PEMEX: Industrial Safety and Environmental Protection Challenges

One of the great energy challenges facing Mexico is to guarantee the timely, sufficient and affordable supply of natural gas, both with imports and with domestic production. To that end, between the third quarter of 2021 and 3Q22, PEMEX’s total natural gas production increased by 5.1 percent, from 3,690 to 3,879 MMpcd. The production of associated natural gas in the third quarter of 2022 was 2,750 million standard cubic feet per day (MMSCFD), an increase of 58 million MMSCFD (2.2 percent), compared to that of the third quarter of 2021. Meanwhile, non-associated natural gas production stood at 1,128 MMSCFD, a volume that is 13 percent higher than that of the same quarter of 2021 (998 MMSCFD).

In this context, although the total production of natural gas increased, as we have already indicated, by 5.1 percent between the third quarter of 2021 and the same quarter of 2022,  marking six consecutive quarters of small increases in production, the volume obtained is absolutely insufficient to meet the needs of the country. Mexico continues to have a very high dependency on the US for the supply of this fundamental energy source for electricity generation and national industrial activity.

Given this situation, the urgency for the government and PEMEX to design a comprehensive strategy to ensure the supply of natural gas to the country remains evident. Institutional, fiscal and regulatory measures are required as well as greater investment in transportation and storage infrastructure projects. It is not enough to increase the volume of gas production in the country. PEMEX would have to adopt a production strategy abroad as well as invest in nitrogen separation plants to reduce gas flaring. Furthermore, the relevance of creating a subsidiary of PEMEX focused on gas production should be seriously analyzed so that these projects do not compete, in budgetary terms, with oil exploration and production projects. Only in this way can we gradually get out of the situation of vulnerability in which our country finds itself, in terms of natural gas.

On the other hand, from the first quarter of 2019 until the same quarter of 2021, the burning of gas, sending it into the atmosphere, has experienced sustained growth, report after report, rising from 5.1 percent in the first quarter indicated to 14.9 percent of the gas extracted in the 2021 period. The volume of gas sent into the atmosphere during those two years went from 243 to 712 MMSCFD. That is a dramatic increase of 193 percent. As of the second quarter of 2021, gas flaring had been steadily declining, although it remained  very significant. However, in the second quarter of 2002, this slow but positive trend was reversed, reverting to  a negative trend.

Indeed, in volumetric terms, between the third quarter of 2021 and the same period in 2022, gas flaring went from 605 to 491 MMSCFD; that is, there was a significant decrease of 18.8 percent. Measured in percentage terms, the gas sent into the atmosphere went from representing 13.1 percent of the total produced in the third quarter of 2021 to a value equivalent to 10.4 percent in the reported quarter. However, the volume of gas sent into the atmosphere in the reported quarter was 25.9 percent higher than in the first quarter of this year and 14.7 percent higher than the second quarter. In other words, the burning of this energy, as a proportion of the gas extracted, went from 8.4 percent to 10.4 percent, between the first and third quarters of 2022.

The interruption of the sustained process of reducing gas flaring, as stated by PEMEX in the results report for the third quarter of 2022, would have been caused by the production of gas highly contaminated by nitrogen in the Northeast Marine Region, the delay in the construction of the infrastructure for the conditioning of gas in the Ixachi field, stoppages for maintenance and failures of various compression equipment as well as rejections and releases from PEMEX Industrial Transformation’s gas processing centers. The result is that despite the trend progress in reducing the release of gas into the atmosphere, its current level is more than five times higher than the regulatory limit of 2 percent of the total produced.

Meanwhile, safety at work continues to be a red flag for PEMEX’s operations. Indeed, the index that measures the number of disabling accidents, per million worker hours of exposure to risk, worsened significantly, rising from 0.44 to 0.49 between the third quarter of 2021 and the corresponding quarter in 2022. That is an increase of 12.7 percent. In line with the deterioration of the previous index, the total number of days lost per million man-hours worked increased notably, from 26 to 39 days in the same period, a very worrying increase of 50 percent. In contrast, both indices were zero at PEMEX's refinery operation in Deer Park, Texas.

In fact, for the January-September period, PEMEX reported the highest severity of accidents in the last nine years. Indeed, in the first nine months of 2022, the accident severity rate was 27 days lost due to disabling injuries suffered per million man-hours worked with exposure to risk. This figure is 50 percent higher than that observed in the same period in 2021, when it was 18 days lost per million hours of worker exposure to risk.

The evolution of both indexes represents a serious setback in terms of industrial and labor safety; therefore, it must be the object of immediate attention by the administration of PEMEX. In this area, there should be no consideration of austerity, or of any other limiting measure, since the objective of any company should be to provide the greatest possible safety to those who work in a high-risk sector such as the oil industry.