Brad Mcneill
CEO
Frontera Offshore
Jesus Lopez
Jesús López
Operations and Business Development
Frontera Offshore
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View from the Top

Every Challenge Is an Opportunity

Wed, 01/22/2020 - 08:39

Q: What are the most relevant elements when detailing the factors behind your project portfolio?

BM: Our development has always been tied to the Gulf of Mexico’s infrastructural development. I first came to Mexico in 1997 with Bechtel to work on the revamp of the Cantarell field. Frontera was later formed in 2001 as a consultancy for the oil and gas opportunities we identified in Mexico at the time. Of course, by the time the Energy Reform came in 2014, we had reorganized the company to prepare for the arrival of a new generation of contractors and clients whose needs would reflect different standards and requirements. They were going to be entering the Mexican oil and gas industry for the first time and we knew there would be a great demand for local partners to help them adapt to this sector’s characteristics. By early 2017, we had found the steady and successful rhythm of work that we had been looking for. Our projects and ongoing operations included activities such as pipeline stabilization and ROV services. More recently, we completed a cable lay project for Eni’s field development in Mexico as a subcontractor of Sapura Energy. While we do not subcontract directly with PEMEX, we are familiar and comfortable with its requirements and the general dictums of the national industry. I would say that, with all this in mind, we identify the great need for offshore infrastructural growth and development in Mexico as the key incentive driving our project portfolio. 

Q: What are the most important ways in which you prepare your clients and new operators for the infrastructural context in Mexico?

JL: We approach from four complementary action lines: quality, safety, compliance and technological advantage. During the project development phase, we first have to help our foreign clients understand the dynamics of Mexican law. The legal infrastructure that dictates customs and customsrelated bureaucracy, for example, is extremely complicated and yet it is essential to have a complete handle on it when working in the marine and offshore sectors. In this same vein, you have national contents, which are calculated through methods that changed in significant ways between 2010 and 2012, changed again in 2015 when SENER came out with a completely new and different calculation, and are now changing once again. 
Of course, for us this is perfectly fine, because we find that there is plenty of value to be added from simply increasing our national content by hiring capable Mexican engineers and technical experts. However, this usually only represents around 30 percent of your operational expenses. A significant part of the remaining 70 percent are costs related to your vessel. This is where you find an important area of opportunity, since there is not sufficient infrastructure in Mexico for building specialized offshore vessels, and the port infrastructure for servicing the offshore fields in the Gulf of Mexico is also limited.   
There is still work to be done on the port infrastructure in the Mexican shore of the Gulf of Mexico. For example, for Mexican deepwater development, the closest available port with appropriate draft depth capacity is Tampico. Reaching the worksites from there can take up to 28 hours for an average supply vessel. Imagine you are in the middle of a drilling campaign. You load up your supply vessel with 600 m3 of drilling mud. The vessel leaves port and reaches your platform 28 hours later. That mud then needs to be unloaded from the vessel, loaded onto the platform and then down the well. This operation will probably take you two or three days, so to continue operating without interruptions, a second vessel with a second load of drilling mud needs to be leaving port before that first vessel leaves your platform to begin its return trip. The logistics for securing the continuity of operations is always challenging, and these companies need local experts like us to help navigate them. Managing these interactions is part of our scope of services.  The closer alternative port would be Matamoros, but that port needs to be developed so that its draft depth capacity and quayside support can accommodate deepwater support vessels. Mexico needs to secure accessible ports for supporting the development of its offshore oil and gas projects.

Q: How do you expect these challenges and opportunities to evolve in the future?

BM: Port capacity is the biggest bottleneck to be addressed; you would need to measure necessary infrastructure to be developed in the future in terms of kilometers of docks yet to be built in order for the modernization of Mexico’s offshore infrastructure to be truly effective and successful. Thankfully, I believe there are already plenty of ongoing efforts headed in that direction 

JL: As important as it is to reverse the production decline is, the potential of the Mexican oil and gas industry is not necessarily going to be based on how much can be produced but rather how much can be stored and transported. Infrastructure development is also necessary. For instance, we just finished a project for the installation of 24km of cable in the offshore region near Tabasco for Eni. A dozen similar projects are going to be necessary in the next three years, and that is just to address the needs of new operators; in addition, PEMEX will also have to provide repairs and maintenance to around 25 percent of its 2,500km of pipelines and its 320 platforms over the next four years, and build a significant network of pipelines and platforms for developing its fields.  
To meet these opportunities, Frontera Offshore has entered an exclusive collaboration with DOF Subsea for the Mexican market.  The alliance is intended to leverage the local presence and track record of Frontera with the specialized vessels, engineering capabilities and subsea survey and installation experience of DOF Subsea. The Mexican offshore market is expected to see unprecedented growth over the next 5 years and Frontera-DOF intend to be the lead subsea contractor in the region. The energy reform in Mexico has now reached field development phase for some of the shallow water operators and Pemex are investing heavily to increase production. This combination, together with upcoming deep water activity, is expected to provide ample opportunity for Frontera-DOF to deliver a full range of services, all in compliance with the highest standards of quality and safety.

Frontera Offshore is a Mexican company, and a Subsea Services Contractor in Mexican and Latin American O&G Industry.