Prevention Mindset Needed

Sun, 07/01/2018 - 13:31

The consolidation of the Energy Reform is not only palpable in the upstream sector, but also in the midstream. Companies are looking to capitalize on the opportunities in terms of revamping old pipelines and constructing new ones. “In midstream, we are in the midst of the largest expansion our pipeline network has ever seen, extending it from 11,000km to 18,000km to reach more regions of the country,” explains Aldo Flores, Deputy Minister of Hydrocarbons at the Ministry of Energy. Beyond the transport infrastructure, more players are entering on the supply and demand sides, creating regional hubs, and price liberalization is allowing regional pricing to form a more dynamic natural gas market. “We expect these changes to foster wider distribution coverage across the country, since we are at an early stage in the development of our new energy model,” says Flores.


Recognizing the need to provide a secure, reliable and pricecompetitive source of natural gas to satisfy the increasing demand of energy in the different economic sectors of Mexico, the Ministry of Energy created CENAGAS. Four years after its creation, in August 2014, the operator of the natural gas transport system in Mexico established itself as a reliable operator of the widest network of pipelines in the country. David Madero, Director General of CENAGAS, is preparing for the future. “Our ultimate objective is to provide gas security to the country and we are well under way. We are aware that private companies will eventually earn larger shares of the market so we need to carry out the projects we deem necessary, with an eye on budget control and costreduction practices,” he says.

While planning Mexico’s natural gas pipeline system, Madero recognizes that the goal posts have moved. “A few years back, critical alerts on natural gas supply were the main concern due to the lack of infrastructure growth, which changed after the implementation of the Los Ramones pipeline project,” he says. “Now, challenges are related to the drop in local production that leads to more natural gas imports as we are reaching our limit for imports capacity.”

Fernando Calvillo, Chairman of the Board at Fermaca, sees considerable business potential in installing connections with the US. “Connecting our pipeline system to the US system makes more sense than losing money in producing gas. In this context, building pipelines will remain a priority,” he says. However, he adds that CENAGAS’ national pipeline system, SISTRANGAS, is capped due to the lack of investment from PEMEX and CFE, creating the need for more open seasons.

As the number of players starts rising, Madero wants see a thriving industry installing soon-to-be-operable pipelines that will ensure a reliable source of hydrocarbons across the country. Madero also admits that Mexico’s natural gas industry still faces challenges on the journey to allow CENAGAS more autonomy from PEMEX. “We also need to finish our information and operational technology projects, but we believe we are on the right track moving forward,” he says.



While international attention has focused on the upstream sector, the expansion of pipelines to distribute and transport the produced hydrocarbons is a priority, according to Oscar González, Director of Latin America for NDT Global. He warns of a much-needed investment in maintaining the existing midstream infrastructure. “PEMEX’s pipelines have not been inspected in two or three years because the company does not have the budget to do so. PEMEX is working on a day-to-day basis, fixing emergencies instead of focusing on prevention,” he says. Jan Frowijn, Director General of Rosen Group Mexico, shares that view. “There is a lot of focus on expanding new pipelines but the emphasis should also be on maintaining the legacy system as effectively and efficiently as possible.”

González says the industry should naturally evolve while simultaneously gathering and analyzing more information to ensure that pipelines are always available. “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,” he says. “Every year we are finding different defects that require more precise measurement mechanisms and more advanced technologies.” 

Rociel Barrera, Director General of Diablo Pipelines, is using these technologies to bring a preventive maintenance approach to the industry, as well as to educate its clients about the advantages this approach provides their operations. “Beyond the cleaning and repair of pipelines, we are trying to make our clients understand the importance of the integrity of the whole system. Pipeline integrity involves everything related to the pipeline,” he says. “Some of our potential clients are spending millions of dollars every five years because they fail to clean their pipelines regularly. We are trying to make our clients more aware of these expenditures and how they can avoid them with regular pipeline cleaning.” She also admits that this is not an easy task considering the reduced budgets of companies. “As is typical in our market, there is always money to repair and inspect, but none for prevention. So, we are trying to change decades of thinking and channel our clients’ spending toward prevention instead of replacement.”


As the potential for revamping the old and installing new pipelines for natural gas has been assessed, players in the industry are also looking at new ways to make business. IEnova, a company that has been committed to the country since its creation and that has invested heavily in the deployment of gas, oil and ethanol pipelines is looking at new business opportunities brought about by the changes. “We see a great market opportunity in the development of liquid product pipelines,” says Nelly Molina, the company’s CFO. “There is a need for infrastructure to serve the growing demand of a 120-million-person market and an inherent necessity for an open and economically viable liquid fuels market in the country.” With ambition to find new business opportunities Alberto Escofet, Regional Manager of Enagás México, talks about the potential in the country to implement new solutions to old problems. “Mexico has a huge potential that has yet to be tapped in the distribution and transportation of natural gas because there are many regions where the hydrocarbon is not yet available through physical pipelines.” One of the solutions he proposes is the use of virtual pipelines. “Virtual and physical pipelines have different purposes and market justifications that can be complemented,” he says. “With the help of virtual pipelines, regions where natural gas had a limited presence will start to see the benefits of using such a fuel over other options, particularly for power generation.”