Mexico Energy Reform: Border Pipeline Challenge In Chihuahua

Mexico’s oil and gas industry is about to open up to the rest of the world — and American oil and gas companies are eager to get a foothold in a market closed to outsiders since 1938. That’s the year Mexico nationalized its oil industry and ordered American and other foreign companies out. But before major exploration can take place, Mexico has to create an infrastructure to support it — roads and especially pipelines. And that’s where the challenges begin. In the last 12 months, there’s been a five-fold increase in pipeline capacity joining the U.S. and Mexico. The industry’s lobby group — America’s Natural Gas Alliance — says it’s all tied to Mexican energy reform. The pipelines are part of a nationwide infrastructure build-up in Mexico to support the new energy production that Americans want to be a part of. At an ejido in Chihuahua state residents say they've been told by a local businessman that their 1,500 acre parcel about an hour from the Rio Grande is one of the properties under consideration for a series of five natural gas pipelines that Mexico's state-owned oil and gas agency Pemex wants to build along or near the border, including two that would import American energy. At a nearby, privately owned ranch, we spoke with an 84-year-old rancher and farmer, his skin burnished by the Mexican sun with gnarled fingers that speak to a life on the land. "We have a lot of doubt about the gas pipeline and which land it will be built on," he said. He said two weeks ago, engineers came to his ranch. He says they showed him plans for a pipeline that went through one of his ranches. He says the engineers told him they wanted to pay for the right to use his and his neighbors’ lands. "I'm not renting or selling this property," he said he told them. There's another challenge for U.S. energy interests. It is the elephant in the room as foreign oil and gas executives decide whether or not to enter Mexico's new energy regulatory environment. Pipelines across much of Mexico are vulnerable to organized crime. In the last year, Mexico’s Attorney General’s Office and Pemex allege criminals have drilled nearly 2,500 pipeline taps so far this year, up more than a third from the same period in 2013. The stolen hydrocarbons are estimated by Pemex to be worth more than a billion dollars. All of this poses problems for American energy interests. They need access and security...more