Energy experts say nearshoring in Mexico is good for Texas

LAREDO, Texas – Energy experts say the nearshoring boom happening in Mexico right now is going to good for the Texas economy, particularly along the border. 

According to Forbes, nearshoring is the inverse of offshoring. A strategic business practice, nearshoring involves outsourcing tasks to a neighboring country, such as Mexico, rather than distant offshore locations, such as China.

Todd Staples, president of the Texas Oil & Gas Association (TXOGA), asked a question about nearshoring as he moderated an industry panel discussion at a summit held in Laredo on April 18. 

The summit, titled South Texas Energy Impact-Laredo, was sponsored jointly by TXOGA and South Texas Energy & Economic Roundtable (STEER). It was held at Texas A&M International University. 

“Near-shoring provides opportunities for Texas growth, Texas jobs, Texas development,” Staples told the Rio Grande Guardian International News Service, at the conclusion of the summit.

“The reports that we’re hearing from businesses located in South Texas is because of the nearshoring occurring in Mexico, warehouses are being built in Texas, new trade opportunities are growing. And so, we want to see that success. We have an abundance of natural gas. Mexico is an invaluable partner and a big customer of our natural gas. And we want to see this growth and development that will benefit everyone.”

One of the industry panelists was Mike Howard, CEO of Howard Energy Partners. Interviewed after the panel had concluded its discussion, Howard said: 

“So, what we’ve noticed is what’s good for Texas is good for Mexico and vice versa. And the pipeline, the natural gas that we’re sending to Mexico right now is powering the power plants and the nearshoring activities happening right now. So, as these Amazon-size warehouses and these factories are going into Mexico, they need energy, and there’s not enough energy in Mexico. So, it’s incentivizing oil and gas to be produced here in Webb County. Because there’s an energy demand… it’s helping because as prices in the U.S. aren’t great, prices in Mexico are good. And so nearshoring is really helping the natural gas and oil business here in Webb County.”

Another industry panelist was Cliffe Killam, president and CEO of Killam Oil. Asked about the nearshoring phenomenon, Killam said:

“So, the impact we’ve had so far, we’re beginning to see significant investment into Mexico. Some of that money has not fully come online yet in terms of factories and facilities but it will be coming on in the next couple of years. With that there’s going to be a tremendous amount of investment into the Texas-Mexico border from El Paso to Brownsville. Laredo is going to be a core component of that and with that investment, there’s going to be additional, astronomical power needs to help with that industrialization.”

Killam said more data centers are going to be needed.

“Technology is going to be needed to support that nearshoring. There are going to be a massive amount of data centers in Mexico, South Texas, across Texas. And they have an incredible amount of power need,” Killam said. “In order to help to accomplish or satisfy that, it’s about getting that power distribution and, in turn, supplying that power. And I think natural gas is going to be the way to help make that happen.”

Editor’s Note: The above news story is the first in a two-part series on the South Texas Energy Impact-Laredo summit hosted jointly by Texas Oil & Gas Association and South Texas Energy & Economic Roundtable.

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