Guillermo Barrera
CEO
Olam Energy
Luis Montelongo
Luis Montelongo
CFO
Olam Energy
/
View from the Top

Nitrogen: Core of a Diversified Portfolio

By Cas Biekmann | Tue, 01/21/2020 - 13:19

Q: How has Olam Energy developed its services portfolio over the years?

GB: Our core business was the transport of liquid nitrogen. Now, we are the No. 1 company in Latin America for storing cryogenic nitrogen, closing 2018 with more than 1 million m3 of ISO tank capacity. Nitrogen is an important element in the industry. Without it, production would not be possible in many wells, forcing their closure. Currently, our products and services support equipment from the big four, including Weatherford and Schlumberger. Our company is 100 percent Mexican and we have a workforce of over 120 people. Three wells are using our nitrogen, helping them to contribute over 12Mb/d to the total national production. Olam Energy also provides nitrogen injection services and high-pressure pumping for stimulations, cleaning, acidification and cementation.

Q: What is the main added value you can bring to oil and gas players?

LM: We have a highly experienced maintenance team to support the biggest companies. Our clients hire us because they cannot find any other partner as flexible as Olam Energy in working with nitrogen injection units. Our services and products provide flexibility to our clients’ operations by reducing the installation time of permanent piping after a well is finished, so production can flow as quickly as possible. This is aligned with PEMEX’s current cost-efficiency objectives.

Our other strength is risk management and assessment. . We are now properly settled and have plans to branch out to other markets in Latin America. We also bring people with significant experience in the sector to strengthen our offering and the quality of our services, among them our Engineering Director Benito Ortiz, who was formerly the Ku-Maloob-Zaap administrator.

Q: Why did you decide to focus on mature onshore fields and platforms in the Gulf of Mexico?

GB: I have 10 years of experience in MPD and a total 20 years’ expertise in the oil and gas industry. We started collaborating in MPD with Halliburton in Mexico. Our interest is to eventually own and manage all the equipment used in drilling operations. There are a lot of mature fields that require nitrogen. However, cryogenic nitrogen may not the best option for every well. In those cases, companies might need to use a membrane to separate nitrogen from the air to supply the well. We also participate in that process, complementing our MPD services.

Q: How do you balance your core business and your newer endeavors in terms of cash flow?

GB: Despite the uncertainty, we are sure that the industry is recovering. We do not want to stop our maintenance services and other operations in drilling since we have gained significant expertise and have used our fluids in various wells. Drilling operations represent big investments. However, we have reduced our participation in these services and returned to our core business: nitrogen injection. We are now growing again and will continue to invest. We are already participating in a well with Petrolera Cárdenas Mora and our intention is to increase our involvement in onshore fields.

Q: What are Olam Energy’s plans regarding secondary recovery?

LM: PEMEX is going to play a key role in secondary recovery due to increasing oil prices. Turnkey contracting will definitely play a big role in these processes. We are now participating with companies like Grupo Protexa and Marinsa in platform projects. Our involvement would not have been so easy if PEMEX remained the only player. We are confident in our role in this segment given our current assets.

Q: How is nitrogen injection influenced by oil prices?

GB: The geopolitical landscape is definitely having an impact in international markets and oil prices. However, this is out of our hands, so we just focus on making our operations more efficient. Similarly, in the wake of a crisis, PEMEX is more focused on profitability and not on producing at any cost.

 

Olam Energy is a Mexican company based in Ciudad del Carmen. Its core business is the storage and injection of nitrogen used for drilling operations. The company also provides maintenance services and is experienced in MPD.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst