Texas energy boosters urged the Trump administration on Tuesday to strengthen rather than diminish the North American Free Trade Agreement to protect the flow of natural gas exports from the US to Mexico as output is surging due to billions of dollars of investment in the Permian Basin and midstream infrastructure.
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Todd Staples, president of the Texas Oil & Gas Association, made the comments as the group released its annual analysis of the impact of the state's energy industry on the market and the economy.
The report comes at a time when producers and pipeline operators are eager to build on the two countries' relationship, which ultimately benefits Texas when production increases.
About $11 billion in taxes and royalties was paid to the state in fiscal 2017, compared with $9.4 billion the previous year, Staples said.
That growth could be jeopardized depending on the outcome of talks over renegotiating NAFTA.
"We think NAFTA should be a permanent document," Staples told reporters during a conference call. "A sunset provision doesn't do any good for those that are making the kinds of investments that are required."
Total exports of natural gas, including to Mexico, are expected to account for 55% of all new US natural gas demand over the next five years, data from S&P Global Platts Analytics shows.
As Mexico retools its power generating fleet to rely more heavily on gas and draws on US supplies to fill in for falling domestic production, Platts Analytics expects that total US exports to Mexico will increase to 6.9 Bcf/d by 2023, a 2.7 Bcf/d build over 2017.
US LNG exports overall are expected to reach 10.5 Bcf/d by 2023, an 8.3 Bcf/d increase over 2017 levels. By comparison, domestic gas demand is expected to rise 8.7 Bcf/d above 2017 levels to 81.2 Bcf/d by 2023.
Because of its production fields and expansive Gulf Coast infrastructure, Texas is a major component of those growth forecasts.
"Policy that encourages growth of the entire oil and gas sector is key to the whole story," Staples said. "We have a lot at stake as we continue to provide energy resources to our neighbors."
In recent months, other industry groups and some pipeline operators have weighed in.
Among them, Sempra Energy, which is developing pipelines in Mexico through its subsidiary IEnova, said in December it was concerned about proposals to reduce investment protections, limit the ability to use international arbitration procedures, and talk of a sunset clause to allow NAFTA to be terminated after five years.
Such proposals could cause some companies to cut back on long-term production and infrastructure plans.
"Aligning these up is a growing pains process, but it is one that is essential to the economic prosperity of Texas and our relationships with Mexico," Staples said.