The Texas General Land Officer’s new commissioner, George P. Bush, is taking his office in some fresh new directions and finding some positives in a challengingly slow energy economy.
by Al Pickett
George P Bush campaigning for Texas Land Commissioner in Sweetwater, Texas Oct 2, 2013 at the Shale Show
The Border Energy Forum has been held for 22 years, but this year’s event—and future forums, too—took on even more importance because of recent reforms to the Mexican oil industry, according to Texas Land Commissioner George P. Bush.
The Border Energy Forum is a bilingual event focused on fostering collaboration and conversion of the most efficient and technologically advanced uses of energy resources on both sides of the border. It brings together local, state, and federal officials from Texas and California, as well as the nine Mexican states that border the United States, along with both upstream and downstream industry representatives.
Bush, who attended the forum in San Diego in October for the first time since taking office in January, was one of the keynote speakers at the event, along with the former President of Mexico, Vincente Fox; Gary Doer, Canada’s ambassador to the United States; Jody Elliott, president of Oxy Oil & Gas; Hector Marques Solis, head of the energy unit of the Secretaria de Economia in Mexico; and Amanda Martin-Brock, chief executive officer of Water Standard.
In 2013, Mexican President Enrique Pena Nieto struck an unprecedented political deal with the two main opposition parties in his first days in office, scoring a number of legislative victories to bring higher standards, as well as greater openness and competition, to that country’s telecommunications industry, the education and tax systems, the banking system, and the state-run petroleum business. The reforms opened Mexico’s oil industry to private and foreign investment for the first time.
Obviously, that provides the oil and gas industry in Texas with, potentially, tremendous opportunities to not only send crude oil, condensate, and natural gas to Mexico but also to provide services and new technology from the Lone Star State to our neighbors to the south.
“A lot of people are still interpreting what their role will be with the new Mexican reforms,” Bush said. “By next year, I hope to convert the Border Energy Forum into a deal-making conference to bring American ingenuity to the oil patch in Mexico.”
He added that Mexico has instituted air quality standards that are even more stringent than those required by President Obama’s Environmental Protection Agency. Because of that, Mexico is converting its coal power generation plants to cleaner natural gas, so Mexico needs the natural gas produced in the United States, most of which will come from the Eagle Ford Shale in South Texas.
“There is a huge demand. CFE [the state agency in Mexico] is bidding out thousands of kilometers of pipelines,” Bush added, noting that midstream companies such as Kinder Morgan and Trans Energy are progressing toward building pipelines to take the natural gas from the United States to Mexico. “Howard Energy in San Antonio is working on connecting the Eagle Ford with Monterey, which is one of the largest metropolitan areas in Mexico.”
Any pipelines taking crude oil, condensate, or natural gas to Mexico will, of course, have to have State Department approval, something the Obama Administration denied in the proposed Keystone Pipeline to bring the heavy crude oil from Canada to the refineries on the Texas Gulf Coast.
Bush, the son of Presidential candidate Jeb Bush and the grandson of former President and Midland oil man George H.W. Bush, said the Border Energy Forum in October included discussion of a number of issues, including the U.S. ban on exporting crude oil, the EPA clean power regulations, the Endangered Species Act, and energy policies in both the United States and Mexico.
“I shared that I believe in being all in or not going in at all,” he emphasized. “The Texas General Land Office will have more of a role in the management of the forum in the future.”
Bush said he believes the forum has direct ties to economic development.
“The energy business is responsible for four out of every 10 jobs created since the 2008 crash in the United States,” he stated. “The oil and gas industry is a huge foundation for the Mexican economy, too. By opening up the opportunities in Mexico, the innovation of the oil and gas industry in Texas will result in a stronger economy for Texas and the United States, as well as Mexico.”
Permanent School Fund Land
The General Land Office plays another role in the state’s oil and gas industry by conducting the sale of oil and gas leases on the 13 million acres in the Permanent School Fund land. Bush, who chairs the School Fund Board along with two gubernatorial appointees, remarked that under his leadership the GLO took a historic step in 2015 by holding Texas’ first-ever online sale of oil and gas leases.
Previously, anyone wishing to develop oil and gas reserves on Permian School Fund land had to physically submit a bid, sealed in an envelope, to the GLO office in Austin. It was a process that, as Bush said, had changed very little since the 1950s. By putting the process online, the GLO brought in more bidders and made more money—nearly $1,500 per acre more than the last traditional lease sale. The Permanent School Fund made $20 million in about 20 minutes.
“Even in a soft oil and gas market, we made more money per acre by opening up the bidding process to more producers and investors,” he explained. “The 21st Century economy is online. We sell on eBay, buy from Amazon, and catch a ride through Uber. Putting these energy lease sales online just makes sense. Texans demand a more efficient, effective government, and we are delivering it at the General Land Office. As you can see, we are busy at the GLO doing big things for the people of Texas, and we are just getting started.”
Bush said about 90 percent of the state’s Permanent School Fund land is in the Midland Basin and Delaware Basin, with the remaining 10 percent in the Eagle Ford Shale region of South Texas and a smattering of acreage in the Texas Panhandle.
He added that the GLO will also hold its first offshore lease sale in several years in January. He said most of the production in state waters is natural gas, which, of course, has seen depressed prices in recent years. Bush, however, contended he wants to be proactive in the move to the use of more natural gas because of the abundance of the clean-burning fuel.
BLM Overreach
Bush also remarked on his involvement in the Western States Land Commissioners Association, a group of asset managers in 23 states stretching from Wisconsin to Alaska, including Texas, Louisiana, and Mississippi.
The group, which manages 440 million public acres, has a large voice, according to Bush.
“The land commissioners in the western part of the country are fired up about the Bureau of Land Management and what they see as an overreach by the BLM,” he emphasized.
Bush cited the Endangered Species Act, the stringent clean power regulations under the EPA, and the 1970s out-dated ban on export of crude oil as examples of overreach by the BLM and the federal government, all issues that he said the Western States Land Commissions Association is fighting.
Al Pickett is a regular contributor to Permian Basin Oil and Gas Magazine. His profile of oilman Pieter Bergstein also appears in this issue.