Editorial: Texas benefits from Mexico's energy sector reforms

Published on Friday, 22 September 2017 14:42 - Written by

Mexico has made great strides in reforming its energy sector. And now Texas is benefitting from those reforms by supplying that country with homegrown natural gas.

“Sending natural gas across the border to Mexico opens the door for an ‘incredible opportunity’ for Texas, a commissioner at a state energy regulator said,” UPI reported last week. “Ryan Sitton, a commissioner at the regulatory Texas Railroad Commission, met with state officials and private sector representatives to discuss how reforms in Mexico’s energy sector could help Texas.”

Sitton pointed out that natural gas sales to Mexico will both supply that country with much-needed fuel, and also boost the Texas economy.

“Shale company ONEOK Partners announced plans two years ago to build a 200-mile long pipeline that would carry natural gas from a shale basin in Texas to an international connection at the Mexican border,” UPI reported. “Through a joint venture with Mexican gas transmission company Fermaca Infrastructure, the Roadrunner pipeline would have the capacity to ship as much as 640 million cubic feet of shale natural gas per day once completed in 2019.”

It’s all happening because Mexico made the wise decision to reform its energy sector, which has been nearly all state-owned.

“Years, if not decades, of political gridlock came to an end when Peña Nieto took power in December 2012, leading to constitutional changes that allowed the participation of private players all along the energy value chain,” Forbes magazine reports. “But it was not until July 12, 2017 when the bold reform gamble delivered better-than-expected outcomes.”

Everyone benefits - especially the Mexican public. U.S.-based operators can help that country access its resources more efficiently, as it struggles to meet growing demand.

“The liberalization of Mexico’s energy sector has the potential for big impacts on American operations, as the country is a major market for U.S. oil and gas,” Oilprice.com reported last week. “Demand for oil, gas and refined products is growing quickly in Mexico. According to a recent webinar by Argus, the number of passenger vehicles in Mexico tripled from 2000 to 2014, and the company’s population growth rate is twice the average in OECD countries. Unfortunately, Mexico’s domestic production has lagged behind demand. The country has been forced to import increasing volumes from the U.S.”

Texas companies are already helping Mexico to find more oil and gas in that country.

“In addition, the government has been allowing private companies to work on projects for the first time in many years,” Oilprice.com explained. “The country’s first private offshore well in 80 years, the Zama-1, found great success. Operated by Talos Energy, Sierra Oil & Gas and Premier Oil, the well discovered 1.4 billion barrels of oil in place, far beyond the 100-500 million barrels expected. The Mexican government is hoping to see similar success in onshore operations, as it is opening the Burgos basin, the Mexican portion of the Eagle Ford, to private investment.”

As Sitton pointed out last week, “Mexico’s energy reforms and demand coupled with near historic highs in U.S. production are creating an enormous opportunity from which both countries will benefit.”