The mainstream news has been relatively quiet in the last month about a recent and significant Chinese investment in South Texas oil. But Tom Pauken, chairman of the Texas Workforce Commission, has expressed concern about long-term effects of such deals on the U.S. economy and possible threats to Texas.

Pauken's November 5 statement referred to a deal announced in October, in which the government-run China National Offshore Oil Corporation (CNOOC) entered into an agreement with Oklahoma-City based Chesapeake Energy, paying over $2 billion for a one-third interest in Chesapeakes Texas project, through which it will gain access to fracturing and directional drilling technology.

While its not unusual for foreign investors to buy interests in Texas oil and gas deals, this time its different. Its bigger. And it will allow China access to new, hard-earned U.S. technology. The region of South Texas that is home to the Eagle Ford shale play contains reserves trapped in previously hard-to-access shale rock formations. With technological advances, however, the United States has become a leader in hydraulic fracturing (fracking) of these geological formations.

Fracking is a process in which cracks, or fractures, in formations are created or enhanced in order to provide an outlet for oil or gas. Though fracturing a well isnt new, hydraulic fracturing is, and the Chinese want this knowledge.

Pauken further observed in his Texas Workforce Commission statement that the CNOOC/Chesapeake agreement is just one more example of Chinas hedging its bets by exchanging its devaluing U.S. dollars for U.S. hard assets:

The U.S. Department of the Treasury reports that China holds more than $860 billion in U.S. Treasury securities and China's foreign exchange reserves are believed to contain l.7 trillion American dollars.

In fact, 65 percent of China's foreign exchange reserves are composed of greenbacks.

Pauken discounted as unsound the Keynesian economic policies of Treasury Secretary Timothy Geithner in weakening the dollar, and questioned if the resulting courtship of foreign investment is worth the risk of a short-term shot in the arm:

The CNOOC agreement with Chesapeake Energy also prompted the November 11 Christian Science Monitor (CSM) to ask, What Does China Really Want in South Texas? CSM concluded that China is seeking a better way to produce cleaner energy.

Others, however, disagree. In Midland, Texas the epicenter of all things oil in West Texas, with most residents connected in some way to that business oil and gas consultant Morris Burns is disturbed about the long-term ramifications of selling to the communist government-run CNOOC:

With the Chinese purchasing a minority interest in a field, the camel has his nose under the tent. That concerns me.

If theyre able to purchase a minority interest, they can someday purchase a bigger one. They already get enough of our dollars

Many wonder why those concerns are not heightened in 2010.

Forbes further noted that pension fund boards in California, Florida, Illinois, and Minnesota list CNOOC as either a restricted company or one under scrutiny. These boards are divesting their holdings from companies identified as doing business with Iran. According to Forbes,

CNOOC has extensive commercial ties in Iran, and is under contract there to produce ten million tons of natural gas annually, and U.S. officials should determine whether CNOOC is in violation of U.S. sanctions laws.

If CNOOC moves forward on its current deals and engages in transactions that would trigger action under the Iran Sanctions Act investing $20 million or more in the Iranian energy sector, providing it with technology, goods or services, or selling refined petroleum to Iran Washington should prohibit it from making major investments like the Chesapeake deal.

Forbes suggested CNOOC be rigorously examined concerning its intent to use new-technology expertise acquired in the United States to further its projects in Iran:

Only when CNOOC answers questions over its activities in Iran to Washingtons satisfaction should the U.S. government declare Americas energy riches open to the state-owned Chinese energy giant.

There are those, including many Texans, who are at best uneasy about the Chinese presence in the U.S. economy, even if it does satisfy America's concerns about Iran. Under capitalism, the United States has led the world again in the application of technological advances, and opponents of the Chinese investment see no reason to give away the farm under such suspicious circumstances.