Mexico at the Offshore Technology Conference, OTC: light and dark

The Offshore Technology Conference, OTC, was recently held in Houston Texas, as is the case every year. It was the 50th anniversary of this unique event in its class, which can convene more than 40 thousand people and more than 1500 companies of all kinds, related to technologies and services for the oil industry. The event has evolved over these 50 years and what began as offshore technology – offshore technology – became the event of technologies in general, and the largest exhibition of equipment, machinery and services of the international oil industry.

One of the characteristics of recent years has been the presence of pavilions or large stands of countries that facilitate their national companies to publicize technologies, services, and skills to make themselves known internationally. This year Mexico was present through representations of the state of Tabasco and the Mexican company Protexa. Unfortunately, there was no presence of Pemex, and many people missed this absence after more than 10 consecutive years of being there and filling an important image space of the oil country. However, there was a Mexican presence in an interesting technical panel that discussed the issue related to the administration of transportation and distribution of hydrocarbons, the presence of private investors and the concerns of the sector related to the change in the authorities of the country’s energy sector.

The issue of the midstream in Mexico remains critical as exploratory and, in some cases, development wells are being drilled. Questions such as: Who is responsible for receiving the hydrocarbon from wells that drill private companies? How would they connect to Pemex facilities? What type of tariff can be established? Can private operators directly dispose of crude oil? produced to the market?, they are still in the public arena, and require answers and solutions from the regulatory institutions and also from the leading company in the sector: Pemex.

To discuss these questions, the Mexico panel included representatives from Pemex, the Energy Regulatory Commission, regulatory body and service companies and independent operators. The panel was divided into two segments, the first was made up of operators and three companies also drilled wells in shallow waters of the Tabasco Coast. The second segment had the participation of the general director of the Energy Regulatory Commission, CRE, and three service companies.

The presentation made by the Deputy Director of Resources, Reserves and Associations of Pemex Exploration and Production was very important, who explained in a simple way what related to the existing facilities and that allow the storage of crude oil and the processing of gas in the terrestrial areas, highlighting the capacity available in different gas processing plants and production batteries, which in some cases exceeds 70%.

The Pemex E&P representative also explained that there are two schemes that the national company is considering to share that available capacity with other companies that are producing in the regions. He said they are working on the type of contracts they will use to give a commercial form to the type of alliance they would make with those interested companies. In general, the liquid and gas transferred to Pemex E & P facilities will have to pay a fee to be defined in each case specifically. Pemex will also have the option to buy the gas and liquids from the respective operator and the national company will be responsible for marketing them.

For his part, the Commissioner President of the Energy Regulatory Commission spoke to the audience about the responsibilities of said. the institution in the midstream sector in Mexico. He pointed out that open access in gas processing plants is inherent in the commercialization of this hydrocarbon. Regarding the collection and distribution (transport) systems, the CRE has so far made no distinction for regulatory purposes and is considering the execution of a benchmarking study, to determine if in other countries, there are different experiences. He commented that, in the case of Pemex gas processing plants, the CRE has the authority to regulate in those cases in which they are in the middle of transport systems, because they are considered as part of them; but not in those cases of plants located in specific sites away from transport systems, or within refineries or petrochemical plants. Answering specific questions from the auditorium, the commissioned president of the CRE commented on the analysis carried out by the institution to establish the value of the gas market at the head of the well, using the calorific value of gas as a bechmark. He also commented on the opportunities that will be presented to continue opening the systems to private investment, considering the principle of asymmetric regulation, the basis of which states that Pemex should continue to reduce its market share, in those places where it is the dominant supplier.

The representatives of private companies showed their interest and concern because no tariffs have been defined that allow them to carry out their commercial analyzes for the best disposition of their production, both of oil and gas, mainly offshore. This indecision has led them to consider individual solutions to solve their situations with laying lines, and rents of small FPSO ships. They also ratified the confidence in the current administration of the Mexican government and how they have continued with their good drilling plans. One of the most active operators in the market is the British company BP, which has focused on investments in the midstream that facilitates access to more than 30 customers it already has for its various oil companies.

The service companies pointed out the opportunities to use existing infrastructure on the United States side to support gas and oil to Mexico. This will allow the country to generate income more quickly and efficiently. The relationships between market operators and transport and distribution service companies must bring more economical solutions to the end customer.

An option that has been considered by companies that are developing exploration activities in deep and shallow waters has been the rental of FPSO ships. In the case of shallow waters, the market has evaluated the option of building smaller vessels that can more efficiently meet the requirements of these companies. For deep water, existing ships in the market could meet the needs of the operating companies in that sector. Pemex has already had experience in contracting this type of vessels since 2005 when a FPSO was required to support the evaluation and subsequent production of the KMZ field, while the necessary production facilities and platforms were completed.

The greatest importance of the event was precisely to facilitate this much-needed interaction between representatives of the national company and regulatory institutions, and the private sector, and to have a heterogeneous auditorium, whose main interest is to understand how to move forward supporting the development of the energy sector in Mexico , for the benefit of all.

Luis Vielma, is CBM Ingeniería Exploración y Producción President and CEO, a well-known Mexican engineering services company. Member of the International Society of Petroleum Engineers (SPE) and México Petroleum Engineering Society. Mexican Association of Service Companies (AMESPAC) International Relations VP. Frequent collaborator in three prestigious Mexican energy news publications, as specialized writer for the hydrocarbons sector. Speaker in national and international events of the energy sector. Author of three books, the last one “Chapopote”, a historical fiction of Mexican oil, which is considered the most original documented story of the origins of the oil industry in Mexico.