Binational Energy Consortium Launching for Burgos Basin

A binational Burgos Basin energy consortium is being created and organizers are looking for members from south Texas and northeastern Mexico to join.

A conference was held at Texas A&M International University in Laredo on Friday to explore the concept and the next step is to meet with United States and Mexico officials in March to confirm the name of group.

In his opening remarks, City of Laredo Mayor Pete Saenz said the recent Mexican energy reforms have potentially created “a huge, economic game changing dynamic for border communities.”

Saenz said the reforms provide South Texas an opportunity to become leaders in the marketing and supply of various goods, materials and services to Mexico, in addition to becoming leaders in the exploration, development, production, transportation and marketing of hydrocarbons from the Burgos Basin.

“In an effort to attract large scale corporate investment, we need to identify ourselves as a unified region that spans nearly 300-350 border miles and which contains and offers multiple resources some of which include: our vehicular/commercial bridges and rail bridges, our seaports, airports, industrial park acreage and manufacturing plants; our customs, warehousing, logistics, transportation and trade experience.” Saenz said.

Laredo Mayor Pete Saenz

Laredo Mayor Pete Saenz

“Just as importantly, our region offers an abundant understanding and appreciation of the Mexican culture, its language, customs and business traditions.”

In addition to Saenz, leaders attending the TAMIU event included Webb County Judge Tano Tijerina, TAMIU President Ray Keck, TAMIU Provost Pablo Arenaz, Ofelia Garza of CANACINTRA; Javier Solis, secretary of economic development for Nuevo Laredo, Guillermo Dominguez Vargas, of the Comisión Nacional de Hidrocarburos in Mexico, and Maria Calderón-Porter, assistant vice president for global initiatives at TAMIU.

Calderón-Porter, who is also director of the Binational Center at TAMIU, discussed the idea of setting up a consortium when making a presentation at the 21st Annual U.S.-Mexico Border Energy Forum in Monterrey last October. She said she would like to see binational, bicultural and bilingual energy industry workers transfer seamlessly from the Eagle Ford Shale to the Cuenca de Burgos.

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LNG Exports to Create More Economic Opportunity in Valley and Texas

by Julian Alvarez, President and CEO of Rio Grande Valley Partnership

Much of the nation’s growth in natural gas production has taken place in Texas and in particular, the rapid expansion of production in the Eagle Ford Shale in South Texas.

As the nation’s second most populous state and the largest producing state, Texas and the Rio Grande Valley are uniquely positioned to be at the forefront of the historic opportunity presented by expanding exports of LNG.

LNG exports give the U.S. the ability to assert global energy leadership, strengthen its economy and create good-paying jobs for the hard working men and women in the Rio Grande Valley. The Rio Grande Valley Partnership is focused on creating the relationships and developing programs that advance the region by increasing economic growth and improving the quality of life in the Rio Grande Valley.

The Eagle Ford Shale is providing both of these. The shale play has seen a growth in hotels, restaurants, retail outlets and distribution centers. More importantly, it has created an environment that is beneficial and supportive for the growth of small businesses and entrepreneurialism. As we all know, small businesses are the back bone of every community.

Unfortunately, the recent energy boom has its naysayers, including some in the business community. A small but vocal group of companies have warned of negative impacts of expanded LNG exports on America’s “manufacturing renaissance” and energy prices in Texas. Yet, numerous studies continue to demonstrate their argument is flawed.

Expanding LNG exports will create jobs and provide economic benefits to the Rio Grande Valley region. LNG exports would incentivize new infrastructure investments worth billions of dollars in American communities. A recent study by ICF International estimates that LNG exports will create up to 155,000 jobs for Texans in construction, operations, exploration and production by 2035 and contribute up to $31.4 billion to the local economy as new wealth is generated in the state.

In a press release earlier this year, our own State Senator Juan “Chuy” Hinojosa highlighted the benefits of the energy industry to the Rio Grande Valley region. “We are seeing tens of thousands of new jobs created, higher wages being paid, billions of dollars in investments in the region.” Senator Hinojosa called this boom an Energy Renaissance.

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Formal Announcement of Launch of Rio Grande Valley Newswire

Rio South Texas Economic Council Seeks a More Balanced View of Prospering Border Region

 Dec. 18, 2014                                                             Contact: James C. Moore

jim@bigbendstrategies.com

512.300.9232

Utilizing video production and an aggressive social media campaign, the Rio South Texas Economic Council (“RSTEC”) is promoting an informational web portal to provide a more comprehensive view of the Rio Grande Valley of Texas (www.riosouthtexas.com). RSTEC, an organization representing the economic and development interests of two countries and four U.S. counties along the Texas-Mexico border, is providing regular updates from its new service the Rio Grande Valley Newswire. (www.rgvnewswire.com) Three videos of 5-7 minutes have been posted on topics including the potential impact of the border energy boom, rapid response manufacturing, and a video introducing outsiders to the region.

“We have long felt that our story has not been adequately told,” said Keith Patridge, CEO of McAllen’s Economic Development Corporation. “We decided to make certain that the outside world got a more balanced view of what’s happening down here on the border. The RGV Newswire is being used by the media and thousands of other people who want to learn about the region.”

Keith Patridge, CEO, McAllen Econ. Dev. Corp.

Keith Patridge, CEO, McAllen Econ. Dev. Corp.

On a daily basis, the site offers original content and curated material from other sources around the Rio Grande Valley. Patridge, for example, records a monthly video update on economic news for McAllen, which is posted on the RGV Newswire. Articles and videos posted on the site cover topics like the Burgos Basin shale play in Mexico, developments at the new University of Texas Rio Grande Valley, Space X in Brownsville, the impact of Mexico’s new coast-to-coast highway on valley imports, and the growth at the Port of Brownsville.

“Our valley communities are really starting to take advantage of this platform for publicity,” said Alma Colleli, Executive Director of RSTEC. “They are sending in stories and news releases about projects and events in their areas to help raise awareness and participation. It’s been exciting to watch the steady increase in the number of site visitors.”

Alma Colleli, Exec. Dir., Rio South Texas Economic Council

Alma Colleli, Exec. Dir., Rio South Texas Economic Council

The RGV Newswire was launched in conjunction with a recently completed series of town hall meetings conducted by RSTEC, which were designed to gather citizen input on how to best promote the valley as a desirable location to live and work.

 

 

 

 

 

Oil Price May Slow Development of Mexico’s Burgos Basin

Mexico is getting ready to welcome the U.S. shale revolution into its borders after 75 years of state monopoly. The timing couldn’t be worse.

As a flood of supplies from Texas to North Dakota sends oil into a nosedive, U.S. producers are reducing investment budgets for 2015. The cuts dim the chances they’ll take their fracking and horizontal drilling capabilities down south anytime soon.

After changing the constitution last year to allow foreign oil investment into its territory, Mexico is having to adjust, too. Regulators are considering reworking and potentially delaying leases for the country’s portion of the giant shale formation that encompasses the Eagle Ford in Texas.

“They’re going to have all of the issues of depressed price that the people in the Eagle Ford are having now,” said Michael P. Darden, global chair for oil and gas transactions at law firm Latham & Watkins LLP in Houston.

Energy ministers from the U.S., Canada and Mexico are set to meet Dec. 15 in Washington to discuss the implications of Mexico’s energy reform for the rest of the continent.

Mexican offshore assets have drawn interest from oil majors from Exxon Mobil Corp. (XOM) to Royal Dutch Shell Plc (RDSA) as the end of the monopoly triggers a race to gain a foothold in the country. The question is how quickly producers will be willing to move into the higher-risk, more costly prospects.

With Mexican shale possibly having to wait, cheaper offerings in shallow waters might have to do for now.

“In response to the falling prices, the government is bidding out the most attractive, better margin projects first,” said James K. Alford, a partner focusing on Mexico energy reform for the law firm Locke Lord LLP in Washington.

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Mexico’s Burgos Basin Provides Boom for Texas Law Firms

Carlos Valencia and Tatiana Escribano are two of the most sought-after corporate legal advisers in Mexico.

Until two years ago, they were partners at Dallas-based Thompson & Knight’s Mexico City office. They moved their practice to DLA Piper, a 4,000-lawyer firm headquartered in Chicago and London. One month ago, Valencia and Escribano switched firms yet again, joining global giant Baker & McKenzie.

Chances are good the duo will be poached again by yet another firm.

Big law firms in Texas and beyond are jockeying for position to attract corporate clients seeking to invest tens of billions of dollars in Mexico.

The reason: The border nation is reforming its energy market. For the first time in 75 years, Mexico’s rich oil and gas reserves will be open to private foreign investors for exploration and production.

Dozens of law firms, most of them based in Texas or with prominent Texas operations, are seeking to expand into Mexico. Some have opened new offices or want to do so.

Other firms are creating joint ventures with Mexico firms or raiding firms that have lawyers experienced in Mexican law.

“I think the law changes will absolutely transform the legal market in Mexico, but more importantly, those changes will transform the country, period,” said Luis Gomar, the partner-in-charge of Dallas-based Strasburger & Price’s Mexico City office.

The competition is definitely heating up.

“What is happening in Mexico is extraordinary, and our business interests and legal needs in Mexico are going to significantly increase with these energy reforms,” said Clay Scheitzach, senior vice president and senior corporate counsel at Xerox Business Services in Dallas.

“Energy companies and nonenergy companies are going to need more lawyers to help us with contracts, dealing with business-to-business and labor disputes, and other legal issues that will surface under Mexican law,” he said.

Law firms are debating whether they need to open outposts in Mexico or try to attract clients from their existing Texas offices.

Four Texas-based law firms — Haynes and Boone, Thompson & Knight, Gardere Wynne Sewell and Strasburger & Price — have lawyers permanently based in Mexico. Norton Rose Fulbright is seeking to open an office.

 

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Burgos Basin Consortium Announced in Rio Grande Valley

Rio Grande Valley economic development leaders did not really get involved with the development of the Eagle Ford Shale play because it was deemed too far removed from the region.

That is not the case with the Cuenca de Burgos in northern Mexico, which is thought to be many times bigger than Eagle Ford.

Burgos Basin

Burgos Basin

Today, a new regional consortium is to be unveiled in McAllen today that will focus on how northern Mexico and South Texas can make the most out of oil shale development in the Burgos Basin.

“We are creating a consortium of communities, non-profits and economic development corporations that are interested in a collaborative effort to see how our region can take advantage of what is going to happen just south of Reynosa,” said Steve Ahlenius, president of the McAllen Chamber of Commerce.

Steve Ahlenius - McAllen Chamber of Commerce President

Steve Ahlenius – McAllen Chamber of Commerce President

The group is being titled the Burgos Shale Consortium and the announcement will be held at the McAllen Chamber of Commerce offices at 10 a.m.

Ahlenius said Mexico is a key player in the Consortium. “Several key players from Tamaulipas will be at the announcement,” he said. Ahlenius listed four key goals for the consortium:

*Information and economic impact studies

*Workforce Development

*Business Development and Expansion

* Enhance economic ties between S. Texas and N. Mexico and expansion for Tamaulipas

Ahlenius said two key drivers have positioned South Texas to take advantage of the Burgos Oil Shale play. One is that drilling and recovery technology has now enabled oil companies to recover oil and oil byproducts that just ten years ago were not recoverable; and two, the sweeping energy reform in Mexico that now allows multinational oil producers to invest in Mexico.

“The region is now in a position, because of the location of the Burgos field and staging, to play a major role in energy and energy related businesses. In addition, we are positioned to attract major international companies that require cost effectiveness and energy abundance for their production,” Ahlenius said.

The McAllen Chamber leader said two key events will happen for the Consortium in the next four months, Firstly, the Consortium will fund an economic impact study of the impact and potential of the oil play. And secondly, a Burgos Oil Shale Consortium Conference will be held in late March of 2015 in McAllen.

Ahlenius said the cost of joining the Consortium will be $500 per entity.

Tamaulipas Governor Egidio Torre Cantú recently hosted a discussion on the potential impact of Mexico’s energy reforms on his state. The event was held at La Fogata in Reynosa and several Valley leaders were present, including state Sen. Juan Hinojosa, state Rep. Sergio Muñoz and McAllen Mayor Jim Darling.

Torre Cantú showed a power point presentation that was based on a report on energy development his office released earlier this year.

“Mexico is part of the dynamic energy transformation field. The economic activities related to the energy sector contribute 12.3 percent of the national GDP. These include from oil extraction, refining, transmission and distribution of electrical energy to making derivatives in petrochemical industry. In Tamaulipas, these activities contribute 20.5 percent of the state GDP,” Torre Cantú said.

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Mexico: North America’s Last Energy Frontier Ready to Dance

Eagle Ford may be North America’s most prolific shale gas basin with more than 8,000 wells drilled in the region. By contrast its Mexican cousin, Burgos basin, just across the border, has barely seen any action. But that may soon change.

In a span of just two years since his 2012 election as Mexican president, Enrique Peña Nieto has swept aside state-owned Petróleos Mexicanos (Pemex) 76-year monopoly over the country’s oil and gas sector with a constitutional amendment and a string of new laws.

mexico-oil

“The constitution was passed quickly and the secondary laws were passed with blinding speed, and the regulations are being implemented,” says Jay Park, a Calgary-based lawyer who has been advising Pemex since 2003. “Everybody I know in the Mexican government is working eighteen-hour days to get this done.”

While Mexico and Canada compete to supply heavy oil to U.S. Gulf Coast refineries, some Alberta companies are reportedly eying opportunities across the board in Mexico as North America’s last energy frontier opens up.

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Houston Chronicle on Mexican Reform and Valley Boom

EDINBURG – Samuel De Los Santos wound his way through pallets of avocados stacked three stories high and talked about his company’s plans for expansion.

On a good day, he and his team of 18 at Don Hugo Produce will unload about $7 million in fare from Mexican farms before sending it on to supermarkets in the United States. The operation is expected to double soon, De Los Santos said, and then grow again after that.

As he talked, De Los Santos described massive highways under construction and an economic revival coming on the heels of an energy industry boom. The numbers had the same scale as the ones used to describe the energy-driven economic surge that has lifted much of Texas since the end of the past decade – but this one would take place in Mexico, with the products headed north.

“Imports are expected to triple,” De Los Santos said. “It’s going to create a ton of work for us.”

In the Rio Grande Valley, at the southernmost tip of Texas, De Los Santos isn’t the only one talking about what’s going on south of the border.

Over the past year, President Enrique Peña Nieto has led his country’s lawmakers into passing a high-profile and contentious package of economic reforms. That has prompted American policymakers and businesses to look for increasing opportunity in the country that already is Texas’ largest trading partner.

If Peña Nieto’s measures work, they could reverse years of sluggish growth that have weighed both on Mexico’s economy and the border regions of Texas. The overhaul also could be a chance to rewrite the narrative of drug violence, immigration and poverty that has so often been used to describe the states of northern Mexico – and, by proximity, South Texas.

The centerpiece of Mexico’s landmark reforms is the privatization of its energy sector. The country’s electricity generation, oil and gas exploration and energy infrastructure have been owned and run by the government since 1938.

Gus Garcia, Edinburg EDC

Gus Garcia, Edinburg EDC

The state-owned oil company, Petróleos Mexicanos or Pemex, has struggled to attract enough investment and expertise to maintain its production, despite the presence of large reserves in the Gulf of Mexico and shale formations that cross the U.S. border and extend south.

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A Border Story

During the past few months, the people of Texas and the rest of the country have been hearing about the Rio Grande Valley. Unfortunately, the type of publicity we received was unwanted. A surge of child refugees from Central America created a humanitarian crisis that again stirred the debate about immigration. Our communities largely ignored the political rhetoric. We had children in our midst, and they needed our help.

But the Valley still got kicked around by the news. And some larger facts went ignored.

Ramiro Garza

Ramiro Garza

First, our elected and business leaders and civic organizations were almost universally against the deployment of the National Guard. In fact, the conservative Republican president of the McAllen Chamber of Commerce wrote a personal letter to Gov. Rick Perry asking him not to send the troops. Customs, Border Patrol, and law enforcement was able to manage in the influx of children. And our generous citizens volunteered time and donated food and clothing during this humanitarian crisis.

The governor, however, sent the troops. And research indicates their presence is harmful. Economist Ray Perryman’s analysis shows the valley will lose $541 million in yearly economic benefits, including 7,830 jobs, while the impact for the entire state reaches $650 million in gross annual product and 8,680 jobs.

None of that, however, stopped the political insults. We heard again how we lived in a “war zone” and a “third world.” Those negative claims are ignorant and uninformed. The forty communities of the Rio Grande Valley, which have been historically marginalized by our geography and lack of political influence, are turning into an economic and cultural force that will have impact far beyond our palm-lined roads and sun-swept beaches.

Finally, our geography is an advantage.

The 120-mile Valley sits, strategically, between two of the largest oil shale plays in North America. The Eagle Ford Shale, which has led the U.S. recovery from the Great Recession, and the Burgos Basin just across the Rio Grande in Mexico, is transforming the region. The Burgos is estimated to have eight times the energy deposits as Eagle Ford, and Mexico is opening up exploration and development to American companies. The Port of Brownsville, already the number one Foreign Trade Zone exporter in the country, will become even busier with the import of rigs and other equipment for Burgos production.

Real estate values will also increase, and not just because of the energy boom. Mexico has recently completed its first coast-to-coast highway and it dramatically reduces shipping routes to U.S. markets in the Midwest and Northeast. Produce and manufactured items will cross one of the twelve international bridges in our valley, instead of entering through Arizona and California. Shipping transfer houses have already begun relocation to our border from western sites. And the Interstate 69 project, which has $714 million in construction underway in Texas, will further expedite delivery to customers.

Mexico has signed free trade agreements with 48 countries, and that has led to the relocation of major international manufacturing operations, including global automotive brands. In a concept called Third Coast Manufacturing, raw materials and parts for all types of products are shipped to Brownsville and Mexico’s east and west coasts for assembly or refinement before delivery through the Valley to U.S. markets.

Multi-national companies are discovering the strategic importance of the Rio Grande Valley. In fact, on the day Gov. Perry was on network television riding the river with a bulletproof vest and boat armed with 50-caliber machine guns, 200 executives from Japan and South Korea were visiting to consider relocation to the Valley. Imagine their reaction when they turned on the news later that night in their hotel rooms.

Our region also has extensive infrastructure for higher education. The University of Texas has committed $700 million over the next ten years for the launch and growth of the University of Texas Rio Grande Valley, including a medical school. UTRGV will be one of the largest universities in the nation when its first class enrolls August 2015. But South Texas College, Texas Southmost, and Texas State Technical College already educate tens of thousands of our students, and recent agreements with Mexico will ensure that both nations’ work forces for the energy and technology industries will be prepared for future opportunities.

The Valley may be overwhelmingly Hispanic but investors and entrepreneurs from around the world are making their way to our border region. And as America’s demographics shift, we might all discover in the Rio Grande Valley the formula for cooperation and future prosperity.

The time has arrived for our leaders in Texas and Washington to abandon tactics of fear and acknowledge that the Rio Grande Valley has become America’s gateway to tomorrow.

Ramiro Garza is the city manager of Edinburg, Texas, and a lifelong resident of the Rio Grande Valley

Rio Grande Valley Elected Officials Meet with Egidio Torre Cantú, Tamaulipas Governor, to Discuss Energy

Elected officials from the Rio Grande Valley say they are impressed with plans the State of Tamaulipas has in place to exploit the massive oil shale play in the Cuenca de Burgos.

[Tamaulipas

Tamaulipas Governor Egidio Torre Cantú hosted a discussion at La Fogata in Reynosa on Mexico’s energy reforms and what they will mean for his state. [Courtesy of the Rio Grande Guardian].

Five Valley leaders were invited to a meeting and lunch hosted by Tamaulipas Governor Egidio Torre Cantú at Reynosa’s famous La Fogata restaurant on Monday. The five were state Sen. Juan Hinojosa, state Rep. Sergio Muñoz, McAllen Mayor Jim Darling, McAllen City Manager Roy Rodriguez and McAllen’s superintendent for international bridges, Rigo Villarreal.

Torre Cantú gave an in-depth power-point presentation on the yet-to-be tapped energy reserves that Tamaulipas possesses. According to studies, the Cuenca de Burgos is far bigger than Texas’ Eagle Ford Shale.

“There is no doubt that Governor Torre Cantú is very proactive and that the State of Tamaulipas has done its homework in terms of what needs to be done with the infrastructure needs and the educational needs and how to provide a system that also benefits families by providing them with high paying jobs,” said Hinojosa, at the conclusion of the meeting.

Also present at the meeting were…

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