Identifier
Created
Classification
Origin
08MONTERREY490
2008-10-30 20:33:00
UNCLASSIFIED
Consulate Monterrey
Cable title:  

BORDER ENERGY FORUM FOCUSES ON BILATERAL ENERGY COOPERATION

Tags:  ENRG EPET ECIN ECON PGOV MX 
pdf how-to read a cable
VZCZCXRO9477
PP RUEHCD RUEHGD RUEHHO RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHMC #0490/01 3042033
ZNR UUUUU ZZH
P 302033Z OCT 08
FM AMCONSUL MONTERREY
TO RUEHC/SECSTATE WASHDC PRIORITY 3229
INFO RUEHME/AMEMBASSY MEXICO PRIORITY 4251
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0040
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHMC/AMCONSUL MONTERREY 8746
UNCLAS SECTION 01 OF 02 MONTERREY 000490 

SIPDIS

DEPARTMENT PLEASE PASS TO U/S RUBEN JEFFREY III
DEPARTMENT PLEASE PASS TO EEB A/S DANIEL SULLIVAN

E.O. 12958: N/A
TAGS: ENRG EPET ECIN ECON PGOV MX
SUBJECT: BORDER ENERGY FORUM FOCUSES ON BILATERAL ENERGY COOPERATION
AND RENEWABLE ENERGY

REF: A) MONTERREY 397 B) MEXICO 3208

MONTERREY 00000490 001.2 OF 002


UNCLAS SECTION 01 OF 02 MONTERREY 000490

SIPDIS

DEPARTMENT PLEASE PASS TO U/S RUBEN JEFFREY III
DEPARTMENT PLEASE PASS TO EEB A/S DANIEL SULLIVAN

E.O. 12958: N/A
TAGS: ENRG EPET ECIN ECON PGOV MX
SUBJECT: BORDER ENERGY FORUM FOCUSES ON BILATERAL ENERGY COOPERATION
AND RENEWABLE ENERGY

REF: A) MONTERREY 397 B) MEXICO 3208

MONTERREY 00000490 001.2 OF 002



1. Summary. The fifteenth annual Border Energy Forum held
in Monterrey emphasized cross-border energy cooperation and the
potential of renewable energy. EEB officer Matt McManus
praised Mexico as a reliable energy producer, and announced the
signing of a Presidential Permit to allow a PEMEX subsidiary to
build a gasoline pipeline from El Paso, Texas to near Ciudad
Juarez. The conference attracted substantial interest in
renewable energy from private sector companies. Despite the
concurrent discussion of energy reform in the Mexican Congress,
there was little discussion of the reform package, other than
one presenter who thought that it provided little incentive to
drill deep water oil wells in the Gulf of Mexico. End Summary.




2. Over three hundred representatives from business, NGOs
as well as state, local and federal government officials from
the U.S. and Mexico attended the Border Energy Forum held in
Monterrey on October 23 and 24. Interest in the conference
exceeded organizers expectations and many conference sessions
were oversubscribed. The USG was well represented by the Consul
General, EEB Energy Producer Affairs Division Chief Matt
McManus, the Embassy Mexico Energy Attache and econoff. Energy
is a key issue in Northern Mexico due to the border region's
industrial production, population growth, importance as an
energy transit point, and the need to expand renewable energy.





Enhancing Border Energy Cooperation




3. In the opening session, McManus emphasized that the U.S.
values Mexico as a reliable energy partner, and that energy
flows in all directions in North American, since the United
States is a net exporter of gasoline and natural gas to Mexico.
Moreover, the State Department has led efforts to streamline the
Presidential Permitting process for cross-border energy
pipelines. Indeed, McManus announced the issuance of a
Presidential Permit by the State Department to PEMEX's PMI

subsidiary for the Frontera Juarez Pipeline. The pipeline will
transport gasoline and diesel from El Paso, Texas, to Cuidad
Juarez, Chihuahua, reducing the use of gasoline tanker trucks
across the land border, enhancing road safety and providing for
more efficient energy transportation.




4. ConGen Monterrey also emphasized enhanced energy border
cooperation in a side meeting with the Energy Council, a group
of state legislators from 11 energy-producing U.S. states, five
Canadian provinces and Venezuela. The council has had
difficulty recruiting their Mexican State counterparts,
partially since Mexican state representatives only serve one
three year term, so there is constant turnover. The Consul
General recommended first winning over Nuevo Leon's private
sector to provide continued continuity and interest, and offered
to introduce Energy Council members to key post private sector
contacts at the next business roundtable hosted by the
consulate.



Border Forum Strong Focus on Clean and Renewable Energy






5. Many of the main speakers and workshops focused on ways
to develop renewable energy. The Mexican state of Nuevo Leon
touted the SIMEPRODE project to convert waste into electricity
(see reftel A). The landfill project converts methane gas
produced from the landfill into 12MWh of electricity for
Monterrey and other cities in the state of Nuevo Leon. The
project provides a renewable energy source and keeps a potent
greenhouse gas from entering the atmosphere. Many government
officials and small businesses were also interested in learning
about funding schemes for renewable energy from organizations
such as OPIC, the Inter American Development Bank, the State of

MONTERREY 00000490 002.2 OF 002


New Mexico Governor's Office and the Houston Technology Center.
These organizations presented case studies of how they are able
to finance and provide technical assistance with companies
working in clean or renewable energy. Small US companies in
particular were interested in working on renewable energy
projects in Mexico but were unsure about the Mexican federal
regulatory requirements, which restrict commercial sale of
energy.




6. Alejandro Lambreton Narro, the Nuevo Leon State Energy
Coordinator, called for more development in natural gas
infrastructure including natural gas from the United States.
Natural gas is cleaner and cheaper, and needed by rapidly
expanding cities in Northern Mexico and rural areas alike.
However, in many cases the government is unable to deliver
natural gas to rural areas in Mexico. The PEMEX Cuenca de
Burgos facility in Tamaulipas was cited as an example of how a
successful natural gas project can provide a cheap, reliable
source of energy.




7. At the conference there was a strong consensus that
Mexico must institute carbon sequestration and storage programs
to be able to successfully compete in a cap and trade system
envisioned in any 2012 post-Kyoto Protocol agreement. Given
current population growth and industrialization, CO2 emissions
are expected to increase 90% by 2050. The technology for carbon
sequestration and storage has existed for over 30 years but is
not in use in Mexico. There remain many difficult hurdles
before any system can be put in place such as proper financing,
insurance and accountability.



Doubt that Energy Reform will Spur Deep Water Drilling




8. The only conference breakout session focused on oil was
devoted to deepwater exploration. A senior representative from
an international oil company focused on the cost and
technological challenges firms face exploring and producing in
ultra deepwaters. He noted that firms in ultra deepwater
development work in partnership with other companies to
diversify risk due to the extreme cost of the projects. Former
SENER and SRE official, private consultant, Dra Lourdes Melgar
expressed disappointment with the limited nature of Mexico's
energy reform. She showed a map which illustrated extensive
deepwater drilling in U.S. waters of the Gulf of Mexico,
contrasted with the limited rigs developed close to shore in
shallow waters on the Mexican side. As U.S. exploration
approached the maritime border, including the `donut hole', an
area in which U.S. and Mexican coordination will be needed in
the future, Melgar expressed concern that PEMEX would not have
the technical and financial capability to partner with the U.S.
in these deep water areas.




9. Comment. Aside from the one session on deep water
drilling, the lack of discussion of Mexican energy reform was
notable. The Mexican Congress was in the final stages of
approving the energy reform package (see reftel B) during the
Border Forum. Nevertheless, despite having a large number of
energy executives and government energy officials at this
conference, there was surprisingly little reaction to the PEMEX
reform bill as most conference participants focused on renewable
energy. Econoffs questioned various participants about the
energy reform package, but only elicited vague praise that it
was a step in the right direction. The next Border Energy
Forum conference is scheduled for October 2009 in Houston, TX.
End Comment.
WILLIAMSON