagle Ford Shale and the Burgos Basin oil and gas plays are “huge” for South Texas.
“I think it has the potential to be a very big deal from a number of points. It is going to open up Mexico for the first time to foreign companies for drilling and new business. That is very important. That is going to bring the oil companies in. When you look strategically at where we are located, we are in the middle of the Burgos and the Eagle Ford. This allows you to go in both directions. The Eagle Ford is tapering down some. It is not as active as it was. Mexico s is going to pick up, so I think you are going to see drilling companies and things moving down here. Probably we will maintain our equipment stuff on the U.S. side, just simply because it is safer. That is a potential,” Patridge said.
“But, I think what is even more important, in the longer term, is that with as much natural gas as Mexico is projected to have down there, 400 trillion cubic meters of natural gas… I cannot comprehend that. What that tells me is that if I am a company that uses natural gas in my process or as a raw material, such as fertilizers, chemicals, I would certainly look at locating a facility here. I think that will come. It won’t be until they open the market up but it is going to be a big deal.”
Other speakers at the RGV Hispanic Chamber event included state Sen. Juan Hinojosa, state Reps. Ryan Guillen, Armando Martinez, Bobby Guerra and Oscar Longoria, former Univision Radio presenter Brenda Lee Huerta, and Walmart public affairs director Daniel Morales.