Óscar Luis González Arias
Director Latin America
NDT Global

In Mexico's Midstream for the Long Term

Thu, 09/28/2017 - 16:07

Mexico is seeing an uptake in investments for the oil and gas upstream segment. With over 70 contracts assigned to both national and international operators as of October 2017, and an approximate expected investment of US$60 billion, the country’s upstream sector is growing stronger. Midstream is a different story, with a lack of capital for even the most necessary maintenance.
“Although the presidential administration had resolved to prioritize investment in the upstream area, the oil price drop in 2014 derailed that initiative. As the maintenance of pipelines lags behind production priorities, service providers like us have run into problems. Unfortunately, we do not see a drastic change in the short term and most probably things will stay this way until 2019,” says Oscar González, Director of Latin America for NDT Global.
The issue is less about having technological and costefficient solutions; it is a matter of setting priorities. “Pipeline inspection technologies have improved globally over the years. The industry got better at analyzing and controlling typical problems, which paved the way for integrity inspections, such as detecting cracks, stress corrosion and mill defects. Every year we are finding different defects that require more precise measurement mechanisms and more advanced technologies,” González says. 
NDT offers the best technologies to increase the lifespan of pipelines, and has done so in Mexico for over 30 years, he adds. “NDT has developed the most accurate ultrasonic inspection techniques for data acquisition to detect every type of threat. Our technology leadership allows us to also work with customers to address any specific issue they might have. We have served the Mexican market for over 30 years now with a permanent and strong presence, performing inspections first with magnetic flux and later with ultrasonic technologies. Our biggest customer in the region has always been PEMEX.”

As PEMEX focuses and prioritizes the upstream segment, it has put the midstream sector into a recession, González says. “PEMEX’s pipelines have not been inspected in two or three years because the company does not have the budget to do so. NDT had 25 inspections scheduled with PEMEX for 2016, of which only five were performed due to the company’s lack of capital. For 2017, we had a total of 40 because of the 20 that did not take place in 2016, but as of October 2017 we had only performed three. PEMEX is working on a day-to-day basis, fixing emergencies instead of focusing on prevention.”

Although these are difficult times, there is a light on the horizon. As production of hydrocarbons ramps up, there will be a need for a healthy and strong pipeline transportation and distribution network. Although it will take time, companies such as NDT are setting their sights on the long term. It will not be easy, González says. “There is an expected uptake in the installation of pipelines but that is not the most attractive market for us. These pipelines are new and the inspection required is only on baseline terms. Inspection and maintenance activities will certainly be needed, but it will be at least five years from installation before they require inspection and maintenance.”
To remain for the long haul, companies should have a diversified portfolio of activities in which they can rely. NDT Global is offering its strong experience in the Mexican market as an added value. “We have diversified the services and markets we work in,” says González. “We have developed a very strong set of skills and human capital, which are now being deployed in other parts of the world.” 
NDT Global’s Mexican office has become a hub for not only its activities in the Americas, but also for Europe, offering services to countries that require the most expert human capital there is. “From our office in Mexico we manage all South American activities. We have been busy in 2017 with jobs in Colombia, Peru, Ecuador and even Brazil. Our offices have also become a human talent development unit as well as an analysis center for several international activities in Canada, the US and Europe. Although it does not compare to the market PEMEX used to represent, it has been a great help.”