People, Technology: The Future of Mexico's Pipelines

Q: What is the state of the Mexican and the international pipeline industry?

A: There is a certain level of bureaucracy and hierarchy that you do not find often in other countries. Nevertheless, the nature of Mexicans makes doing business relatively easy. Contracts move quickly, although discussions with agencies can take some time. In general, the industry is very competitive internationally.

Q: In what ways is the government involved in the pipeline infrastructure today?

A: A pipeline is just a pipeline; it has no inherent nationality. The key is that you continually must reinvest in your infrastructure to keep it functioning. If there is a great deal of government interference that cuts into profits, efficiency is hampered and budgets may be reduced. In my experience, pipelines differ very little around the world and are usually well looked after. In Mexico, product theft is prevalent, which is without a doubt one of the biggest issues the government is trying to deal with. The other main problem is that reinvestment in new infrastructure is difficult because it is too expensive. Mexico will need to make these pipelines last for 40 more years, even though they are already 50 years old. During reorganizations, infrastructure is often forgotten, as the focus turns more to people and management, but we must not forget the importance of infrastructure. Pipelines resemble each other and old does not mean outdated. It may just need more investment. Good operation and maintenance are the keys to functioning pipelines. Common standards between the public and private sectors are important for safety. I believe Mexico should focus on its aging infrastructure and comply with regulations. I recommend three standards to help regulations: safety culture, data management and competency of people. These directly help our future generations of workers as there is pressure to give new generations less funding and training.

Q: What policy initiatives could help improve pipeline integrity management, maintenance planning and rehabilitation?

A: It is crucial to work with these regulations. The safest pipelines are operated in countries where the regulator and pipeline operators work together. My recommendation is for the regulator to establish a common-ground relationship with operators. Regulation, operation and standardization lead to safety. The key is to combine processes and regulations with investment and financial resources. The operator invests and then goes to the regulator to get their operations checked. There is an agreement between the two because the industry sets the standards that will be followed. The process works because of this cooperation. Nonetheless, this cooperation can still improve a great deal.

Q: How can companies manage the challenge of sharing data that might be valuable commercially?

A: Safety data should be shared. The airline industry, for instance, is legally obligated to share safety data, even though it costs them money. This sharing of information does not happen in the oil and gas industry. Enforcing laws to obligate companies to share information is always the last choice, but unfortunately it works. It has reached the point that there could be a safety issue on the other side of the world, and the information is not shared, even though companies here are likely to encounter the same issue.

Q: How do you think the expansion of pipelines in Mexico will evolve in the future?

A: The existing infrastructure is probably fine; the challenge is to use it better. Gas exports would need to become more of a business as well. Furthermore, it seems like pipelines are underused. If it is only half used, it is a waste of money. As far as change in the Mexican oil and gas industry is concerned, the Energy Reform was a great idea.

Phil Hopkins Ltd. provides engineering consultancy and training to the pipeline industry. Phil Hopkins was previously Executive Director of the pipeline engineering company Penspen Limited and Managing Director of Andrew Palmer and Associates.