Baker Hughes in Mexico: competitive technology

Mexico

Robert Pérez, Baker Hughes’ vice-president and regional leader for the Americas, talks to The Energy Year about the growth of the Mexican petroleum sector, the company’s expanding activities in Mexico and its new energy technologies. Baker Hughes provides energy technology services to markets worldwide.

How does Baker Hughes contribute to the growth of the Mexican petroleum sector?
Baker Hughes has been providing energy-related equipment and services in Mexico for over 60 years. We are an energy technology company.
There has been a clear uptick in upstream activities in Mexico, as seen in the number of rigs today versus the ones three or four years ago. The sector has rebounded, which has led to a significant increase in operating rigs.
A lot of the activity that we carry out is focused on upstream work – for example, integrated well services, which we provide to support Pemex’s operations. We are now starting to work more with private operators as they move from an exploration phase to a production phase. There has been a clear push made by private local operators and IOCs in the E&P scene. We are supporting many of these activities as well.
Our turbomachinery manufacturing plant in Nuovo Pignone, Italy, has been actively providing services and new equipment in Mexico. Nuovo Pignone has a large installed base of equipment in Mexico, which allows Baker Hughes to have an ongoing market presence in servicing rotating equipment. On the new projects side, for example, we have been selected to provide rotating equipment for the new Dos Bocas refinery. Moreover, in the LNG space, Baker Hughes is the worldwide leader in liquefaction technology, and for example we are providing liquefaction trains for Mexico’s first LNG facility.
A large part of our footprint in Mexico revolves around the oilfield services and in the rotating equipment market, but we complement this with our digital solutions business line, which has a full complement of monitoring, measurement, and instrumentation equipment that we supply to the industry.

What technologies is Baker Hughes launching to enhance sustainability and advance the energy transition?
We were the first oilfield services company to announce a 50% emissions reduction by 2030 and a net-zero target for 2050. Our energy technology helps our company and the industry advance on the path to clean and sustainable energy. To reduce our internal emissions footprint, we first had to measure it to establish our baseline. We offer technology that directly assists our customers reduce their carbon footprint.
What the world is recognising with recent events is that there is a need for energy balance and transition. In this context, the hydrocarbon market continues to be critical, and a keen focus needs to be placed on safety, reliability and efficiency, coupled with technologies that also reduce one’s carbon footprint. Today, it’s all about balance, efficiency and sustainability.
As an example, we have technologies in the space of flare reduction such as flare.IQ. We are confident that, over time, the Mexican petroleum industry will further embrace these solutions to balance production efficiency and sustainability. The opportunity to capture flare gas for its efficient use is brilliant, as it is a way of further monetising a resource that would otherwise go to waste.
Distributed generation will also grow to take advantage of gas that’s available in places where bringing it to a central location doesn’t make economic sense.
Many strategies will need to be implemented to succeed in the energy transition. One example is the deployment of CCUS [carbon capture, utilisation and storage]. We have technology to aid in the sequestering of both pre- and post-combustion carbon. We can play in all three spaces of the carbon capture value chain: capturing, moving and storing carbon.
We have also embraced new trends such as hydrogen, where we manufacture gas turbines that have been tested that operate on 100% hydrogen. As that market evolves, we are positioned to provide gas turbines that can drive mechanical devices like compression or power generation solely using hydrogen.
Different markets have different levels of maturity. Globally, we already have projects where we are applying different parts of these technologies. Mexico is at an early stage of this development, but this situation will evolve over time. We are determined to be the energy technology company of choice by being on the cutting edge of the energy transition.

How is Mexico increasing its connectivity to gas reserves and underground storage as means to achieving energy security?
Mexico’s strategy over the last 20-30 years has been to increase connectivity to gas reserves. The advent of shale production in the US has revolutionised the sector. In the early 2000s, the US forecasted they had less than 20 years of gas reserves, but after the shale boom, it went to 100 years. The US then went from having regasification facilities to building gas export liquefaction facilities.
Mexico was in a superb position to access abundant and cheap gas from the US via its pipeline interconnections. As a result, the country’s energy matrix includes a fair amount of gas imported from the US. More than 70% of gas consumed here comes from our neighbour. This makes sense from an economic point of view because US gas is still some of the cheapest in the world. The focus has been placed on monetising oil over gas, and the rationale is sensible: while oil generates an exportable commodity, gas tends to be a regional one. These latter points, however, may be changing.
At present, the government is looking at underground gas storage to balance the supply and demand on a short- and long-term basis. This is also fundamental for energy security, even more so after curtailments such as those seen in February 2021, when the cold weather in Texas caused cuts to the gas supply into Mexico.
As Mexico progresses in its development of underground storage, it will be able to balance supply and demand along with displacing higher-emitting fuels such as diesel and fuel oil. All of this takes time and long-term planning.

How is Baker Hughes contributing to the ramp-up of E&P via the support of private and public operators?
There’s currently a lot of emphasis on boosting production, so we’re increasing our investment and our commitment in this area. We are more active offshore – especially in shallow water – but we’re also active onshore. In the last year, we have operated up to 15 rigs.
How much work we do on those rigs varies depending on the contracts we have. In these contracts it’s all about how fast you can complete a project and how quickly you can help bring production on line. We are driving to do it faster and more efficiently, which means having people, technology and inventory in-country is key.
We see a clear ramp-up of E&P activities where Pemex is directly and indirectly involved in onshore and shallow-water plays. Their strategy is now to focus on maturing fields, which are quick wins where they aim to reverse depletion. The deepwater is still a different type of development simply because one needs large investments and a long planning horizon to develop deepwater areas and personnel with highly technical skills and technological expertise.
We work with many of the IOCs present in Mexico, as we have a global relationship with them. Many of these operators leverage their global relationships, frame agreements and broader business arrangements. The vocation of companies like Baker Hughes is to make available the latest technology on the most competitive terms.

Tell us about your involvement in the Dos Bocas refinery and the upgrade of existing state-owned refineries.
The Dos Bocas refinery is one of the major investments for this administration. In the past we have supplied compression and cogeneration equipment for Mexico’s existing refineries. So, we were keen to compete for business for this new project, and we managed to become one of the largest equipment suppliers for this refinery. We are providing equipment such as compressors, steam turbines and cogeneration equipment. Our equipment will be key for the provision of the power and steam that will supply this refinery.
In addition, we see Pemex putting capital into the existing refineries in its quest to modernise and revamp them. We have installed equipment and worked with Pemex to upgrade and renew the equipment. These activities will not only give these facilities a high level of reliability, but in many cases, they will also increase their capacities.

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