A more efficient regulation of Mexico’s energy industry

Mexico

Ángel Carrizales López, executive director of the National Agency for Safety, Energy and the Environment (ASEA), talks to The Energy Year about how ASEA is working to make regulation in the energy industry more efficient and how it seeks to protect the environment and communities. ASEA is Mexico’s regulator for safety, energy and the environment.

What has ASEA done to improve its regulatory approach to the energy industry?
From its foundation in 2015, ASEA was created as a regulatory body for the entire hydrocarbons value chain. We have focused on the design, elaboration and development of upstream, midstream and downstream regulatory instruments and are the only agency in the world that does that.
In this regard, we have worked on the development of 31 regulatory instruments (11 Mexican Official Standards and 20 General Administrative Provisions) published in the Official Gazette of the Federation, in addition to 12 Guidelines and 4 Criteria. All of these instruments are available on our website.
In 2019, we began working on reviewing the regulations that were issued based on the principles of regulatory improvement mandated by President of Mexico Andrés Manuel López Obrador. It was possible to identify that there were still regulatory gaps; therefore, a plan was drawn up with the specific purpose of rectifying and updating the entire regulatory framework. We also carried out specific and comprehensive inspections to ensure that all aspects of operational safety, industrial safety and environmental protection were covered.
For example, we added the modality of “limit of liability by amounts” for insurance contracts, for those who carry out the activity of distribution of petroleum products through distribution facilities. This is beneficial to 1,129 facilities, which are no longer required to carry out a probable maximum loss (PML) study. This study has a direct impact on the costs of the regulated and, at the same time, on the end user’s budget. As a result, companies will now have two alternatives to comply with the insurance requirements: limit of liability by amounts, or the submission of a PML study.
We also improved our relationship with the regulated entities and have achieved a better day-to-day operation within ASEA. There were important areas of opportunity which we took advantage of, and we are now more efficient from an operational and human resources point of view: we improved our staff’s efficiency, as well as our inspections and instruments, and developed new regulations in accordance with the challenges of the sector.

What Official Mexican Standards is ASEA developing to protect the country’s aquifers from petroleum activities?
There are two main aspects about groundwater: the first one is the aquifers, and the other is produced water and flowback fluids associated with upstream activities.
Regarding aquifers, ASEA has regulations in force to regulate hydrocarbon upstream activities. Its objective is that these activities, which are classified as highly risky due to their nature, are carried out protecting the integrity of people, the environment and facilities.
The Guidelines for Industrial and Operative Safety and Environmental Protection for Exploration and Extraction of Hydrocarbons in Mexico includes the geophysical survey, drilling wells and workover operations, established to avoid any possible contamination of groundwater. The implementation of correct cementing casing pipes in the wells, as a hermetic barrier is fundamental to fulfil this purpose. The goal is to mitigate the possible impacts that could be caused by the infiltration of fluids from the reservoirs to wells and finally into the groundwater.
ASEA is also updating NOM-138-SEMARNAT/SSA1-2012 on Maximum Permissible Limits of Hydrocarbons in Soils and Guidelines for Sampling in Characterisation and Specifications for Remediation. This Official Mexican Norm establishes the maximum permissible limits of hydrocarbons in soils, and guidelines for sampling in the characterisation and specifications for remediation. ASEA is now working closely with the National Water Commission (CONAGUA) to consider remediation of contaminated onshore waters.
Currently, ASEA regulations consider the implementation of barriers to avoid environmental impact associated with drilling and workover activities. This, in relation to the large volumes of produced water that come out of the well with the crude oil during well production, containing soluble and non-soluble oil/organics, suspended solids, dissolved solids and various chemicals used in the production process, which represents a risk to human health and the contamination of aquifers and surface water bodies.
For this reason, ASEA proposed the creation of the Official Mexican Standard to regulate the Management of Produced Water and Flowback Fluids associated with upstream activities. This regulatory document establishes the specifications and technical criteria on industrial safety, operational safety and environmental protection related to the management of produced water and flowback fluids and the maximum permissible limits of the parameters for their discharge to receiving bodies.
With these regulatory documents, ASEA addresses, in a preventive and corrective manner, the components of pollution risk, to guarantee the well-being of communities, which is also consistent with the human right to a healthy environment.

How is the agency contributing to a better and safer upstream sector?
We promote communication with the regulated entities in a direct and close manner with ASEA. In this way, we are aware of the activities they perform in each of their contract or assignment areas.
Each activity carried out in the upstream segment is supervised, inspected and monitored based on risk management. We verify regulatory compliance, and only impose precautionary measures if required to reduce or mitigate risk. Furthermore, we follow up and address incidents reported by regulated entities through root cause analysis (RCA).
To mitigate the impact associated with oil and gas activities, we seek to preserve the livelihoods and wellbeing of the communities where projects are located. Therefore, the agency imposes and enforces environmental standards and other measures to ensure the safety and preservation of biodiversity, and to promote the respect and wellbeing of those communities.
To safeguard the offshore and onshore environment, our actions include the management of waste and atmospheric emissions, bearing in mind the economic development of the agricultural and fishing communities located in the vicinity of the oil and gas facilities.
In summary, ASEA is committed to issuing effective regulations that promote the conditions for the regulated entities to act in an environmentally and socially conscious manner. For this reason, it carries out a continuous process of evaluating the performance of upstream activities, under a policy to ensure compliance rather than sanctioning.

What regulatory efforts are you making to control, prevent and mitigate emissions?
On November 6, 2018, ASEA published in the Official Gazette of the Federation the Guidelines to Prevent and Control Methane Emission in the Hydrocarbons Sector. This regulation has been taken as an example by other Latin American countries in their efforts to control such emissions.
In addition, ASEA makes efforts within the framework of environmental contingencies to improve air quality in the metropolitan area of the Valley of Mexico, which includes 16 territorial districts of Mexico City, and 28 municipalities of the State of México. To this end, we monitor the control of fugitive emissions of volatile organic compounds (VOCs) through the establishment of test methods and parameters for the various activities applicable to vapour recovery systems in service stations for the sale of petroleum products to the public, established in NOM-004-ASEA-2017.
In this sense, for the prevention and control of air pollution, we monitor whether the regulated entities comply with the regulations on maximum permissible emission limits. If they do not, we may proceed to suspend their activities or impose a fine.
Currently, the agency relies on the Official Mexican Standard NOM-008-ASEA-2019, service stations with a specific purpose for the sale to the public of LPG, using of partial or total filling of portable containers, which includes as an element a dry disconnect device. However, ASEA is working on the development of a regulation in which it will include dry disconnect devices to restrict the release of residual LPG into the atmosphere, with the aim of effectively reducing LPG emissions during distribution and dispensing activities.
There are several structural problems, such as lack of incentives and technological barriers (measurement, reporting and verification systems), that complicate the achievement of our emissions reduction target. However, we ensure that operators respect compliance with the rules.

To what extent are you strengthening the relationship between operators and ASEA?
Our intention is to have a one-to-one approach, and, to this end, we are promoting Safety and Environment Week in different states. This exercise began in Tabasco, and it was a great success. With this type of event, we get closer to the regulated entities, we listen to them and we are able to dialogue with them. In addition, we organise forums and workshops to answer any questions about what we do.
In this sense, proximity to operators has become essential. Most of the companies we have been visiting recognise a greater interaction with the agency in this administration, a closer ASEA. We like to do field work and have direct communication with companies to understand their needs and concerns. As an agency, we believe in a closer coexistence, within the framework of legality, with the actors of the hydrocarbons sector, with emphasis on the communities that live day by day with the projects of this sector.
In this context, last year we launched our Popular Complaints System. This is a digital platform useful to promote social participation, since it facilitates the submission of complaints from the public on matters within the agency’s competence. This helps us to be closer to Mexicans and their needs.

What is the rationale behind ASEA recently becoming a certifying body?
In November 2021, after several negotiations and joint work with the National Council for Standardisation and Certification of Labour Competences (CONOCER), ASEA was accredited as a Certification and Evaluation Entity of Labour Competences, developing training, evaluation and certification programmes in competency standards.
With these actions, we seek that people who perform activities in the hydrocarbon sector – such as operators of LPG auto-tanks – have enough knowledge to apply their procedures with a high level of performance, ensuring that they comply with high standards of industrial safety, operational safety and environmental protection to reduce the risks of accidents and incidents during the development of their activity.
This strategy was triggered by an accident in a market in Mexico City in 2021, which set a precedent for us. An LPG tanker truck exploded, and the lack of immediate action by the operator aggravated the situation. This committed us to seek mechanisms to support the operators of these vehicles to be trained, evaluated and certified.
Thus, in 2021, we developed the competence standard for the safe operation of LPG distribution auto-tanks. They have to perform tasks under strict safety measures, which include the correct use of personal protective equipment, not using mobile phones, knowledge on defensive driving, knowing how to park and secure the auto-tank correctly, knowing the correct placement of a ladder to climb up and down to reach the level where the stationary LPG tanks are located, to verify the conditions of the area where the LPG will be unloaded in a safe way for the end user.
Once the standard was developed, we carried out pilot tests to corroborate its relevance, applicability and clarity, analysing three elements that the operator will carry out – from the daily checking of the auto-tank, the journey and the unloading of the LPG to the customer’s home.
This is where the social vision of our project comes in: many times, operators have not completed their basic training and, therefore, do not know the risks of the product they handle. This is why it is essential to train and certify them. This certificate recognises that those who operate the auto-tanks know the properties and behaviour of the product they are working with, as well as the actions to be taken in case of incidents or accidents. With this, ASEA contributes to the professionalisation of the hydrocarbons sector.
As part of these strategies, we are also working with service station dispatchers and supervisors. We want to certify them because they are the first line in terms of emergency response.

Tell us about the importance of the Industrial Safety, Operational Safety and Environmental Protection Management System (SASISOPA).
Our objective is to ensure that the regulated entities implement SASISOPA within their facilities, through the 18 elements that it comprises. By complying with all the elements, companies and facilities automatically pave the way towards legal certainty, good integrated management, adequate risk management and regulatory strengthening. It is an effective regulatory roadmap covering the entire value chain of the oil and gas industry. At the same time, it helps companies to avoid accidents and environmental hazards that can affect the livelihoods of adjacent communities. By applying the pillars of SASISOPA, companies can reduce their impact on a surrounding community or protected area.
SASISOPA offers a holistic approach to the industry, covering the main barriers to industrial and operational safety, and providing solutions to them. The main problems identified are structural, such as the lack of instruments for companies to comply with their operational, financial and technological obligations.

What are some of ASEA’s objectives in the short and medium term?
ASEA wants to get even closer to the industry, to understand its problems and continue working to protect people, the environment and facilities in the hydrocarbons sector through regulation and supervisory actions.
Through our hydrocarbons sector compensation programme, the agency provides options for the regulated entities such as the one to undertake projects to support protected natural areas, thus generating a real impact on communities. This is very important to us, and that is why we need to reach out to regulated entities.
Collaboration with other agencies and governmental bodies is also very important. We cannot go on alone as an authority. We have to adopt different approaches of collaboration – not only with federal agencies, but also at the state level. For this reason, we are implementing our Safety and Environment Week initiative. In the medium term the objective will be to establish representative offices in different states, especially in oil-producing ones such as Tabasco, Veracruz, Campeche and Tamaulipas; as well as Yucatán, Jalisco and Querétaro, which are relevant states for the oil market.

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