Juan Manuel Delgado, Schlumberger
Release Date: 0000-00-00
The general consensus throughout the Mexican oil and gas industry is that the past five years have not been easy. However, in October last year, Andrew Gould, former chief executive of Schlumberger, cited that 2011 would be a turning point for oilfield services in Mexico. How true has that been and how has it built off of Schlumberger’s development in Mexico?It has indeed been five very exciting years for the oil industry in Mexico, particularly for service providers. Like many other in this business, over 90% of our activity is with PEMEX Exploration and Production. But we also have an increasing minority of client companies who are in a way related to PEMEX. We also serve the Federal Commission of Electricity which is involved in geothermal activity and utilizes similar technologies for drilling geothermal wells as we do for oil and gas wells. In general, there have been ups and downs in the oil industry, which have created different opportunities and allowed more participation for Mexican companies. This has been a positive development as it promotes competition and focuses on efficiency. Consolidating the Oil and Gas Mexican industry is certainly opening opportunities for new companies. We, Mexicans, like to compete and prove to ourselves that we can do better than others in the market place. The changes in the law for contracts with Pemex that are taking place motivate competition and the possibility to offer more integrated services to PEMEX. For example, 2011 has been a good year to explore and consolidate different prospects in the industry around the so-called Mature Fields contracts. They will add more activity and bring more players into the picture, helping PEMEX increase its oil production. Although they might not have had yet as great impact as PEMEX initially hoped for, they are a good way to start the Mexican model of private company participation in the O&G production industry. It is clear, however, that PEMEX is the only company taking equity on the assets, and any changes to this would be left to the government to decide. We, as a service industry, have to comply with the rules of the game set by PEMEX and the government.
Over the past 12 years Schlumberger has won more contracts in Mexico than any other oilfield service company. How have you been able to succeed in this race against your biggest competitors?
Schlumberger was originated in France and established its presence here in Mexico even before PEMEX existed. We have records which take us back to 1936. Since then, we have had continuous operations in Mexico, and during these years we have adapted to the dynamic working conditions and rules set by PEMEX. We created a commitment with PEMEX to provide oilfield technology and have very good experiences working together with them.Since our origins in Mexico, we have expanded our portfolio from what once was only well logging to practically all services required in the upstream world. We cover everything from seismic exploration and interpretation of field data, all the way to mature field development, engineering, reservoir characterization, and production. We have the most complete portfolio of new and innovating technologies and services among all of our competitors. This is one of the main reasons why we count with so many types of contracts. Our main competitors cover several areas, but not the entire spectrum as we do. Adding it all together, you can see the progress and success of Schlumberger in Mexico.It is important to mention that we not only participate in the tendering processes, but we also contribute through Research agreements. We are the only service company in our field doing so in Mexico without having a direct economic benefit. To understand the complex reservoir phenomena in Mexico, we do it together with Pemex and with our network of research centers around the world. For example, in conjunction with the Mexican Petroleum Institute (IMP) and the Universidad Autonoma de Ciudad Juarez (UACJ), we are working on a CONACYT-SENER research project that was awarded a year and a half ago, in which we are linking together our International Research Centers with the IMP and the UACJ. Again, we are the only service company in our field doing this in Mexico. We are very proud to do so.
You also have an important maintenance center in Veracruz which is unique in its kind. What makes it so unique?
To deliver our services, we have very specialized tools and equipment. Maintenance and preparation of that equipment is normally done in the various field locations. Our center in Veracruz supports our directional and MWD drilling product line. It is unique because our volume of activity in Mexico would call for 10 different labs around the country. However, instead of having service operations spread throughout the country, we centralized them into one unique workshop that functions like a production facility. When building cars, for example, you have a serial process that starts production from scratch and operates all the way to the final product with efficiencies generated along the way. You do not have that option when labs are spread out. We created the same concept of a production line that receives a tool from the field and, in record time, they can be very well maintained and ready to use again, anywhere in Mexico. We have the entire process centralized in one place and it is what makes the maintenance facility unique. The end result is that we can provide services to our clients more efficiently and at lower prices. We also have a manufacturing plant in Monterrey which has been in operation for over three years and has more than 120 people working there. We export over 95% of its production to Schlumberger’s locations all over the world. We also work very closely with Mexican local suppliers and, despite the security events that have unfolded in Monterrey, we are planning to expand that facility.Schlumberger is working in the Chicontepec field, which has the industry abuzz, being one of the country’s main resources.
What do you believe is missing in order to achieve better performance? Is it a matter of needing better execution or technological development? And how can Schlumberger help?
We have been actively supporting the development of Chicontepec over the past few years. In Mexico City we have Research Centers with 10 geoscientists fully dedicated to the understanding of the behavior of that reservoir. It is certainly very complex and we have been trying different technologies and developing new tools and sharing the knowledge with PEMEX so that they can determine how to develop most effectively the field. It really depends on their vision and strategy for field development. Even though PEMEX has gone somewhat fast in the development phase, they have also invested quite a lot in understanding the reservoir. It is the biggest accumulation of oil in the country. The oil is there and we need to help PEMEX bring it to surface. A lot of people compare Chicontepec to Cantarell, which is misleading. Chicontepec is one of those unique fields where even with all the tools available today it is not easy to understand and follow the continuity and multiple compartments of its reservoirs. Exploitation of Chicontepec does not have a magic solution and it is not, by any means, straightforward. There is no one simple field development plan that leads to immediate success like in the majority of other fields. With fields in the southern part of the country, it is hard to reach the oil, but once you have achieved this, it is relatively easy to extract. Chicontepec is the opposite. It is easy to get to the oil, but very difficult to extract it. The right combination of tools, processes and technology has to be considered for different parts of the reservoir itself. The northern part of Chicontepec vastly differs from the southern and center part, which therefore requires different technologies. All things considered, intensive engineering is required to continuously monitor and evaluate the field.
PEMEX announced a huge investment plan which includes reactivation of mature fields and deepwater exploration. What targets have you set for these new frontiers and how are you readying the company to tackle the opportunities?
Our first and foremost target is that we are going to be there. We are the market leaders and need to keep supporting PEMEX in their new plans for development. We see huge opportunities to continue helping PEMEX as the leading service company in those projects as we have done in others during the last 75 years. PEMEX is undergoing various internal changes.
They want to increase transparency and improve efficiencies, for example. What do you believe are the main challenges they will face in order to achieve their ambitions?
I think it will involve getting Mexican talent into the industry. Having qualified and talented engineers in sufficient volume is one of the biggest challenges facing the industry, and definitely it is something that PEMEX needs to keep working on. It is something similar to what we face in Schlumberger. We have a good quantity of professional foreigners working in Mexico; it has been one of our main diversity policies. We have as many as 25 nationalities represented. At the same time, over the past five years we have managed to recruit and transfer more than 800 Mexican engineers to other global Schlumberger locations. We have been recruiting an average of 170 Mexican engineers per year and transferring many of them to maintain our participation in our global growth. In Schlumberger, there are more Mexicans working overseas than here in Mexico. I would like to touch upon female participation in Schlumberger. We acknowledge that engineering programs at universities have approximately 25-30% female students. We aim to have a similar percentage of participation of female engineers in our company. Over the past five years, 30% of our total technicians and engineers that we have recruited are women, so we have very much met our goal. We are now proceeding towards having more female managers. Perhaps similar policies could benefit PEMEX as well.
You mentioned the violence in Mexico. Today in the news we see Brazil and Colombia leading Latin American oil and gas. Yet the sector is bigger both in size and proportion to the national economy here in Mexico. Do you think Mexico can regain its image as a good place to be – industrially and economically?
I think it is going to take some time for us as a country to solve our problems. The steps that the government is taking are leading us in the right direction. We have both the natural resources in oil and gas and the structural elements as a society to succeed. It should now be a matter of aligning everyone and the willingness of our governors to make sure that we do it.
As general manager of Mexico, is it a challenge to vie for investment against countries such as Brazil or Colombia?
Top management at Schlumberger has never hesitated to give us resources because PEMEX is one of our top clients around the world. What they keep challenging, however, is how manageable the situation is here, in reference to violence in the north.
What is the most rewarding part of working in oil and gas industry for a company such as Schlumberger?
I am a petroleum engineer first and foremost, so, for myself, I am completely in my element here. I am proud to have taken Schlumberger to where it is today in the market. We are well ahead of our competitors. It makes me very proud to have the participation of so many Mexicans abroad and to be recognized as an industry leader by PEMEX and the local Oil and Gas Industry.At Schlumberger, offering the best technological solutions to help our clients address the challenges of the oil industry, as their trusted service company, and providing good value to our employees and share holders, is very rewarding.
What would be your final message to our readers on behalf of Schlumberger?
Our commitment is clear: we have active participation in research and engineering because we are convinced in Schlumberger’s principle of being a leader in technology. This has to be offered to our clients anywhere we work. We are active through our collaborative relations with universities and Mexican Research centers. We also implement a strong social responsibility plan. We respect and give back to the communities where we work making sure that we are in an active dialogue with them. It makes our employees proud of working for Schlumberger as our ethical values, principles, and technology are here to stay.
| Company: | Schlumberger |
| Country: | Mexico |