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 
 
 
¶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