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Connecting the Dots of Regional Integration

Héctor García - Bechtel Internacional de México
Director General

STORY INLINE POST

Sat, 08/12/2017 - 08:17

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Q: How will the development of natural gas pipelines from the US to Mexico impact LNG imports to Mexico and what role might Bechtel play?

A: We believe it is a fundamental shift in the way the regional energy market is behaving. We now see a North American energy market with increased access to cheap natural gas coming from the US on the one side and Mexico clearly expanding its natural gas pipeline network allowing for clean power generation, something that we strongly advocate. This change also allows for industrial development in certain areas of the country that previously did not have access to natural gas. Regional energy integration is now changing the dynamics in the US as a supplier and in Mexico as a consumer of this resource both for power generation and for industrial development. We are optimistic that this trend will continue. I think that regional energy integration is almost irreversible; it is happening and it would be very hard to turn the dial back. 
Mexico has three regassification facilities. Given the current market dynamics we anticipate the potential conversion of some of those into export facilities. We have first-hand experience in the conversion of regassification installations into export liquefaction facilities. The first time we did it was in Sabine Pass for our long-standing client Cheniere Energy. We built the regassification facility and after some time they called us to ask if we could support them with the opposite process, so we converted the plant. Of course, we used some of the basic infrastructure already in place, but then we also had to change the process altogether. Now our customer is exporting liquified natural gas from that Sabine Pass facility. We anticipate that with the Energy Reform and the ability of the private sector to take a more prominent role in Mexico some of these facilities could become export terminals.

Q: What is Bechtel’s role in the integration of a pipeline network reaching all of Mexico?

A: Bechtel has had a long-standing presence and participation in the energy sector in Mexico. We have worked in oil and gas but also in power generation. We were pioneers in privately financed power plants and were actually the developers, investors and executors of the first privately financed power plant in Mexico. Since then we have completed two more and in total we have carried out nearly 2,500MW of privately powered combined cycle power plants. But we were also pioneers in privately financed pipelines in Mexico, with the 700km Mayakan pipeline in southeastern Mexico. We believe we have cumulative experience in delivering infrastructure projects such as pipelines, which is now driven mostly by private investors and operators for whom time is critical. For them, it is imperative to have a facility operational by a certain date, within a certain budget, within high parameters of safety and quality. We believe we fit right into that picture as an accomplished EPC contractor that can work with private customers and understand their commercial drivers. 

Q: In what parts of the oil and gas sector do you find the scales of projects that interest you?

A: We find projects of adequate scale in pretty much every sector that we work in. We have experience with tanks and fuel storage terminals and we perform work in that sector, though clearly the scale of those projects is relatively much smaller than if we talk about a refinery or an LNG facility, which is an investment of billions of dollars. A terminal will have a cost that is in the low hundreds of millions of dollars while an LNG facility can cost between US$5-7 billion. It depends on the sector. We gear up our delivery models to participate in diverse sectors according to the scale of the project at hand. In every case we bring our proven execution models, processes, procedures and discipline to bear but we need to adapt them to a small investment or to a big investment depending on the project.
However, it is true that within certain sectors, the bigger the project, the smaller the competition. Few companies around the world can tackle the scale of projects that we can deliver. We need to think differently when considering smaller projects. We can scale up or down accordingly, but we always need to be selective.
 

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