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Page added on November 8, 2014
Group wants to tap into Mexico’s oil, gas wealth
In preparation for the drilling of Mexico’s Burgos basin — a geologic formation similar to the Eagle Ford Shale north of the Rio Grande Valley — regional business development leaders formed a new bi-national group.
Dubbed the Burgos Shale Consortium, organizers said they want to help ensure the Valley and Tamaulipas, is prepared to reap benefits from an anticipated surge in oil and gas production.
“Everyone has been focused on the fact that this is happening but nobody is coordinating to determine what this means for the community,” said Keith Patridge, executive director of the McAllen Economic Development Corp. and co-founder of the group.
“You had this huge expansion of activity in the Eagle Ford, but the communities weren’t prepared for it.”
Patridge pointed to how many previously dormant towns have faced serious housing crunches with the migration of oil field workers seeking high wages for the rough work.
He pointed to possibilities beyond residual boosts in the service and logistics industry as potential for growth.
A Gulf Coast manufacturing facility in Louisiana run by Sasol, a South African energy company announced last week, plans for an $8.1 billion ethane cracker plant.
The plant will process ethane — a component of natural gas — is heated until it “cracks” and can be used in manufacturing of plastics.
The same company considering a natural liquefied natural gas plant which converts the fuel into diesel at the site, as well.
“We are going to have huge amounts of natural gas resources here so maybe we could develop that sector by bringing companies in that use that process,” he said of a potential industry that would benefit the cross-border collaboration.
Already, a liquefied natural gas plant is planned at the Port of Brownsville, as well as a pipeline from the Eagle Ford Shale that runs through Starr County into Mexico.
Representing interests just south of the border, Jose Maria Leal Gutierrez, Tamaulipas’ secretary of energy, said the partnership would help both neighbors’ chances to succeed.
“We have the opportunity to be integrated with our closest neighbors, South Texas,” he said and commended the effort. “It is an honor for us.”
But that doesn’t mean development of the Burgos basin will be easy.
Cartels regularly tap into pipelines owned by Petroleos Mexicanos — better known as Pemex, the Mexican national oil company — in Tamaulipas and steal millions worth of the black gold.
Gutierrez said security is of utmost importance to the state.
“The state is already in collaboration with the federal government and the different security agencies in the state to implement strategies to avoid these situations,” he said, urging drilling companies to coordinate with local authorities so safe routes can be established to help prevent any problems.
But the risk is worth the reward, officials said.
“The estimate is a $100 billion of investment, that is a huge amount of money and the question is how many jobs can be created from that,” said Steve Alhenius, president of the McAllen Chamber of Commerce about the projected flush of economic impact.
“That’s a primary goal of this consortium — to find out what are those numbers really going to be,” An economic feasibility study is set for this winter, with further discussions to continue set for a conference in March, Ahlenius said.
Such a study would help project job numbers — a missing link for institutions when applying for federal grants to help train the local workforce, South Texas College President Shirley Reed said.
“We have support but need that data,” she said.
Omar Elizondo, the economic development secretary in Reynosa, said educational attainment and University support will be key when the development begins.
“We want to make sure that the students come from here, and (companies) don’t have to bring some from Houston or Monterrey,” he said.
7 Comments on "Group wants to tap into Mexico’s oil, gas wealth"
rockman on Sat, 8th Nov 2014 5:55 pm
Might be great…might not be. Time will tell. Just on the US side of the border sits a ranch Shell Oil paid $1 BILLION for the Eagle Ford drilling rights. And then quickly drilled at least 185 wells. I’ll guess at a total cost of around $1.5 BILLION. The average INITIAL production rate (before the established high decline rate kicked in) of the wells frac’d and completed was 79 bopd and 900 mcfpd. Shortly afterwards Shell took a $2 BILLION write down and announced they were abandoning all of their US shale development projects. They subsequently sold the ranch lease and all the wells for less then $700…about 1/3 of what they had invested.
But who knows: a sweet spot may develop somewhere in Mexico. But it will take years and $BILLIONS to find it…if it does actually exist.
shortonoil on Sun, 9th Nov 2014 7:13 am
The price of oil will never again be high enough to justify large scale shale development. Within a couple of years this illusion will fade away into obscurity.
Davy on Sun, 9th Nov 2014 8:04 am
Short said – The price of oil will never again be high enough to justify large scale shale development. Within a couple of years this illusion will fade away into obscurity.
Damn, that was short but sweet. I am with you short on a descent paradigm of oil and the economy hand and hand in a codependent descent. When the recession comes and we know one will, it will nail the coffin shut for oil’s future supply growth. We will see the combination of lower economic performance along with depletion of energy quality and quantity of supply. The combination of these negative oil dynamics with systematic financial issues will be far too large to overcome. This negative oil/finance dynamics will create feedbacks and self-reinforce danerously.
We are close to a point were complexity will not hold due to limits of growth, diminishing returns, and carrying capacity overshoot from over population. If this were not enough there are other black swans. Together the above is a predicament that can’t be solved. We can only get started on mitigation and descent adjustment strategies. I am pretty sure this will not happen until the financial repression has run its course. That could happen quickly because this repression game is a Ponzi scheme on a global level. The market bubbles can evaporate quickly likewise. These are confidence driven games on a global scale.
We already have serious deflation and inflation. These in combination create dysfunction. The bottom can’t afford to prosper. The top is sucking in wealth through an asset bubble that has impoverished the bottom by parasitic financial skimming. Deflation is occurring on the international level from forced austerity. Sovereigns can’t show real growth to cover the inflating unfunded liabilities and high deficits. IMA deficits that will skyrocket with pain when interest rates are forced to rise in a recession with panic and a fall in liquidity.
This is really a doomsday scenario that appears to have started. It still is anyone’s guess how this is going to play out but IMHO the stage is set for a drop of epic proportions. What the degree and duration of this drop will be is of critical importance. Much will depend on how the top reacts. The wrong decisions during this dangerous period could magnify the pain. We need only look back to the great depression at how bad decisions magnified the drop.
There will be a degree of chance involved. How will all the assorted predicaments and problems coalesce? We know when an aggregate descent starts, complexity will be lost, energy intensity will drop, and economic performance weaken, and social fabric will fray. Sounds like a perfect storm brewing. We just don’t know what kind of storm yet. Wild times are ahead so start prepping.
westexas on Sun, 9th Nov 2014 9:14 am
I wonder what the effective royalty rate will be for foreign companies operating in Mexico?
And once burned, twice cautious? If they nationalized once, why wouldn’t they nationalize twice?
nemteck on Sun, 9th Nov 2014 4:00 pm
“The price of oil will never again be high enough…”
Using the table of shortonoil “shortonoil on Fri, 7th Nov 2014 8:16 am”, the oil price decreases as a straight line down to zero. The equation constructed from his data is:
(year -2012)/(2019-2012) = (price-104.6)/(26.9-104.6)
Set the price to zero and one gets the year as 2021.4 where oil does not cost anything. I am looking forward to this because my car is new and in 2021 I still will have it.
farmlad on Sun, 9th Nov 2014 5:01 pm
nemteck Where did you buy this car that runs on oil? can it run on Canadian tar as well? How about condensates?
jmb on Sun, 9th Nov 2014 6:55 pm
“Set the price to zero and one gets the year as 2021.4 where oil does not cost anything. I am looking forward to this because my car is new and in 2021 I still will have it.”
Good comment Nemtec. I can’t wait either.
I think you see the same contradictions I do. Surely someone will have a need for oil; the military, police departments, emergency services, industrial agriculture etc. Won’t we still need lubricants? Maybe we will have to go back to whale oil. except the whales are disappearing.