What is Ahead for Mineral Rich Texas and Mexico?

Glenn Gantt serves as the Director of Business Development at Hughett Engineering, an upstream petroleum engineering firm in Dallas and serves as a board member and former president of the Texas Energy Council.

We spoke with him to learn more about what the energy council is doing to educate Texans on energy opportunities throughout the region.

  1. Briefly describe what the Texas Energy Council does and its importance for the industry.

Much like SMU Mission Foods Texas-Mexico Center, the purpose of the Texas Energy Council (TEC) is education. It was created in 1988 as a collection of various local professional organizations in the energy sector and boasts over 5,000 total members of its constituent organizations. Every year, the TEC hosts a symposium with the goal of transferring current issues and knowledge to its members while raising scholarship funds for Texas resident college students majoring in energy sector fields. The 32nd Texas Energy Council will be on April 30 at The Dallas Petroleum Club and the topic is The Dynamics of Change. The public is welcome to attend and information on panels and speakers can be found here.

  1. What are the areas of opportunity and challenges in energy collaboration between Texas and Mexico?

Much like everything else, Texas and Mexico share a lot of history and opportunity in the energy sector. Most people don’t realize that perhaps the most influential man of the early 20th century oil industry got his start in the oil fields between Tampico and Veracruz. That man was Everette DeGolyer, a name you might recognize from the DeGolyer Library on SMU’s campus or his home, Rancho Encinal, which is also known as the DeGolyer House at the Dallas Arboretum.

The United States and Mexico have two very different ways of approaching the oil and gas sector. The U.S. does not have a nationally owned oil company and individuals can own the mineral estate, whereas Mexico nationalized the oil sector in 1938 and the government relies heavily on the national oil company, Petroleos Mexicanos or Pemex.

Even though you have these two different ownership conditions, the fact is that the rocks below the surface don’t necessarily respect the lines drawn on a map. For example, the Eagle Ford Shale has brought a large amount of development and money to South Texas and it stretches into Coahuila’s Burgos Basin where it is known as the Boquillas Formation. RoyalDutch/Shell has the world’s second largest SPAR (a type of floating flatform) based along the maritime border of the U.S. and Mexico. The Perdido Fold represents a great opportunity for Mexico to bring in foreign investment. Midstream companies are seeing the value of providing natural gas, a plentiful and cleaner burning fuel, across the border via pipelines, helping both sides.

Yet capital always craves consistency and a fair return on its investment. Since the turn of the century, Mexico had talked of reforms in the energy sector[1]. Next came the major reforms under the previous administration, and the opportunity to bring in foreign investment and technical knowledge. Outside companies supply the finances and work alongside Pemex employees, giving them insight and training to the new methods and technologies in action. In theory, this gives Mexico the financial and technical capacity to monetize (and grow) its reserves and eventually improve the overall standard of living of the populace in exchange for an agreed-upon financial benefit to those investing. Those same foreign investors will definitely be watching how the process plays out under the current administration[2].

For example, under the prior administration, foreign oil companies were invited to participate in Mexico’s oil and gas exploration and production activities directly. A good example of this was Houston, Texas-based Talos Energy bidding on several exploration blocks offshore Mexico along with partners. Wildcat drilling yielded the major Zama discovery, with Pemex as a minority partner. If political pressures stabilize, the role of Texas oil and gas companies could quickly repeat history and usher in another era of Mexican petroleum discoveries as happened before in the development of what was called Mexico’s Golden Trend. If the current administration, however, continues to curtail and try to claim the discoveries earned by foreign oil companies, Texas as well as all other foreign countries will step back and watch instead of participating.

  1. How have energy companies been innovating within the industry?

The energy sector has always been one of innovation. New technology and methods have been consistently developed and applied over the years to extract hydrocarbons from deposits that were once deemed uneconomic or even obtainable, yet 100 years later, we are still seeing production grow from places like the Permian Basin.


[2] https://news.yahoo.com/fight-over-giant-mexico-oil-194353968.html

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