Jackson Payne
CEO
Novamex Energy
/
View from the Top

Preparing Mexico for Potential Shale Explosion

Wed, 01/21/2015 - 12:56

Q: How is Novamex Energy collaborating with the government of Coahuila to prepare its shale segment?

A: There are large amounts of shale resources in Coahuila, where the government is trying to build an industrial park to create a cluster. This is an area where Novamex Energy can help out. We are buying companies in the US and bringing them to Mexico, where they will have a presence in Saltillo. We chose this city because of its proximity to Texas as this means we can reduce freight costs when shipping to Houston. Coahuila has a skilled labor pool and a good environment for building plants as many raw materials, such as steel, are on hand. We have proved over the course of a decade that we are committed to developing the Mexican oil and gas sector, while doing it with Mexican board members and investors. Many companies circling to enter Mexico for the shale plays will come here to take money from the country, which is not the case for Novamex Energy. We are building up Mexican companies and we have been here since before the Energy Reform. The government has realized this so the authorities see us in a positive light.

Q: How do you view the concerns about the lack of shale experience among Mexico’s oil and gas industry?

A: There is a lack of technical expertise in Mexico. The IOCs will certainly improve this situation but the services sector still lacks true direction or leadership. Certain geologists that have carried out seismic believe there may be more shale gas in Eagle Ford south of the Rio Grande than north of it. However, Mexico does not have the talent or experience to take a shale play of that magnitude and emulate what has been done in Texas. Then, we must look at the workers. Many wonder how Mexico will develop enough skilled workers to develop the necessary infrastructure, such as pipelines, which is a very difficult exercise that requires high certifications. The US faced a similar knowledge gap in the 1980s. If Mexican shale is detonated as in Texas, it may be very difficult for Mexico to compensate for that gap. It will be a real challenge to train people fast enough to not lose momentum once the shale industry kicks off. For this reason, we will build a training center with the government of Coahuila that will allow Mexican workers to build up their skills and take advantage of job opportunities in the oil and gas sector. Ideally, it would be up and running in 2015, but given the timeframe, we will at least get the process started this year.

Q: What are the main services Novamex Energy intends to provide the Mexican oil and gas industry?

A: We build systems for drilling rigs in the oil industry. Our versatile mud system is the most important system we provide. We also build any other tank that goes on a rig, such as water tanks, field tanks, structures that house generators, or any similar structures.

Q: How did Novamex Energy first become involved in Mexico?

A: Our project was initially called Rio Bravo and began in the US in 2005 before being registered in Mexico in 2008. The idea started when my uncle worked for a company in charge of constructing drilling rigs and was unable to find certain parts. Eventually, he found the parts he needed in Mexico and hit on the idea of building tanks here. We first started by contracting others to build our tanks before deciding to do it ourselves. After several years of running Rio Bravo, we needed to grow as we were only catering to a small portion of the industry. We joined forces with a capital group and we started Novamex Energy, a public company listed on the OTC Exchange in the US. We are now doing a reverse merger and are integrating Rio Bravo into Novamex Energy as we aim to target the shale boom. We are also targeting other careful acquisitions. By buying companies with complementary business lines to ours, we can offer our customers more options.

Q: For which of your products do you anticipate the highest demand in Mexico?

A: I would say pipelines and we already have an agreement in place with a company that builds them. This means Novamex Energy can build pipelines, provide maintenance, and place metering systems as theft is a serious issue in Mexico. Putting metering systems in new pipelines and retrofitting old ones is a huge market for us. In addition to developing its pipeline business, Novamex Energy will also build rigs. There is no reason not to build rigs here as it would be easy to move manufacturing from Texas down to Mexico. We want to build a company that does all of the above and we are well-positioned to do so.