David Madero Suárez
Director General
CENAGAS
/
Insight

Operator Entrusted to Develop Infrastructure

Wed, 02/24/2016 - 12:17

As part of the authorities’ effort to generate a transparent and open energy sector, CENAGAS was created to manage and operate the national natural gas transportation and storage system. In order to ensure gas availability in the country, CENAGAS needs to construct a solid strategy that anticipates the average and peak demands based on the numbers it will obtain from the electricity sector, the cogeneration industry, and the industrial demand, as well as the penetration of natural gas into the domestic market. According to David Madero Suárez, Director General of CENAGAS, once the operator has estimated this demand, it will have to devise a balance of pipelines and storage infrastructure that will allow it to bring gas to places where it is needed, while simultaneously limiting costs.

The existence of a technical system operator raises questions about the role of the productive enterprises of the State in the natural gas sector. “All the pipelines CFE has tendered have been built and operated by private companies. People mistake these for CFE pipelines, but the fact is that they are operated by professional international companies participating in the Mexican market,” he clarifies. CENAGAS will participate alongside these companies by operating 9,000km of pipelines it will inherit from PEMEX. Madero points out that the oil company has not participated in the distribution segment for quite some time now. Nonetheless, PEMEX will continue to transport natural gas until the transfer of duties to CENAGAS is complete, and in the meantime, PEMEX will assist the system operator with its transportation responsibilities. Madero is confident that eliminating the possibility of PEMEX acting as a shipping company will allow the oil company to become an important producer that could also commercialize the gas it produces, or alternatively import gas.

Amid these changes, Madero says that the Administrative Board of CENAGAS does not foresee the system operator being involved in the construction of new ducts in the medium term. The pipelines that are already planned will be built by private companies, amounting to an additional 6,000km of ducts and investments of up to US$10 billion. “Some productive enterprises of the State could participate through joint ventures, subsidiaries, or companies where they have stakes, but we are looking for private companies with experience in building and operating these projects,” Madero stresses. However, he admits that the authorities must identify possible storage projects and pipelines to transport gas from new processing centers.

At the moment, no storage projects are planned for the next few years. “Nowadays, storage in Mexico is technically nonexistentasidefromourLNGfacilitiesinAltamiraand Manzanillo,” Madero states. In his view, one option would be to implement strategic projects and launch tenders. “We needstorageprojectsfortheshortterm,withthecapacity to increase supply relatively quickly. Saline cavities can serve this purpose. Nonetheless, we also need long-term solutions that can store large volumes. In this case, we have to evaluate depleted oil wells and other underground geological formations where we can potentially store natural gas.”

Madero comments that technology will play an important role in ensuring a reliable natural gas system in the country. He mentions that PEMEX already uses SCADA systems with satellite technology and microwaves. In his view, pipeline systems are evolving as a result of technological improvements, and now SCADA systems not only have the capability of measuring gas flow, they can also assess the quality of the gas and provide reports across large distances. Even though the equipment linked to PEMEX pipelines will be transferred to CENAGAS, the oil company will retain its SCADA system because these can be used for other substances, such as liquids and crude oil. Therefore, CENAGAS will install its own SCADA, which means an upgrade to the latest version of the software, powerful servers, and the possibility of including remote automation. “We should also seize the opportunity to implement networks such as those used by mobile phones to collect information from control centers, enabling us to detect leaks, among many other things.” Madero says CENAGAS will seek a broad investment program aimed at pipelines with the goal of tightening security and improving the operator’s daily activities, while also increasing the efficiency of technology.

At the moment, CENAGAS is polishing its strategy and concentrating its efforts on completing the transfer of PEMEX assets over the next two years, and beginning its activities as a technical system operator. Between three to five years from now, CENAGAS will work on improving its operational efficiency with the goal of establishing benchmarks with the rest of the international industry, and with other worldwide systems operators, to ensure CENAGAS is at the forefront as a technical operator. For Madero, the ideal scenario would be for CENAGAS to be rated among the top 25 shippers in terms of efficiency, costs, and operational safety.