As Mexico opens its doors to foreign investment and foreign operators for the first time in 75 years, Houston’s oil and natural gas-related businesses that supply the chemical and energy industries are primed for growth. Houston’s exports will also get a boost from a new open-door philosophy in Mexico, according to a report from the HSBC Group , a banking and financial services organization, and the Greater Houston Partnership , an economic- and trade-development group.
The report released May 13 stated that the combined impact of a massive investment in chemical plants and LNG export terminals on the Texas Gulf Coast and the opening of Mexico’s oil production could add more than 55,000 jobs to the Houston region’s economy even with only a 15% percent increase in exports.
The opening of Mexico’s oil and gas industry to foreign investment will allow Houston to export two innovations–deepwater drilling and hydraulic fracturing, the report said. “Many already attribute Houston’s survival in the 1990s and quick economic recovery from the Great Recession to these innovations, but the opening up of Mexico to foreign investment will likely further spur investment and jobs.”
The U.S. and Canada are experiencing production booms; however, that is not the case in Mexico. For nearly a decade, Mexico’s oil output has declined. Crude production peaked at 3.3 million barrels per day (MMbbl/d) in 2005, declining to 2.5 MMbbl/d in 2012. North of the border, the U.S. Energy Information Administration (EIA) forecast domestic crude production to increase from about 7.4 MMbbl/d in 2013 to 8.4 MMbbl/d in 2014 and 9.1 MMbbl/d in 2015.
The Cantarell, which was once considered as the world’s most prolific field, is “typical of Mexico’s production decline,” the report stated. Cantarell peaked with 2 MMbbl/d in 2005 but produced just 454,100 bbl/d in 2012. Similarly, Mexico’s production of natural gas peaked at 7 trillion cubic feet (Tcf) in 2009 and fell to 6.4 Tcf in 2012. In contrast, EIA’s 2014 energy outlook projected that the U.S. will be a net exporter of natural gas beginning in 2018.
“There are many reasons for Mexico’s production declines, but they can all be summarized in three buckets—lack of technology, lack of financing and lack of human capital. Pemex [the Mexican national oil company] currently lacks the technology and finances to develop deepwater projects in the Gulf of Mexico or shale oil deposits in the north. But foreign energy firms