The Explosive Side of Oil and GasWed, 01/18/2017 - 00:01
Q: How does the handling of explosive materials in Mexico compare with other countries?
VC: The management of explosive materials in Mexico is different to anywhere else in the world. The level of complexity is extremely high due to the very strict laws involved in the process.
CG: The biggest challenge is negotiating all the regulations that the Mexican Ministry of National Defense (SEDENA) applies to the handling of dangerous materials. This body regulates the process on a basis of permits, which authorize companies to buy, transport, store and use explosives. The permits are not transferable between different companies and must be applied for individually and renewed each year.
Q: How can Hasue help new companies in this regard?
VC: When a company comes from abroad and has to use primary explosive materials for extraction or production, Hasue can offer a complete service. We buy the material, import it, store it and distribute it. Moreover, we assume responsibility for the actual usage of the material so our clients can bypass any formalities with SEDENA.
CG: Companies face additional challenges with the environmental and safety regulations. Hasue has prepared to address this need by obtaining ISO certificates and ensuring we fully comply with international standards. Hasue de México, 55 percent Mexican-owned. We created Hasue Transportes Especializados, which is 100 percent Mexican owned, so that we could obtain the correct permits to transport explosives. SEDENA will only issue the permits when a company fully complies with Mexico’s Ministry of Communications and Transport (SCT) regulations, demonstrating the various hoops firms must jump through to finally be able to handle explosives.
Q: How is the management of explosives impacted by regulatory bodies like CNH and ASEA?
VC: SEDENA considers the products we handle a matter of national security. For this reason, the different regulatory bodies must adhere to the strict policies it sets. The first step to meeting its requirements is to go to the council for permission to use explosives in that specific area. Then the approval of the state government must be obtained. The third and final part is when SEDENA authorizes the permits. It is a complicated process but if the product we handle falls into the wrong hands, it could result in a security issue.
In the past few years the regulations surrounding the handling of explosives have been constantly intensifying. Seven years ago a company could transport explosives in a two-manned vehicle with an escort. Now, an external armed escort is required. There are very few companies in Mexico that can function at this level of specialization.
Q: How does Hasue interact with SEDENA?
CG: We interact with SEDENA on a daily basis as part of our operations. When transporting any type of explosive, authorized military personnel must be informed of the exact departure and arrival times and the vehicle being used 72 hours in advance. We also renew our handling permits annually and report all outgoing material and our usage to the ministry on a monthly basis.
VC: In the area of explosive products for seismic activity, each and every cartridge imported from the US has its own unique tracking number, which is a testament to the diligence that goes into these operations. There is a custody chain of various events that must be constantly accounted for in great detail.
Q: How does Hasue manage the many risks involved in the transportation of explosive materials?
VC: First we have a management team dedicated to environmental issues, safety and security, which adheres to all the regulations set out by the Mexican government. It is undoubtedly a risky task for Hasue to manage explosive material because of the insecurity the country faces.
In the south, problems with land access are common, with farmers or community leaders often blocking entrances and holding companies ransom for money. In the north, the drug cartels cause similar problems. Despite these risks, Hasue has worked for seven years without one incident because we work to the highest standards. Carlos worked with Orica for 30 years, so he is very familiar with the management and production of explosives and with international standards.
Q: What are the specific challenges involved in the process of importing explosive materials into Mexico?
VC: There are many bureaucratic requirements in the process. Additionally, it is complicated by the fact that declarations must be made every time a vehicle changes military zone. We move 15 tons of material at a time, which is a large quantity given the nature of the product.
CG: Without a doubt, new players will have to face the challenge of the differing security measures in place across Mexico’s 32 states.
Q: Is Mexico’s oil and gas market prepared for the increase in the complexity of drilling operations?
CG: The truth is that there will not be enough people to cover the increase in vigilance needed for all the new operations that will begin, whether it is in downstream or midstream. Hasue is
preparing for this in advance so we have enough people for explosive transportation when the time comes.
Q: How does Hasue find and invest in talent to deal with the challenges involved in its operations?
CG: We focus on finding people with proven experience in handling and managing the logistics of explosive material. Every company has its own safety and security standards so we must train and certify our employees to be prepared for every situation.
VC: Since we try to hire people experienced in explosives, we often look to other sectors such as construction or mining. We also seek out ex-military personnel, such as generals and captains. If we decide a person is capable, we introduce him or her to Hasue’s standards, which are often higher than normal. Every warehouse has monitoring centers that constantly keep an eye on what is happening.
Q: How is Hasue positioning itself to capitalize on the influx of new players that will operate Mexican fields?
CG: Right now the winners of Round One are beginning to decide which service companies to contract for the different jobs involved in operations. Operators choose a seismic company, which then selects a company like Hasue to provide explosive materials, so we do not deal directly with the new operators entering Mexico.
VC: The larger international and local businesses involved in the onshore R1.2 were not familiar with the protocols involved in moving explosives in Mexico. Through presentations Hasue answered various questions they had regarding the process. Their biggest concern was how long it would take to implement the permits and plans for transferring materials. It takes 90 to 120 days to process everything once the contract is signed. Their next query was who could do this for them. Hasue was the answer.