Innovation through Expertise: Virtual Pipelines and Storage

Years of experience in the international oil and gas industry will translate well in the Mexican market, but ties to local companies can provide the extra shot that ensures success, says Alberto Escofet, Regional Manager of Enagás México. He adds that Enagás is ready to take the next step. “In Spain, we accumulated strong technical and managerial capabilities that we offered to the Mexican market when we entered in 2011. Now we are ready to go even further by bringing innovative concepts to the table.”
The Spanish company, which has a 50-year track record in Spain’s natural gas segment, launched its activities in Mexico when it acquired 40 percent of the Altamira regasification plant. “This asset provided us with a strong foothold in the Mexican market as we got into close and direct contact right away with local companies that had been present for a longer time,” says Escofet. Following the strategy of gaining local expertise right away was vital for Enagás to become a significant player in the domestic industry. “We acknowledged that we did not know everything and that became one of our strongest assets because it allowed us to work with experts in specific areas where such necessity was identified.” The company secured its presence in the country, leading the construction and commissioning of infrastructure, and now also has shares in the Morelos gas pipeline and the Soto la Marina compression station projects, of which it owns 50 percent each.
With a strong foothold in the area of physical assets, Enagás is now placing a bet on the distribution and transportation of natural gas. It will do so through innovative methods, such as virtual pipelines, which offer clear advantages to facilitate the penetration of natural gas in regions where the hydrocarbon was not present before. “Mexico has a huge potential that has yet to be tapped in the distribution and transportation of natural gas because there are many regions where the hydrocarbon is not yet available through physical pipelines. Virtual pipelines mean transporting natural gas by wheels or vessels, which are much more flexible and much less capitalintensive options.” Despite its bet on virtual pipelines, Escofet believes that such methods will not replace the construction of physical pipelines. Instead, virtual pipelines should only be seen as an enabler for their physical counterparts. “Virtual and physical pipelines have different purposes and market justifications that can be complemented. With the help of virtual pipelines, regions where natural gas had a limited presence will start to see the benefits of using such a fuel over other options, particularly for power generation. After some time, demand will increase and at a certain point the installation of a physical pipeline will be justified.”
As Enagás’ strongest expertise is in the area of physical assets, Escofet recognizes the importance of the company’s approach to working with others that have wide expertise with virtual pipelines. “The business of virtual pipelines will not be based in physical assets as much as in logistics, and we are excited about it because then companies will start asking for our capabilities. To cover their needs, we are in touch with several local companies. They provide the requisite knowledge while Enagás brings its international experience and strength to make this enterprise not only work but excel.”
Despite the company’s long track record, Escofet highlights the challenges it has overcome in all of the countries it operates including Spain, Mexico, Chile, Peru, Sweden, and even Greece, Albania and Italy. It owns 16 percent of the company developing the Trans Adriatic Pipeline. “We have gone through learning curves in all those countries and that has allowed us to become expert managers of technologies and human capital. This has not come easy, as we have had to learn how to do things better, ensuring our capability of offering the best solutions in the market.”
In its pursuit of new opportunities, Escofet says the company also wants to help Mexico overcome its lack of storage. “Enagás has a long track record building storage projects, both on the surface and underground. As the Ministry of Energy recently published its latest storage policy, we can see our expertise further increasing Mexico’s storage capacity. We are in close contact with CENAGAS, CRE and the Ministry of Energy so they recognize the abilities we bring to the table.” An efficient and effective possibility, he adds, would be to use the Altamira regasification facility for operational storage.