Filling in the Gaps in Custody TransferWed, 12/06/2017 - 17:27
Q: What caused your shift in focus from providing pipeline metering equipment in Mexico to software technology?
A: Initially when we started exploring the Mexican market, our focus from the perspective of business opportunities was on projects to provide equipment and compact metering solutions for pipelines and terminals. The disadvantage we found with our business model was that we were bringing this equipment from Europe and we were competing against US and Mexican companies, so winning projects was difficult. Pipeline and terminal operators in Mexico have been relying a great deal on the North American industry to provide this kind of technology.
Since my professional background deals more with software applications, we started offering software tools to support and complement our metering solutions, with the goal of introducing a differentiator into this market. Now we are doing not only the equipment but also providing software technology to support this metering technology. That is where we saw sizeable opportunities for Tory Tech.
Ten years ago in the Mexican market, companies in the upstream and midstream sectors built an infrastructure to measure the oil and gas products they were receiving and moving from production to distribution, but they were not that concerned nor realized the relevance of the quality or the integrity of the measurement data. At the same time in the US, the main objective was to make sure that the measurement data was really reliable and that it accurately represented what was happening in the field. That mentality was not that present in the Mexican market at that time. Due to the changes in the regulation, Mexico’s oil and gas industry realized that it is not only important to measure the products but also to ensure that the quality of that measurement is reliable.
Q: How are US industry standards affecting the Mexican market for measurement technology?
A: The connectivity of new pipelines with the US market is putting pressure on the pipeline operators in Mexico to follow the industry standards applied north of the border. Even though pipelines are not fully regulated in Mexico under the same laws as in the US, Mexican companies will need to be prepared for when such regulation arrives. The convergence between US and Mexican regulation is also evident in the MoU signed by ASEA and the American Petroleum Institute (API) to use API standards and recommended practices in its safety programs.
Q: How has the dynamic regarding PEMEX impacted the Mexican metering market?
A: A very interesting condition in the evolution of the Mexican market is the fact that PEMEX has been divided into separate business units and new partners were invited to come into the market. This new business environment opens opportunities for us. Before, PEMEX owned the whole supply chain process, from production to distribution, so there was not such a big concern if the product was not accurately measured from production fields to the pipeline or from the pipeline to the terminal. Now, losing product means losing money for the business unit.
Q: What do you see as the main gaps in terms of delivery between what is installed and what could be installed?
A: In the past all these companies in Mexico were under one big umbrella, and therefore, they did not place too much importance on measurement systems when they were moving products from upstream to midstream. The first opportunity we see is to replace all these basic measurement units with more sophisticated technology to really perform custody transfer. All the new facilities will require this kind of equipment and software to ensure that they can manage inventories and balance accounts accurately. In addition, we also see an important market with pipeline and terminal companies, where they will need to improve and secure their operations by implementing Control Room Management. That is where we see the main opportunities