Mexican Energy Reforms Can Benefit Texas
News Article Sponsored by TEEX
Recent reforms by the Mexican government have loosened the government’s monopoly on developing hydrocarbons, meaning that for the first time in decades, private firms in Mexico can engage in the oil and gas market. As vice chairman of the International Trade Committee, I was in Austin recently for a joint hearing with the Energy Committee to explore how the reforms in the Mexican energy market can benefit Texans.
Hydrocarbons are a large part of the Mexican economy, making up over 30 percent of federal revenues. After years of declining revenue, inefficient production, and mismanagement the government is allowing private firms to operate. Just across the Texas border, a large gas shale called the Burgos Shale is promising. There are also prime areas in the Gulf of Mexico slated for bidding to the private sector.
U.S. companies are already getting in on this new shale play. For one, a new network of pipelines will be able to deliver gas from hubs like Laredo, Texas and Monterrey, Mexico. Moreover, a planned Liquefied Natural Gas terminal in Brownsville (like the one in Portland) will be an opportunity to export gas to high yield markets overseas. Increased oil and gas activity in Texas and Northern Mexico will help to solidify this area as an energy leader with the promise of good jobs and a growing economy.
Coastal Bend Energy Revolution
Late last year the United States Congress finally lifted the decades-long ban on exporting U.S. crude oil to foreign markets. This move was especially significant to Texas because the very first barrel of oil shipped from the U.S. to a foreign market left from Corpus Christi. The oil was from our very own Eagle Ford Shale and was transported to a terminal in Germany for processing. This is not to mention that the second shipment of U.S. crude was sent from Houston. Despite the drop in energy prices, Texas remains a national and world leader in the energy sector.
As vice-chairman of the House International Trade Committee, I heard testimony about how this ban was hurting our competitiveness and that opening up our oil markets would boost production in Texas and stimulate the economy. Some energy experts believe that the Coastal Bend could be the premier location in the United States from which to ship our domestic crude. Add to this, the much anticipated opening of the Cheniere Liquified Natural Gas terminal in San Patricio County, the Coastal Bend stands to gain once the price of oil rises and domestic production increases.
Coinciding with these significant changes is a renewed push in our high schools for career and technical training that allow students to graduate with a certificate and skills to get jobs in the industrial sector. This combination of educational opportunity and industry will serve our region well.
Foreign Investment in Texas
A new report from the Comptroller’s office indicates good news for Texas’ role in the global economy and sheds light on the kinds of foreign investments being made in the state. In fact, in 2013 alone, $26.4 billion of foreign investment was made in Texas. Such projects, like the $700 million Austrian-led Voestalpine iron processing plant in San Patricio County is one such example of foreign investment in our own backyard.
Perhaps surprising to some, the country with the greatest amount of foreign investment is not one of our bordering neighbors, but the United Kingdom (U.K.). Around 22 % of our foreign investment is made by U.K. firms. You may recognize companies such as BP, Rolls Royce and BAE Systems, all UK-based companies investing in Texas. In the Comptroller’s report, officials from these firms indicate that Texas is a prime spot for investment because of our business climate, central location and good infrastructure.
Our state is home to 16 seaports and 26 commercial airports that facilitate international commerce. Among UK investments, Energy is the most, followed by IT, Professional Services, Industrial Goods and Transportation Equipment.
However, many other countries are also investing in Texas. In terms of dollars, a 2014 report from the Governor’s office shows Germany following close behind, with Canada, Japan, and France rounding out the top 5. These 1,400 firms employ about five percent of the state’s private workforce.
Most energy experts agree that the best approach to a comprehensive energy policy is a mix of fuels. That means using traditional methods, like oil and natural gas, but supplementing with renewables like wind, solar and others. Under a new law that took effect on September 1st, homeowners will now have more say-so over whether they choose to install solar panels on their roof. By protecting property rights, we are allowing consumers to take control of their energy use.
Under the current law, some homeowners associations can restrict the ability to install solar panels. While rare, these associations use a loophole in the law that would prevent you from installing these panels. Solar power is increasing in Texas because the cost is going down and our state has many days of sunlight. Texas is still behind other states in using solar power, but each year there is a significant increase.
Those who oppose solar panels have concerns about keeping the neighborhood in good order and the law provides a provision that a homeowners association can restrict them in certain cases, if they “substantially interfere” with the land or in other limited cases.
Liquefied Natural Gas
In May, 2015, Cheniere Energy began construction on their Corpus Christi Liquefaction Project – a $14.5 billion liquefied natural gas (LNG) export facility in San Patricio County – after waiting nearly three years to receive all necessary federal permits. The project is expected to begin exporting natural gas in 2018-2019.
On June 1, 2015, the company announced a planned multi-billion dollar expansion of that project, which will make it the largest planned LNG facility in the state of Texas and the largest privately financed investment in the history of the state. The expansion will include two additional LNG processing units (trains), one storage tank, and a new 22-mile pipeline which will run parallel to the currently approved pipeline. Cheniere anticipates construction to begin on the expansion in May 2017 and for it to be operational the first quarter of 2021.
This facility may not be Cheniere’s only investment in the Coastal Bend. In October, 2015, the company announced they are considering building a $500 million, 552-acre marine terminal and condensate facility in Ingleside.
Cheniere’s projects will have a tremendous impact to the Coastal Bend economy and will bring thousands of direct and indirect jobs to our area. A study on the original LNG project estimated that
over 11,000 direct and indirect jobs would be created in the Coastal Bend and South Texas region just during the five years of construction alone.
I am proud to have worked with Cheniere on a number of issues important to our community and look forward to their continued investment in San Patricio County and the Coastal Bend.
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