Paper-based Culture Hinders Tech Adoption

By Peter Appleby | Fri, 01/17/2020 - 12:56

While global oil prices have made up ground since the dramatic price crash of 2014-2015, the benchmark WTI Crude price has hovered between US$50 and US$60 per barrel for most of 2019, barely half of its pre-crash rate. Despite last year’s period of price steadiness, continued low prices mean companies across the value chain remain cost-focused, making their operations more efficient to maximize the ROI for every dollar invested. Industry 4.0 technologies, which include IoT and machine learning, and the ongoing digitization of the industry, remain key to cutting costs and developing Mexico’s oil and gas industry.

Jesús Lamas, Former General Manager for Mexico and Central America at Schlumberger, agrees that technological innovation is poised to propel the global oil and gas industry. Now is the chance for the Mexican market, still adapting to the application of game-changing tech, to make a great leap forward. “The next big opportunity for the oil and gas industry, particularly in Mexico, is the implementation of innovative technologies to reach a full digital transformation; strategic deployment of artificial intelligence, analytics, robotics and blockchain will help to increase efficiency, productivity, reliability and predictability of operations,” he says.

The winners of Mexico’s first nine licensing rounds committed a total of US$161 billion to their blocks, a large chunk of which was directed to the exploration and early development phases of their fields’ life cycles. Robert Pérez, President of Baker Hughes Mexico and Central America, says that technology is central to help operators in Mexico reduce the financial risk associated with these early phases: “We are collaborating with our customers in new ways to enhance their overall project economics. This includes offering new integrated products, services and digital solutions to address their toughest challenges in accessing, finding and developing energy resources.”

With production drilling now taking place in Mexican offshore waters, staying ahead can help operators avoid the high costs associated with unexpected downtime. Companies in Mexico are now using more data-driven technology to preemptively identify drilling risks and avoid financial waste. Resource Energy Solutions’ Drill AI drill bit technology is one such example. “It allows us to see ahead of the drill bit through the analysis of measurements in areas such as bit wear predictions, analysis of stuck pipe condition and well blowout characteristics. These are just a few of the 65 data points that we collect every second at the rig in real time,” says Trent Marx, CEO.


Further along the value chain, advanced technologies are delivering benefits to the midstream and refining sectors of PEMEX, a company that has traditionally been averse to investing in game-changing technologies. Guillermo Bilbao, Director Mexico for PA Consulting, explains that as technology is becoming more affordable, its value-adding uses are becoming more common-place. “Applying machine learning to maintenance allows us to predict with great accuracy when something is going to malfunction or break. That prediction is worth tens of millions of dollars in savings. We have applied these technologies previously with enormous success in the North Sea […]. What is interesting is that the NOC is attracted to these technologies in part because they do not require an enormous up-front investment,” he says. Vernon Murray, Emerson’s Latin America President, underlines the company’s view on the benefits that increased technology can bring to the oil and gas sector in Mexico. “For the last seven years we have worked with the University of Villahermosa to train our automation engineers. They can provide the skills necessary for the current market. We do not believe that automation means fewer jobs, we believe it means different jobs,” he says.


Cutting-edge technologies can only be handled by a highly-trained workforce. Work is required to bring local content up to the standard expected and both the public education system and private contractors must each play a part. “The Mexican oil and gas industry must acknowledge that it has both strengths and weaknesses. One area of weakness is in its application of technology. To close these gaps requires a collective effort led by PEMEX, government entities and private companies now working in the country. Mexico’s open market means more competition and a higher demand for specialized resources, which fosters an industry shift toward specialization for more efficient exploitation of resources,” says Carlos Palvicini, Vice President Americas at Petrolink.

Peter Appleby Peter Appleby Journalist and Industry Analyst