1. Re-Energize the Americas &
Border Energy Forum XVIII
As Goes the Border,…
Hunter L. Hunt
October 26th, 2011
2. Disclaimers
Family of failed farmers
77 year old family business that has drilled dry holes on 6 continents
Newest most “inexperienced” utility in the country
I speak Spanish like I play golf
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3. As Goes the Border,…
The Three “Megatrends” Driving Growth
Implications for Infrastructure
Amber Lights
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4. Megatrend #1: Border Demographics
Population Growth in US Border States
2000 - 2010
1.30
Arizona
Texas
1.25
New Mexico
1.20 California
Indexed Growth
United States
1.15
1.10
1.05
Growth Rate in Mexican Border States
2005-2010
2.5
1.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2
Growth Rate
1.5
1
0.5
0
Source: U.S. Census Bureau, Population Estimates Program Source: INEGI. Censos de Población y Vivienda
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5. Demographics – Hispanic Population Growth
Hispanic Population Growth
2000 - 2010
16
14
Population Millions
12
10
8 2000
6 2010
4
2
- Total Population Change in US
California Arizona New Mexico Texas
Border States 2000 - 2010
5.0
4.5
4.0
Popilation Millions
3.5
3.0 Non-Hispanic
2.5
Hispanic Growth
2.0
1.5
1.0
0.5
0.0
California Arizona New Mexico Texas
Source: U.S. Census Bureau, 2010 Census and Census 2000
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7. Reasons for Migration
US Migration to the Southwest and Texas
Warmer Weather
Economic Opportunities
Retirees on Both Sides of the Border
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8. Megatrend #2: Cross Border Industry
NAFTA accounts for nearly one-third of the total US exports
Mexico and the United States traded more than $1 billion worth of
goods each day in 2010, a 4-fold increase since1994
Mexico spent $163 billion on US goods in 2010
NAFTA-related trade with Mexico (since 1994) added 1.7 million US jobs
Nearly 50,000 small and medium-size U.S. businesses export to Mexico,
collectively selling $41 billion in goods to Mexico
22 states count Mexico as the No. 1 or No. 2 export market; 14 more count
Mexico as a top-five market
The Unites States provides up to 50% of all input for Mexico’s
maquiladora manufacturing and assembly firms – more than $41 billion
in annual sales
Sources: U.S. Department of Commerce, U.S. Food and Produce Association
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10. Maquiladoras
Boost US population, employment and output growth
A 10% increase in maquiladora output leads to an increase in the
adjacent US city as follows:
0.5-0.9% increase in total employment
0.7-0.8% increase in manufacturing
0.13% to a 0.20% increase in wages
Foster cross-border retail activity as maquiladora worker spend a
significant portion of their income in US border cities
Have brought input suppliers from the Midwest to locate along the
border for just-in-time supply chains
Source: Cañas, Jesús et al. Federal Reserve Bank of Dallas. Impact of the Maquiladora Industry on US Border Cities
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16. In Summary
Three major trends continue unabated
Demographic growth, both indigenous and migrants
Industrial growth, on both sides of the border
Renewable energy development
The critical requirement to support these trends:
INFRASTRUCTURE
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17. A Simple Case Study: Sharyland Plantation
1998
2008
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18. A Simple Case Study: Sharyland Plantation
6,000-acre mixed-used master planned development between Mission and
McAllen, TX developed by Hunt Realty
Almost 1,850 residential homes, prices ranging from $160K-$1M
Almost 4 million sq. ft. of industrial Class A space in business park
Black & Decker
Corning
GE
Motorola
Panasonic
T-Mobile
Market value of land
~$14 MM in 1998
~$980 MM in 2010
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19. A Simple Case Study: Sharyland Utilities
Created in 1999 to serve the Sharyland Plantation in South Texas
Energized first customer in February 2000
Currently serving ~2,500 customers in the Valley
Have grown to serve 42,000 customers in 29 counties throughout Texas
150 MW High Voltage Direct Current (HVDC) Interconnection to Mexico
Energized in 2007 to support reliability and commercial activity
Actively used by market participants in Texas and Mexico
Currently seeking expansion to 300 MW
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20. Bullish on Future Energy Infrastructure
Proposed Sharyland Utilities/Hunt Power Transmission Projects
IA
NE
CA NV Chicago
UT
IL
CO
MO
Verde KS
Transmission
Project
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AZ Hernandez
NM
Southline OK
Sante Fe TX
Transmission Project 8
7 1
AZ to Sonora
Interconnection CREZ
Tucson
Nogales Juarez
Cross Valley
Transmission Line
NM to Chihuahua
Mexico
Interconnection
SU Interconnection - 2 McAllen
HVDC Expansion Brownsville
LRGV
Interconnection
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21. Bullish on Future Transportation Infrastructure
Nogales – Mariposa I-35 Expansion
Port of Entry TX-DOT announced
$200 million expansion in 2010
Modernization Project
I-69 Extension
Planned to connect three different
border crossings in Texas to connect
San Ysidro with northern crossings.
$500 million Union Pacific
Modernization Project Rail station
$400 MM
San Luis, AZ – San Luis, Donna – Rio Bravo
Sonora Commercial International Bridge
Crossing Guadalupe – Tornillo Bridge Built in 2010
Built in 2010 Replace the Fabens-Casita
with $10 million new bridge
Anzalduas International
Bridge
Built in 2010
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22. Bullish on Renewable Energy Projects
California Arizona New Mexico Texas
Solar +4,800 MW Solar +800 MW Solar +300 MW Solar +700 MW
Wind +8,800 MW Wind +1,900 MW Wind +4,300 MW Wind +41,000 MW
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23. Bullish on Energy Entrepreneurship
Upgrading Heavy
Emerging Solar Using sunlight to
Crude Oil
Technologies convert CO2 and natural
Indigenous to North
gas to liquid fuels
and Central America
Relationship With Other Universities
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25. Amber Lights: Politics
Q: What do you do with a demographic group that is:
Pro-God
Pro-Family
Pro-Small Business
Risk takers investing in their children’s future
Fastest growing demographic group in the country, will be a majority in
Texas in ~15 years?
A: Dream demographic for Republicans (?)
A: Equal seat at the table for Democrats (?)
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26. Amber Lights: Politics
A History of Failure
Immigration Reform
DREAM Act
Border Security
The Demographics of the Border are Inevitable – And Exciting!
Other countries could only dream of this human capital gift
We must not let fear or patronage destroy a beautiful future
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27. Amber Lights: Cartel Violence
This trend is fueling the unhealthy political debate
Despite Mexican economy growing at over 4%, this dominates the news
Plenty of blame to go around
BOTH SIDES NEED TO FOCUS ON STOPPING THIS DANGEROUS
SITUATION
Source: 2011 Trading Economics
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28. Amber Lights: Cultural Missteps
The border area is different
Dominated by Hispanics and Native Americans
Both have incredibly rich cultures and heritages
Yet stereotypes still pervade
The area needs investment, not lecturing
Hunt / Sharyland Utilities Approach
Core values matter
Respect for the Individual
Humility
Know you are guest; strive to be a partner
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29. As Goes the Border,…The Future is Bright
The region is growing The future of both
and will continue to do so countries is tied to our
collective success
With the right mix of people and investment, it is a very bright future!
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