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

Strengthening Stimulation and Drilling Technology in Mexico

By Karin Dilge | Wed, 08/31/2022 - 14:24

Q: What new opportunity did 2021 bring to Olam Energy?

GB: Generally, it was a good year, though the pandemic made it challenging to achieve growth while dealing with confined and sick personnel. We had to hire more people as a result, which complicated our logistics, operations and budgeting, but we still achieved a year of growth. From our point of view, national energy policy developments have been great. The growth in production and maintenance activity for PEMEX have been a benefit to Mexico’s industry. Overall, it was a year full of challenges but also one of growth and consolidation. 

 

JM: These challenges gave companies like Olam the opportunity to continue growing. In comparison to other players with less flexible structures, we could take on jobs that were difficult even for Mexico’s biggest enterprises. This opened doors for us as we were able to expand in other business areas and start new projects. It consolidated our position during the past year, when opportunity materialized out of crisis. It was not an easy challenge to take on because of PEMEX’s delayed payment times. Finding the right mechanisms, we were able to expand the company in various areas where we had knowledge but had not yet generated business. As such, Olam was able to venture outside of its core business of liquid nitrogen storage and stimulation technology.

 

Q: What aspect of the current energy policy direction has most benefited the company?

GM: Contrary to what many may think of the current federal administration, we are convinced that the political path Mexico is on is right for the country. Examining the geopolitical situation, it is evident that the president’s policies will become successful. During past administrations, PEMEX was steadily hammered and broken up. Now, the NOC is being reconsidered as a main pillar of the national economy. Oil and gas are seen as top contributors to Mexico’s development. 

PEMEX’s overhaul is ensuring the company can maintain steady production. We must be aware that we are no longer an oil exporting country, although we should not have been one in the first place. Constructing the Dos Bocas refinery was, therefore, an excellent decision, as is the maintenance and upgrading of other refineries that past administrations were letting fall to pieces. Now, the government invests heavily in refining. The acquisition of Deer Park was a winning strategy, too. Mexico consumes between 1.8 and 1.9 MMb/d. Why pay a third party for this supply and leave the benefits elsewhere? It is better to refine within Mexico and create a virtuous economic cycle. With the current fuel prices, the additional income from refining is a benefit to the entire economy. Many industries do not realize that the country’s refining’s growth is advantageous to everyone.

 

Q: How have Olam’s efforts to capture a higher market share evolved?

GB: As a medium-sized Mexican company, Olam is agile and flexible in the services it provides. This has positioned us as an important player in the well stimulation market and in providing offshore drilling solutions. We have a good market position and are still competing with large multinationals, even surpassing them at times. Compared to other nitrogen players, our market share is solid, mainly due to Olam’s flexibility.

 

JM: The capacity increase and investment in mobile nitrogen warehousing gave Olam the capacity that the market demanded. We achieved a higher capacity than our main Mexican competitors. The company also acknowledges the importance of its key client, PEMEX. Olam contributes to the NOC’s production increase and therefore to one of the government’s main objectives. PEMEX counts on us to be able to increase its production. Olam facilitates its well stimulation through its nitrogen injection services. 

 

GB: Technological innovation allows newly drilled wells to start producing even before all statistics for PEMEX have been gathered. This grants Olam the opportunity to participate in other markets outside Mexico, for example India, where we are developing a comparable stimulation project to those we have here.

 

Q: What are your plans for 2022? 

GB: The company’s plans are to consolidate and continue developing its stimulation services regarding the pumping, supply, distribution and transportation of nitrogen. We have an aggressive growth plan in our drilling portfolio whereby we will expand it with Dynamic Pressure Drilling (DPD). In the past, offshore drilling technology came from abroad but now we are important players in the sector by using fully Mexican technology.   

 

JM: Another important goal for the company is to match the capabilities of international competitors as a fully Mexican enterprise. We aim to strengthen our position as a national company so that we do not remain unnoticed. The company demonstrates operational efficiency and compliance with government objectives on its own merit. By presenting the right solutions, we are recognized as a key partner for PEMEX. 

Moreover, Olam has drilling equipment patents regarding DPD, including for 100 percent Mexican rotary heads. This equipment allows users to drill wells that for geographical reasons could not be developed before.

 

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.

Karin Dilge Karin Dilge Journalist and Industry Analyst