Nadia Tamez-Robledo
4:37 PM, Aug 22, 2014
CORPUS CHRISTI - Experts predict a positive, if not yet entirely clear, impact for South Texas as Mexico charges ahead with energy reforms allowing foreign investment. But the Corpus Christi area is still years away in some cases from seeing exactly how the ripple effect will materialize.
Mexican President Enrique Peña Nieto this month signed reforms that ended the county’s nearly 80-year monopoly on oil and gas exploration. The changes come in hopes they will be a boon to Mexico’s economy and increase production as the country faces declining petroleum output.
Ruben Media, Port of Corpus Christi business development director, said pipe-maker TPCO America could benefit from demand generated by the reform. Overall, it’s too soon to tell how the city will feel the effects, he said.
“I think we have to wait until the Mexican exploration laws for foreign investors are in black and white and very clear,” he said. “They are still working on how they will apply these different rules and regulations.”
Valero spokesman Bill Day echoed Media’s sentiment. Much of the company’s expansion is in the Eagle Ford Shale, he said, and there are talks within Valero of expanding its Corpus Christi refinery and docks.
“It’s still too early to tell if we’ll be able to duplicate that (in Mexico),” he said. “That’s still several years down the road. Valero does import a significant amount of crude oil from Mexico, so we are very interested in watching reform process take place.”
While American companies already are working with Mexico’s national petroleum company, reforms will usher in a significant increase in activity, said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University. Initial investment is expected to focus on deep sea drilling and reverse Mexico’s declining oil production, and shale activity will be a longer time coming.
“There are lots of promising shale plays in Mexico, including extension of the Eagle Ford,” he said. “The problem is on the south side of the border, there isn’t much infrastructure in place.”
Shale production needs access roads, water, frac sand, pipelines, housing and expertise to operate. Under Mexico’s government energy monopoly, shale oil and gas formations have remained largely untouched.
“You’re going to have to transplant that into a pretty remote part of the county, and that’s going to take more than an decade, I think, before we see significant production of (shale) oil in Mexico,” he said.
Kim Jones, chairman and director of the Institute for Sustainable Energy and the Environment at Texas A&M University-Kingsville, said the reform bodes as well for Texas education institutes that specialized in energy programs. That goes for the university as well as two-year programs that can produce the engineers, technicians, safety experts and others needed in the oil and gas industry.
“We’re positioned well in this region, not just geographically but with demographics and the population that has Spanish-speaking students and staff and faculty,” he said. “I think it’s a natural extension to look to ... this region here to do some training for the professional groups and technical training. It just isn’t practical to ship a whole division from Iowa and send them down to Reynosa.”
César Martínez, vice president of consulting firm Vianova, echoed Jones’ prediction. Vianova launched a division dedicated to researching Mexico’s energy reform for U.S. businesses like investment firms and energy companies.
“There’s going to be, I believe, room for everyone to participate,” he said, “so the opportunities will be there for Texas firms to provide expertise as partners or to work (there) directly, and also to learn how Mexico does business. It’s a mutual learning experience.”
Mexico has huge potential for shale exploration in border states, he said, and companies with shale exploration experience are poised to benefit whether they become partners with Mexican companies or go it alone.
Weinstein said another caveat will be immigration, particularly the ease with which energy workers and goods will be able move to either side of the border.
“I’m talking about if you really want to integrate the energy industries of the United States, which includes Texas and Mexico, you have to make it easier for people and product and technology to cross the border,” Weinstein said, “geologists or rough necks or equipment, and right now that’s a hassle.”
Mexico decided this month where its national production company, Petróleos Mexicanos or Pemex, will drill in the future. Next year it will open bidding for other areas to outside investors, he said.
“Not until later in 2015 you will actually see … some activity starting to happen in terms of drilling, specifically in areas where shale might be possible,” Martínez said, though accompanying work like installing pipelines could start by then.
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