He says reforms to bring state 217,000 jobs, $45 billion in economic activity-Research finds border ‘could see one of the most dramatic transformations in its history’-Groundbreaking legislation in the spotlight
HOUSTON, Sept. 22, 2014 /PRNewswire/ — BBVA Compass’ Chief Economist Nathaniel Karptestified at a TexasSenate subcommittee Friday about Mexico’s historic energy reforms, which he said will add more than 200,000 jobs, almost $3.5 billion in state revenues and $45 billion in GDP to the Texas economy.
Karp was invited to speak before the natural resources subcommittee by Texas Sen. Juan Hinojosa of McAllen, the committee’s chairman. He spoke about research his team at BBVA Compass conducted on the economic impact that Mexico’s groundbreaking legislation, which was passed in December and allows private firms to invest in the country’s energy sector, will have on Texas.
“Texas stands to be the major beneficiary from the reform due to deep economic ties, geographic proximity and expertise in energy exploration, production and distribution,” Karp told the subcommittee. Mexico “will need Texas’ firms to provide physical resources, cutting-edge technologies, human capital and expertise” – particularly in deepwater and horizontal drilling and extra heavy oil.
He anticipates a large share of the foreign direct investment to Mexico will be used to purchase goods and services from Texas, benefiting a wide range of the state’s industries. In addition, he predicted that Mexico’s faster economic growth created by the reforms will further boost trade with Texas and business opportunities throughout the state.
He pointed out that of the five promising basins in Mexico, the two largest are on or near the Texas border. The Burgos Basin in northeast Mexico is estimated to hold two-thirds of Mexico’s shale gas resources. It’s an extension of Texas’ Eagle Ford Shale, and would have significant appeal for companies that operate on the Texas side of the border. Karp said this will help narrow the socioeconomic disparities between Texas’ border cities and big metro areas, like Houston and Dallas.
“If these border towns effectively seize the opportunity, the Texas-Mexico border could see one of the most dramatic transformations in its history,” Karp said.