35 minute read
Oil & Gas
Gustavo Ortega
Director General of Grupo México Energía
Self-supply is the Name of the Game for Grupo México
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More about this person Q: How did Grupo México become involved in the country’s energy sector?
A: Grupo México got involved for the very first time in the energy sector with the construction of a combined cycle power plant in Sonora. The company began to generate its own energy with a 255MW power plant. During the construction of the first plant Grupo Mexico decided to construct a second plant next to it. Today, we have a combined cycle plant with a total of 500MW. A natural gas pipeline was built to bring the gas in directly from the US to the plant. Fortunately, the project is located close to the border, meaning that a relatively short pipeline of 110km would be enough.
Q: How did the company get involved in renewable energy?
A: While we were building this power plant, the company goal was to innovate and get involved in renewable energy generation. Clean energy is the future and we wanted to reduce our carbon emissions by supporting our Oaxacan projects with a wind farm. This resulted in the construction of a 74MW wind farm. We also built a small solar system to provide energy to our corporate offices in Hermosillo. It has a capacity of 80KW and it is the first solar system to include heliotrope technology. This means the system follows the sun in two directions. It was an extremely innovative solution at the time, around seven years ago. Soon after, the company donated photovoltaic systems to public schools in Sonora and some other places. We are now building a second wind farm in Fenicias, which is located in Nuevo Leon. The farm represents an investment of US$250 million and will have 144MW capacity that will be used for our own supply.
Q: Where does the company see the best opportunities to generate its own energy?
A: I consider that with the changes we have been seeing in the energy regulation and the current uncertainty, identifying opportunities is somewhat limited. Grupo México Energía is still growing but we are focusing on the idea of self-supply. Entering the WEM to sell energy did save us money at the end. However, we would like to see this area more regulated. Currently, our operations continue but they are all under amparos and legal actions. Unfortunately, due to the situation brought on by the pandemic and the regulatory changes, we still have pending matters with CENACE and CRE, whose operations have been affected for several months now. With all the surprises we have faced, uncertainty has taken root in the sector.
Q: How has the company been adapting its strategy to the challenging times in the sector?
A: We are under the self-supply scheme and, therefore, we mainly consume our energy ourselves. We intend to keep that position. We are not considering to switch to the WEM (Wholesale Electricity Market). We know that other companies in the sector have had success there. Nonetheless, our goal is to be our own energy generator and provider under our own terms. However, if there were to be projects in collaboration with CFE, that would allow for some greater clarity regarding investment and we would be inclined to participate. This could be a significantly interesting opportunity in the area of transmission, which requires both new infrastructure and substantial reinforcement.
GridSolv Max Storage and Gems Energy Management Systems
Renowned technology group Wärtsilä provides energy storage for the 50MW Eolica Coromuel wind farm located in La Paz, Baja California Sur. The system will deliver an output of 10MW and help the wind farm to meet strict grid code requirements, while being maintained and monitored remotely to ensure optimal performance at all times.
The storage system comprises the company’s GridSolv Max containerized solution for the core hardware assets of the energy system—batteries, a built-in safety system and air conditioning. The system is able to control the wind farm’s ramp rate, which enhances the site’s energy generation reliability and provides frequency control, as well as further capacity for the grid. The cost-effective GridSolv Max system significantly boosts energy density and enhances energy reliability. Due to its innovative architecture, it is easily installed and integrated for any size or type of storage application.
To boost the storage system’s capabilities, Wärtsilä applies its smart energy management system, GEMS, which connects energy assets to electricity markets and adjusts itself based on the market’s conditions through real-time optimization.
In addition, GEMS supports the management of fluctuations in energy outputs, which can be caused by the wind’s intermittent circumstances. By directly addressing the customer’s energy needs, energy storage technology ensures that energy assets are future-proof.
Electricity Reform Aims to Create Level Playing Field
María de los Ángeles Huerta del Río | 10/03/2021 Federal Deputee at the Congress of Mexico
Certainty to Boost Energy Investment
Mexico Energy Forum | 10/03/2021
Project Financing to Weather All Storms
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Migrating to a New Market Dynamic: Pros and Cons
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Electricity Market Walks but Now It Must Run
Mexico Energy Forum | 10/03/2021
ESG Investment for Higher Profitability
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Flexible Power Generators Are the Future
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Suitable Recognition to Unlock Storage, Grid Solution Potential
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Being Clear About the Path Forward
Enrique Ochoa | 25/03/2021 Deputy for Michoacan and Secretary of the Energy Commission in the Chamber of Deputies
Unsteady Rules Put Community Acceptance of Projects at Risk
Luis Vera Managing Partner of Vera & Asociados
Keeping a Closer Eye on the Energy Counter-Reform
Edmond Grieger Partner at Von Wobeser y Sierra
11 Oil & Gas
The Mexican oil and gas industry was not immune to the various circumstances that have affected the sector globally for the last 12 months. However, it has been shielded from the worst of this situation thanks to its position as a priority for private and public authorities. The Mexican government declared the oil and gas sector an essential economic activity and decreed that its operations were to remain uninterrupted throughout the pandemic. Major operators also made significant commitments to their projects in Mexico despite the necessary delays that their calendars had to absorb for their financial models to remain stable. Many of the sector’s regulators were also able to clear the backlog that shutdowns left, sometimes achieving faster response times with reduced personnel and fewer material resources.
Thanks to these and other efforts, Mexico’s oil and gas value chain has remained productive throughout this difficult time. PEMEX has even managed to address the necessary reduction of its debt while stabilizing production levels. The government’s plans for the NOC remain as ambitious as ever and 2020 showed that those plans might be feasible if the company can survive unexpected of setbacks.
2020 proved to be a remarkable feat of resilience and strength for all of the sector’s participants and stakeholders. What remains to be seen is whether or not a complete arc of recovery and renewed growth can be reached.
11 Oil & Gas
195 Analysis
Surviving Multiple Crises, Thriving in the Aftermath
196 View From the Top
Warren Levy | CEO of Jaguar E&P
197 View From the Top
Andrés Brügmann | Mexico Country Manager of Fieldwood Energy E&P Mexico
198 View From the Top
Emry Hisham Yusoff | Mexico Country Head of PC Carigali (PETRONAS)
200 View From the Top
Alberto Galvis | CEO of Citla Energy
201 View From the Top
José Luis González | Head of the Supervision, Inspection and Industrial Surveillance Unit at ASEA
202 View From the Top
Merlin Cochran | Director General of AMEXHI
203 View From the Top
Gerardo Clemente Martínez | President of AMGE
204 Spotlight
ROC Asset Management’s Place In A New World
205 View From the Top
Eckhard Hinrichsen | Mexico Country Manager of DNV
207 View From the Top
Verónica Fregoso | PMC Platform Manager of PPG Comex
208 Content Links
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The hydrocarbons sector might have been the only segment to face historically dire circumstances that were not exclusively connected to the pandemic. The drama playing out in the sector was clearly evident when the price of oil turned negative in the spring, led not only by lower demand levels brought by the pandemic but also by a global production crisis that international organizations were still attempting to mediate. The world was privy to the sight of tankers moored near ports all over the world, waiting for a hypothetical future date at which offloading would prove economically feasible, let alone profitable.
Mexico’s economy was hit particularly hard by all of these circumstances due to the role that PEMEX plays in its public finances. By the time the production crisis was coming to an end and after a politically contentious negotiation process, the Mexican government had to let Mexico join the list of oilproducing countries agreeing to a decrease in production for the sake of the market’s health, a particularly bitter pill for this government to swallow given that a central aspect of its strategy was based on stabilizing PEMEX’s historic production decrease.
Even in the midst of the crisis, however, MBN experts pointed to an imminent recovery. “Everybody is affected by the crisis and it would be unwise for anyone to say they know the outcome. Unquestionably, there is huge competition now to gain a large part of the global energy market. This is happening in response to the impact that the rise of the US shale market had on global prices. What has happened is a direct expression of that competition and what I perceive, compounded by the effects of COVID-19, is a huge market overreaction,” said QRI Chairman and CEO Nansen Saleri in April 2020. According to Saleri, a price below US$20US$30 would be unsustainable in the midterm due to the world’s energy demand of around 95-99MMb/d. “A sustained price in this range would erode the global market’s ability to deliver this required volume. My own view is that the markets will self-correct and prices will return to a number above US$30,” he said.
Despite the fact that companies in the industry have been able to restructure their activities to increase their resilience through these difficult times, it is also true that the actual recovery arc of the industry, in terms of market indicators, continues to be slow. “So far, the government has been able to fulfill its price commitment because, after the world oil market crisis of April 2020, demand has not fully recovered and international prices, which were down for several months, are just beginning to recover as the economy recovers too,” stated former PEMEX independent board member and current adviser to the Senate in matters of Energy Fluvio Ruiz Alarcón. 2021 is certain to be defined by the successes of public and private organizations in the industry that had an opportunity to learn many lessons in 2020, according to Cochran. “The last time we had this price drop it was due to increased production from shale producers. When prices dropped, everybody thought that the shale industry was dead. Shale managed to thrive, but it did so within the new reality of oil prices. This is the same for oil: it will thrive but it must reinvent itself.”
Warren Levy
CEO of Jaguar E&P
Jaguar: Pandemic Delays Used to Refine Planning
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More about this person Q: What are the latest updates on Jaguar’s operations in Mexico?
A: Last year started with a plan to pick up a rig in March and then a second and a third rig over the course of the year. These plans had to be changed due to COVID-19 and the need to modify operational processes safely. We picked up the first rig in March, just before the shift to remote work began, and kept the rig drilling throughout the year. We did not end up picking up the second rig until November. We were able to complete six wells by the end of the year. Our plans have effectively been delayed by a couple of months. Our original plans remain in place and in 2021 our drilling campaign will ramp up.
The results from 2020 were successful. The most important achievement for Jaguar was a complete year LTI-free. We had not drilled with these rigs before and we incorporated all the different and new service providers into our ranks, which was a great feat. We were also able to improve drilling times throughout the year and have seen some promising initial results. Only one is producing and tied in but we are testing others. We have focused more on maximizing production in existing fields. During 2020, we reactivated a number of wells. This allowed us to more than double our production. Given that these fields had legacy infrastructure, we are pleased with the result. Aside from this, we have worked hard to consolidate our position with the communities in our project areas, as well as accelerating the work we are doing on the environmental side.
2021 is a key year for Jaguar to deliver exploration results. We have also prepared a development program that we are in the process of permitting with the government that mostly encompasses our acreage in the Burgos Basin. The goal is to raise production via development wells and additional facilities.
Q: What will be the company’s next steps with its onshore blocks?
A: We have just finished the drilling on Pikit and the VC02 block in Veracruz and are in the process of completing and testing the well. We have three operating areas that are divided by scope. The northern part of the Burgos Basin, which includes Blocks 4, 5, and 7, is well characterized and includes infrastructure. Here, we are doing evaluations and extensions ahead of small incremental investment.
Blocks 8 and 9 in southern Tamaulipas are considered highimpact exploration, including new geological play concepts. These blocks are higher risk and higher reward, with potential of reservoirs of 1TCF of gas. We are evaluating results from one well we drilled on these areas last year. In Veracruz on Blocks VC02, VC02 and TM01, we are looking for new play concepts and proven hydrocarbon systems. There are both shallow and very deep prospects. The challenge is assuring that we have evaluated enough of the shallow prospects to justifying taking the depth risk. In Tabasco, we have two blocks in the Sureste Basin with well-known play types. Because of the complexity of accessing these two blocks, PEMEX did not look at them. Nevertheless, Jaguar believes the potential is there.
Andrés Brügmann
Surviving 2020 to Produce in 2021
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More about this person Q: How did Fieldwood adapt to the circumstances of such a difficult year?
A: One of the most important lessons that we learned was to improve the adaptability of our operational processes. This includes offshore operations of the two drilling rigs, construction activities taking place at fabrication yards and the construction and installation of subsea pipelines. We concentrated our efforts on protecting the health of our employees and contractors. We went from not knowing anything about the COVID-19 disease to adapting our processes of embarkment, disembarkment and medical evacuation to deal with COVID-19 on a daily basis. We are incorporating new information and updating our procedures in real time. Advances in testing technology were remarkable. The availability of rapid antigen tests in Mexico allowed us to speed up our operations by eliminating quarantine periods for embarkation. Fortunately, we have not stopped operations throughout the entire pandemic.
Q: What do you consider to be the most important differences between 2021 and 2020, from an operational viewpoint?
A: During the first half of 2021 we will focus on the drilling, construction and installation programs in Pokoch and Ichalkil in order to achieve commercial production operations during the second half of 2021. Every day, we work relentlessly toward achieving this goal and to reduce the impact that COVID-19 has on our operations and suppliers. The pandemic is not over yet and we expect the challenges to continue this year and we must continue to be vigilant and react quickly. Despite vaccination efforts, we expect to see more COVID-19 cases during 2021, therefore, our number one priority, to preserve the health of our employees and contractors, is to ensure that everybody follows strict testing and isolation protocols to prevent contagions. 2021 will represent a historic milestone for the Ichalkil and Pokoch projects. After five years of intense work and significant investments required to appraise and develop these fields, we will start the early production phase of the project.
Q: How would you describe your experience throughout the drilling of the Ichakil-4 and Pokoch-2 wells?
A: We began drilling these wells just after the pandemic was declared in March 2020. We decided to adapt our drilling operations to that circumstance, instead of stopping and deferring operations altogether. We also modified our financial plans to reflect the incremental costs related to COVID-19. Currently we have completed drilling Ichakil-4 and Pokoch-2 and we started drilling our Ichakil-6 well. In addition to COVID-19 challenges, we also had to face significant challenges characteristic of drilling in deep and high temperature environments with variable pressure regimes. Fortunately, we were able to overcome these issues successfully.
The structural design of the wells required for our Cretaceous and Jurassic objectives is quite complex. During 2021 we expect to complete four wells (our original two appraisal wells and our two development wells), bring production online and continue drilling Ichalkil-6.
Emry Hisham Yusoff
Mexico Country Head of PC Carigali (PETRONAS)
IOC Uses International Knowledge to Push Offshore Progress
Q: How is PETRONAS positioned in Mexico?
A: PETRONAS is an energy and solutions partner that was established in 1974 with a reputation as a trusted and successful operator across the globe. The company first entered Mexico in 2015, through its Mexican affiliate PC Carigali Mexico Operations (PETRONAS Mexico) and we are now the second-largest acreage holder in the country behind PEMEX, with 10 exploration blocks across Mexico’s three main basins, with a total area of approximately 22,000km2.
PETRONAS’ entry into Mexico’s deepwater arena provides a strategic fit for our business growth, focusing on upstream exploration opportunities and portfolio with potential for longterm value. At the same time, it demonstrates our deepwater capabilities. Mexico is very important to us as it forms part of our extensive search for resource addition.
Q: What is the makeup of the company’s upstream portfolio in Mexico and how have these positions progressed?
A: PETRONAS Mexico has 10 blocks in the country, five as an operator and the other five as a partner. These blocks are within the main three basins in the Gulf of Mexico: one block in the Perdido Basin – Block 4 (with 30 percent participation (PI)); three blocks in the Mexican Ridges – Block 10 (40 percent PI), Block 12 (60 percent PI) and Block 14 (50 percent PI); and six blocks in the Salina Basin – Block 4 (50 percent PI), Block 5 (30 percent PI), Block 6 (50 percent PI), Block 25 (100 percent PI), Block 26 (100 percent PI) and Block 29 (28.33 percent PI).
PETRONAS Mexico’s entry into Block 4 - Perdido Basin in Mexico’s deepwater provides a strategic fit for our business growth, focusing on upstream exploration opportunities with potential for long-term value. This opportunity allows us to extend our portfolio into the prolific Perdido Basin. Our partnership with CNOOC will bring together our capabilities and expertise for a successful collaboration toward developing this basin. We began the drilling campaign for the Moyote-1 well in Block 6 as per plan together with our partner, ECOPETROL. We successfully spudded the well in mid-November 2020 and the exploration campaign was estimated to last for approximately 90 days.
Q: How has PETRONAS invested in Mexico so far?
A: PETRONAS Mexico has invested substantially in Mexico as the country holds substantial material opportunities and is largely underexplored. We are pleased to be one of the early movers in this basin and look forward to growing our portfolio here. Currently, PETRONAS Mexico is one of the most active oil and gas companies in the country. To date, PETRONAS Mexico and its partners have completed drilling of five deepwater exploration wells and two more wells will be spudded in the near future. As for future plans, PETRONAS Mexico will focus its investment in the 10 Blocks and will continuously look for opportunities that suit its portfolio, governed by our Statement of Purpose and Sustainability Agenda that are aligned with SDGs 2030.
PETRONAS Mexico is the first IOC to establish a drilling base in the port city of Coatzacoalcos, Veracruz. Home to the Pajaritos petrochemical complex, the city’s strategic location and infrastructure will become even more relevant with the Trans-
Isthmus Corridor project that will connect the Gulf of Mexico and the Pacific Ocean. PETRONAS Mexico also operates from Port Pajarito for its first operated deepwater well Yaxchilan Este and continues to operate for the Moyote-1 shallow water well.
Mexico is one of PETRONAS’ focus countries and we aspire to drive long-term business value creation through responsible investments here. We hope to continue building our portfolio of resources as well as leveraging emerging opportunities toward supporting and growing together with Mexico in realizing its energy aspirations.
Q: How did PETRONAS aid local communities during the pandemic?
A: When the pandemic hit Mexico, PETRONAS Mexico contacted the mayor of Coatzacoalcos to seek perspective on the potential problems that the community would face while fighting COVID-19. The mayor expressed two major concerns: the lack of infrastructure to ensure access to clean water to the community and the need for a large quantity of PPE for health personnel in Coatzacoalcos.
Guided by our sustainability lens and emphasis on positive social impact, our primary focus was the wellbeing of the Coatzacoalcos community, the area of our operations. In collaboration with Coatzacoalcos city’s Ministry of Economy, PETRONAS Mexico contributed five water pumps to the city, which allow the local government to supply clean water to 80,000 people. With access to clean water, the community can curb the spread of the virus through basic hygiene measures. In addition, we also collaborated with IMSS and contributed 80,000 units of PPE, comprising of facemask, face shield, gloves and coveralls, which were distributed to the Coatzacoalcos health sector, including hospitals, in Coatzacoalcos.
We are also involved in various social programs unconnected to the pandemic. PETRONAS Mexico recognizes that students are the future of the community and seeks to enhance the national education agenda to meet the expectations of the job market, in line with our sustainability lens and positive social impact, combined with SDG 4 quality education. For this reason, PETRONAS Mexico aims to support the national education agenda by enhancing the students’ potential, which will help them to meet the current expectations of the working market. On Dec. 17, 2019, PETRONAS Mexico organized an event with stakeholders and students called “PETRONAS: Connecting with Community and Academia in Coatzacoalcos” where a series of presentations showcased PETRONAS’s activities in Mexico, and presented our technical knowledge-sharing on topics addressed to the student community.
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More about this person
Alberto Galvis
CEO of Citla Energy
Key Operator Reschedules but Does Not Falter
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More about this person Q: How did the events of 2020 change Citla Energy’s vision regarding growth and development?
A: Our strategy focused on building a diversified portfolio in Mexico has remained intact, supported by our investors. We aim at pulling together a set of assets distributed across different stages of maturity, from exploration and appraisal to field development and production. 2020 provided challenges and obstacles to the entire industry, and we have been no exception, but these problems have not changed our strategy. However, our activity plans were adjusted following the initial well results coupled with the effects of COVID-19 and 2020’s extreme oil price environment. Some wells that we expected to drill in 2020/21 were rescheduled. Another relevant change was around the expansion plans of our portfolio. The suspension of new bidding rounds and tenders, including PEMEX’s farm-outs meant that such growth plans had to be equally adjusted.
Q: What lessons did you learn from the three wells you drilled in blocks seven and nine?
A: We learned a lot from these wells. We modified the ranking of the remaining prospects according to new technical information. Each well drilled in the area helped us to further understand the regional geology in a province where few wells have been drilled, and information available is scarce. Through this process, we have significantly enriched our knowledge of this basin.
Q: What synergies have you created with partners ENI and Cairn?
A: We are proud to have formed a partnership with exemplary companies such as ENI and Cairn. They have demonstrated an excellent array of skills and technical competencies in areas such as geological analysis and operations management. All their experiences in operations and activities in the world make it back to these blocks in the form of applied expertise. This expertise has played an important role when facing challenges in 2020.
Q: What is the drilling strategy for block 14?
A: We continue to be very optimistic about block 14. The block already presents a discovery, so our studies are focused on demonstrating the commercial viability of that discovery and identifying additional prospects in this block that could potentially yield additional discoveries. Still a lot of work must be done before reaching a drill decision.
Q: To what degree did the events of 2020 determine whether a discovery or prospect is commercially viable or not?
A: I would argue that it changed very little. There is always the discussion around future oil prices, but history teaches us that it is always fluctuating, so it is best to plan conservatively. In addition, despite the accelerated energy transition, hydrocarbons will be needed for decades to come. In this sense, we still analyze the commercial viability of discoveries with the same eyes. Having said that, one element that has emerged in the south east region is the discovery of several mid-size fields, which creates the opportunity for integrated developments and hubs. Such type of opportunities can help reduce the minimum field size required for commercial viability.
José Luis González
Head of the Supervision, Inspection and Industrial Surveillance Unit at ASEA
A Framework to Maintain Industrial Safety Post-COVID-19
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More about this person Q: What role has ASEA played during the pandemic as a regulator for the oil and gas industry?
A: We were successful in adapting to an ever-evolving timeline. At the beginning of the pandemic, we were told that all activity would be regularized by May at the latest. We all know normality was not restored by then. However, we began adopting online modalities and receiving all the training necessary to manage them. These efforts allowed us to continue operating, executing evaluations and issuing authorizations. Now, these online modalities are quotidian and, for the most part, we have been able to maintain a reasonable continuity in our operations. During the worst times of the pandemic, we put together protocols that enabled us to open during certain days of the week and receive permit applications for the most demanding subsectors of activity within the hydrocarbons industry. Fortunately, this allowed industry entities to operate with legal certainty. Our regulation, inspection, supervision and surveillance departments were able to support operators throughout the industry’s value chain, from upstream to downstream projects, to make sure no shutdowns of their activities occurred. In that sense, I would say that we were a successful regulator throughout 2020.
Q: What are the most important items in your agenda given the changes in leadership that the agency experienced in 2019 and 2020?
A: On March 1, 2021, we celebrated our sixth anniversary. We are considered the youngest regulator in Mexico, so we are experiencing a continuous learning curve. We are on our third administration and on our third executive director. Our director’s agenda is simple: to keep our operations going. His main focus is to increase interdepartmental communications so that more projects can be addressed by the entire agency instead of by individual offices. He is also interested in addressing companies that might be experiencing anomalous incidents in their permitting and authorization procedures. In general, he wants us to target regulatory processes that were left inconclusive and that need to be addressed with updated standards and new procedures. Another focus is to broaden our channels of communications with companies and all regulated entities and stakeholders.
Q: How was the regulation of the oil and gas sector affected by the federal government’s decision to prioritize its operational continuity as essential throughout the pandemic?
A: We understood the centralization of the hydrocarbons sector because there was no other viable industrial engine for the country’s economy. At the same time, this fixation also represented a hard blow to the sector’s regulators. Industry personnel in all segments of its value chain, including myself, were vulnerable to COVID-19. Many experts had to be sent home as a result, and a great deal of real-time monitoring technologies and systems had to be implemented so that their specialized knowledge would not be wasted. This centralization meant that our regulatory services were equally in demand in all segments of the value chain and thus had to be equally applied; one segment could not become more important than the other. We could not execute inspections and issue authorizations faster for exploration and production projects than we did for fuel transport or retail. Slowing down on one segment created ripples down the road that halted production continuity. This all proved incredibly demanding.
Merlin Cochran
Director General of AMEXHI
The Light and Shadow of a Year Like No Other
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More about this person Q: What were the most positive aspects of 2020 for your members?
A: It is important to evaluate the state of our industry at the end of 2020. Regardless the pandemic, overall, the industry achieved important results: US$40 billion of approved investment and US$16 billion of executed investment. Almost US$1 million were invested on National Content. In 2020, the private industry presented six discoveries of resources and reserves have raised 40 percent. In fact, we hosted an event at that time where we talked to government officials, including senators, and explained to them the latest progress that our members have made with their projects and fields. Many people asked us about production levels but we emphasized that approximately 70 percent of our members’ contracts are still in their exploration phase. We chose to highlight metrics that are not only more relevant given the kind of development taking place at these fields but also due to the conditions imposed by the pandemic that affected 2020. Some figures included numbers on employment created by our members’ activities. Surprisingly, job numbers increased in 2020 when compared to 2019.
We also have numbers regarding social impact and the benefits that originate from our members’ activities. Oil and gas contracts do not have strict stipulations or requirements when it comes to social engagement and community management, outside of local content requirements. I say this to illustrate the actions in support of social welfare that our member companies have undertaken are not the result of a need for contractual or regulatory compliance but because they understand that their long-term commitment to Mexico, especially in a year as difficult as 2020, needs to be expressed in meaningful ways.
Q: What concerns your members?
A: One major concern was how to operate safely in this new normality brought on by COVID-19. Offshore platforms and vessels present unique environmental and spatial risks when managing personnel operations and activities, especially in regard to anticontagion industrial safety precautions and protocols. Many of these workplaces can be quite confined, with recirculated air that creates additional risks for accelerating the infection rates in certain cases. To implement safety protocols as effectively as possible in offshore environments, we have partnered with state governments and port APIs. Entities such as SENER, CNH and SE have also played a significant role in doing the work necessary to make this possible.
Long-term uncertainty is another prevalent concern. This is not only based on observations of our upstream subsector or exploration and production activities but also, we are seeing rules change in this industry in a manner that is worrying. Many of our members’ contracts carry 30-year terms, some even 50 years. For the most part, operators have some degree of visibility into the future in terms of strategy and decision-making, provided the rules of the game stay the same. The ROI time frames that our members are working with target the long-term, so they are understandably concerned about the changing policies and rules happening in Mexico’s energy industry. In this regard, I acknowledge the work of SENER, which has been receptive to addressing these concerns, as well as to our requests for transparency and further information regarding the government’s intentions and plans.
Gerardo Clemente
President of AMGE
Mapping the Pandemic’s Impact on Industry Associations
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More about this person Q: How did you become involved in AMGE?
A: I became a member of the association when I entered PEMEX, which was in January 1987. This means I have been a part of these organizations for the past 34 years. I had no idea what the association was all about when I graduated from college and began my career in the industry. As soon as I joined and became part of its activities, I became very motivated when I heard my colleagues promote the development of knowledge and expertise within our profession. Over the years, I have witnessed periods in which participation in the association’s activities has decreased, particularly in moments of difficulty for the industry in which everybody is looking for a new job or going back to school in between jobs. This is a common occurrence in an industry with a certain degree of volatility, as is the case with hydrocarbons.
Q: What is the best way to address those variations in regard to involvement and interest?
A: The association’s history goes back to 1958, when it focused on the much larger branch of geophysics. Over time, we became specialized in exploration geophysics, until we reached a point in which 80 to 90 percent of our activities were focused on oil and gas exploration through seismic methods. Now that I have become president of the association, I am interested in seeing the association return to its general roots. I believe it is imperative that all of our young geophysicists who have just graduated from college have access to a variety of venues through which their talents and education can be applied and developed. We do not want oil and gas exploration, and its volatility related to factors like oil prices and demand, to become a bottleneck that limits the growth of these young professionals. We also have to consider that international trends point toward the eventual diminished of fossil fuels, although we expect the global economy to depend on these resources for quite some time. We also want to establish stronger bonds and networks with other associations and academic organizations to make sure we are providing these young professionals with as many opportunities as possible. We have to keep in mind that the association’s member pool is aging; the average member´s age is above 40. This is why student outreach and the creation of student chapters is so essential.
Q: What are the most important items on your agenda as the association’s new president?
A: To be honest, our most pressing matter right now is taking care of the association’s financing resources. Our main source of income is the Mexican Petroleum Congress (CMP), whose funds have been heavily affected by the pandemic. We expect finances to return to normal levels in 2022, at the earliest. Another issue that became increasingly relevant for us during the pandemic was the safety of our members. To avoid public gatherings, we have migrated to more digital and remotely managed modalities. We are using this time to generate educational material and organize workshops to generate alternative income. We also want to focus on educating young physicists on the value of promoting sustainability at worksites and in the sectors they work in.
ROC Asset Management’s Place In A New World
In many systems and configurations, ROCs are considered the central nervous system through which operational benefits are made clear to the end user. Before 2020, ROCs were already trending toward higher degrees of technological sophistication and maneuverability, especially as AI and IoT applications opened new possibilities for remote operations. However, after weeks and months of lockdowns to contain the COVID-19 pandemic, ROCs became the most essential tool to help managers maintain operational continuity. Premium service and technology providers with ROCs of their own enjoyed an enormous advantage over their competitors. A perfect example is Fugro’s world-class ROC in Aberdeen. Fugro’s clients could track the status of any service they recently contracted, such as the ongoing progress of inspections and surveys or the real-time status of ROVs on the ocean floor. Remote solutions could be offered through a minimal amount of bandwidth and additional equipment. More remote monitoring and management options translate into fewer onsite inspectors and managers, which became crucial during the pandemic.
The remote operation enabled by Fugro’s ROC also has a sizable impact on the company’s carbon footprint, which is now considerably smaller. An increase in remote communication and decisionmaking also means fewer vessels and less travel for experts to specific on-site locations around the world. Alastair McKie, Fugro’s Director of Remote Operations for Europe and Africa, says that, “remote operations and the ROC in Aberdeen bring significant industry benefits in terms of operational efficiency, enhanced safety and the environment.”
Eckhard Hinrichsen
Mexico Country Manager of DNV
DNV Goes Back to Its Roots, Shifts Outlook
Q: Why did the company change its name from DNV GL to DNV?
A: We are simply reverting back to the name we had prior to 2013. The DNV GL name has worked well over the last seven years but we want to simplify matters for our clients and other stakeholders and strengthen our brand. At the same time, we are shifting our outlook. We have a new strategy for 2021-2025 that we have worked on over this past year and will let us move strongly into the energy transition, following our clients along this path. Our oil and gas and energy sectors will be merged under one business line – Energy Systems – reflecting the decarbonization trend taking place in the world.
The focus for Energy Systems will be to continue to service the oil and gas industry and the clients we have, as well as working in unison with the energy side of the company in overlapping areas, offshore wind being one example. The wind turbine expertise from energy and offshore expertise from oil and gas perfectly align here.
There is a great deal of research going on within the company in relation to the energy transition. Hydrogen is one area where we are concentrating our efforts. We have a large research center in Spadeadam in the UK where we will investigate safety and other aspects of the distribution and domestic use of hydrogen. The project is funded in by the UK government and effectively we are building a small city, including streets with houses, where we are researching the use of hydrogen in homes as an alternative to natural gas. Aside from the safety aspect, we are also looking at the impact of hydrogen on the pipe network, gauging embrittlement, and other potential problems.
We have set our goals for sustainability within the country and worldwide and that means that we want to be net carbon positive and power our offices with 100 percent renewable electricity by 2025.
Q: What is the significance in carrying out a Frame Contract for different type of risk analysis for PEMEX PEP?
A: We have been in Mexico for 25 years and have always offered risk analysis services. For the past 15 years, we have also worked with PEMEX PEP, under different umbrella contracts. However, these contracts covered specific regions and areas.
This new contract covers all of PEP’s installations, which include the entire country, onshore and offshore assets. This is a huge scope of PEP installations and will require strong logistics planning. There is a great deal of work to be done here, as risk analyses need to be updated every five years as is required by SEMARNAT. Some installations are coming close to that five-year period so must be reviewed quickly. There are also some ASEA requirements involved, including well design assessments that are needed for their drilling permits.
There is a wide variety of work to be done in parallel and that will be quite demanding. When we enter a new geographical region, we automatically look for opportunities within them and try to maximize these contracts whenever possible.
