More gases in ArgentinaFebruary 2, 2018
Gonzalo Ramón, Air Liquide’s managing director in Argentina and Uruguay, talks to TOGY about Air Liquide’s downstream and upstream activity in the country, gas use for unconventional operations and the evolution of the refining and petrochemicals sectors.
Present in Argentina since 1938, Air Liquide produces and markets industrial and medical gases, supplying products ranging from pure gases to mixtures to serve businesses in the mining, chemicals and petrochemicals, metals, oil and gas E&P, refining, automotive, and food and beverage sectors. The company manages 17 air gases production sites in the country, including at refineries owned by YPF and Axion Energy, among other clients.
On fracking operations: “In pursuit of efficiency, the fractures have migrated from their traditional format to the horizontal type. The consumption of nitrogen is different, as well as the operation, which includes more stages.”
On moving towards cleaner fuels: “Hydrogen used in the petroleum refining process allows for the reduction of the sulphur content of the produced fuels and the meeting of the applicable regulations and environmental standards for cleaner transportation fuels. The clean fuel regulations and the new needs of the market are revolutionising everything and refineries are obviously involved in this process.”
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What services does Air Liquide provide in the upstream sector?
We provide mostly services such as the supply of nitrogen in oilfields for fracturing and coiled tubing operations. Also, we provide services for drying and inerting, pig pushing, pressure testing and product displacements, among others, for a wide range of operations related to fracking tight and shale gas in Vaca Muerta.
In pursuit of efficiency, the fractures have migrated from their traditional format to the horizontal type. The consumption of nitrogen is different, as well as the operation, which includes more stages. As we have been working with the services companies on this for some time, we understand the requirements in these types of operations.
What are the advantages of using gas instead of water in the fracturing process?
Firstly, due to a very significant replacement of water usage, it is a much cleaner process. Secondly, it considerably improves well productivity.
If we compare our current nitrogen consumption per well with three or four years ago, nitrogen use in the operation is increasing significantly. This also leads to boost our short-term strategy in the region. Oil and gas services companies are feeling very comfortable with the use and application of nitrogen.
How does Air Liquide contribute to cost reductions for upstream operators?
I think that in Argentina, in the recent past, competitiveness in well operations was crucial and it will continue to be in the future.
We support our clients’ processes by studying, analysing, working together and sharing experiences. We work closely with our teams in the United States and Canada, which have more experience in these matters, especially people from our Delaware Research and Technology Center, who are always coming to Argentina and visiting our customers in the field with us, because good practices must be applied throughout the whole operation.
What logistics challenges do you face in providing services for E&P pilot projects?
The challenges are quite significant. In these well operations, the consumption per well was once 40,000 litres of nitrogen, and today, some operations can reach 500,000 litres per well, which means that we have to deliver perhaps more than 20-25 tanks over a period of 12 hours. The logistics challenges are huge.
Over the past 12 months, Air Liquide has invested more than USD 6.5 million just in our logistics equipment and infrastructure to be able to provide the necessary services. The great challenge here is perhaps the volatility of the operation and that we have to be prepared to face it.
It could happen as it did in the downstream sector, in which there was a huge boost in activity and then a plateau. We have to be prepared to follow the growth of our clients, if the development of Vaca Muerta takes off as many people think it will.
I think that the infrastructure has to grow along with the operation. If they do not go hand in hand, sooner or later, one will have to wait for the other one. Having on-site production, the solution to this challenge is at hand. It depends on us.
What are your expectations regarding the development of unconventionals in Argentina?
We see Air Liquide’s future role associated with the future of the activity itself. This will have to take off. It is a necessity of the country and that is well understood by all the markets. It is more a matter of how long it will take, than of whether or not it is going to happen. We believe that this will evolve favourably and this is what we have stipulated in our strategic plans through 2025.
How will the downstream sector evolve in the future?
You have greater predictability downstream. We are mostly paying attention to how the clean fuel regulation will impact the downstream. I think that this could actually determine certain actions or investments that the main actors will have to carry out. Different opportunities will be opened for us downstream, as there will have to be a certain movement of the downstream segment, especially for technology updating, fuel quality improvement and so on. We believe that is coming.
Our group actively participates when there are definitions regarding the amount of sulphur that can be present in fuels. This is where the application of hydrogen is crucial. We have a model in which we participate jointly with our client and, in this way, the client can focus on its core business and we can do what we did with Axion Energy: over-the-fence contracts where we operate and maintain the plant and we directly deliver the hydrogen to the customer.
The issue of competitiveness is crucial, since Argentina needs to improve it in this sector.
Why is Air Liquide investing in a new plant at the Axion Energy refinery in Campana?
The new hydrogen plant is an investment of more than USD 60 million and the hydrogen supplied by Air Liquide will be used to meet Axion’s increased needs for its refinery processes, supporting its recent investments to expand its operations in Campana.
Hydrogen used in the petroleum refining process allows for the reduction of the sulphur content of the produced fuels and the meeting of the applicable regulations and environmental standards for cleaner transportation fuels. The clean fuel regulations and the new needs of the market are revolutionising everything and refineries are obviously involved in this process.
Have you had to upgrade your plant in Plaza Huincul?
In Plaza Huincul, we supply YPF from our plant with a nitrogen pipeline, and we provide the nitrogen to upstream customers. This plant is strategically located in Neuquén, allowing Air Liquide to provide a very efficient service directly to oil and gas wells. We have invested in the plant’s expansion, as well as the increase of storage capacity for LIN [liquid nitrogen], a new fleet, new maintenance workshop and a dedicated team.
We work with every oil and gas services company in the region and we have dedicated trucks and buffer equipment. These are very demanding operations. You have a timeframe and within that, you have to deliver the requested product and there is no margin for delay. You have to provide the service in due time and fashion; otherwise, you bring the whole well operation to a halt.
What development opportunities are you observing in the Bahía Blanca petrochemicals pole and what are the challenges?
I think that Bahía Blanca’s petrochemicals pole will experience substantial growth, which is something that several important actors have announced. Our challenge there is to accompany our clients’ growth. We are working on this and we have a strategy and a predicted evolution for our plants for the next two years, including an expansion in our production and evaporation capacity.
Where would you like Air Liquide to be positioned by 2022?
Our great challenge is being the market’s reference and being a company that provides the service our clients need and deserve, enabling them to focus on their core business. I think that this is what is going to lead the company to continue having the great performance it has today in oil and gas activity.
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