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Dow

Oil & Gas – Nicolas Bracho, Marketing Manager for Latin America – Mexico

12.08.2014 / Energyboardroom

The Marketing Manager for Latin America of a leading chemical company sheds light on the chemical solutions segment of Mexico’s oil and gas sector. He discusses how the latest generation of demulsifiers can help realize hydrocarbon productivity gains and also gives his predictions for the country’s nascent shale oil and gas industry.

 

Dow has had activities in Mexico since the late 1950s across a wide variety of industries. Today, Dow’s Mexican assets include three manufacturing plants and two sales offices. Can you please introduce the Mexican office’s most significant milestones to date with regard to servicing the oil and gas sector?

The Dow Oil & Gas business is only six years old and represents what we call a ‘market facing unit’. For many years Dow has offered a diverse portfolio of products relating to a wide range of industries. The idea with the Oil & Gas business was therefore to place all the products that supply oil and gas sector clients under a single umbrella. This unit has been growing fast and we have now established presence across the main energy hubs such as Houston and Singapore. We now cover all the main oil and gas markets with a range of different technologies and chemistry solutions. Other market facing units also touch upon the hydrocarbons industry indirectly such as the Dow Water & Process Solutions business.

Dow Oil & Gas’ presence in the Mexican market is mainly as a solutions and raw materials provider to oilfield service companies such as Schlumberger and Halliburton which deploy our chemistry and innovations to carry out their core activities in relation to Pemex. We therefore don’t tend to go directly to the oil company per se, but are rather one step behind. The only times we might be providing directly to Pemex would be in the downstream segments such as at the refinery level.

Dow Oil & Gas delivers chemistry-based solutions across the entire oil and gas value chain from the well head to the gas station. What specific products and services do you offer the local Mexican market?

The upstream oil and gas segment in Mexico tends to be strongly reliant on chemistry solutions such as drilling fluids. Also once production starts, the oil needs to be treated to remove water and other impurities. At that level, we supply chemistry and solutions to a range of service companies that provide chemical treatment of the oil and gas such as Apollo and M-I Swaco, which is actually a division of Schlumberger. Then, once the clean oil and gas reaches the refineries we deliver technologies that help remove remaining contaminants such as sulfur concentrations and provide any additives required prior to distribution.

In addition to all of that, Dow also provides technology for the insulation for subsea equipment and offshore pipelines. This stems from an acquisition of a British company called Hyperlast which is a Thermal Insulation Polyurethane Systems business. This technology is required in the subsea environment to thermally insulate the pipeline, avoiding an increase of the oil viscosity and deposition of solids, also improving the oil flow and pipeline productivity.

With more than 54 years working in Mexico, what is the strategic importance of the Mexican office to Dow’s global and regional operations?

I’m based in Mexico where I’m in charge of all Latin America, which the most important region in Dow’s Oil & Gas solutions portfolio because we cover Mexico, Colombia and Venezuela which, when combined, accounts for roughly two thirds of the total oil production of Latin America.

The North America region encompassing both Mexico and the US is also of great strategic importance to the company, given Dow’s status asthe largest industrial user of natural gas in the world. This is not for power generation, but because the bulk of our chemistry, especially the ethylene and propylene chains, stem directly from natural gas. Therefore it is important that we remain close to our supplies of raw material.

Mexico, in itself, enjoys stable agreements with foreign producers and has a very favorable positioning in terms of logistics, offering ease of access to both the Atlantic and Pacific. When you combine these factors with the abundance of latent energy resources, the country obviously becomes strategically relevant to Dow.

Dow is active in the Texan shale sector proving water conditioning and recycling and that the company also has a stake in the Argentinian Vaca Muerta field. How do you evaluate the prospects for the Mexican shale gas segment? 

Mexico would seem to be very favorably positioned with regard to shale reserves. The country enjoys the sixth largest reserves in the world for shale gas and the 8th largest for shale oil. Shale oil is especially attractive because it is very clean oil that is rich in raw materials for petrochemicals. The reform has opened a new line of opportunities in this segment, though the types of contracts and level of commitment of foreign partners will ultimately be determined by the outcomes of the secondary legislation.

Given Dow’s strong track record in water conditioning, opportunities may well arise to transpose what we have been doing in Texas to areas like Chihuahua which have known shale reserves, but noticeably suffer from water scarcity. Then again, though water is currently commonly used to perform fracking, this may well change in the near future with some of the newer technologies substituting water for gases.

I do foresee substantial future opportunities materializing in the Mexican shale segment because many geologists consider the shale formations to be found in the northern areas of the country, such as Coahuila state and the Burro-Picachos region, to essentially be an extension of Eagle ford which is abundantly rich in gas and liquids. This is all very promising in the eyes of a company like Dow. The only drawback is the distinct lack of existing infrastructure in those regions.

How can Dow leverage its expertise in advanced chemistry and technology solutions to help drive new production from both conventional and unconventional sources and thus enable Mexico to unlock proven reserves estimated at 10.7 billion barrels of oil equivalent? 

We have developed latest-generation demulsifiers that can separate the water from the oil quicker, cheaper and more efficiently than other products on the market. The additional advantage with this chemistry is that it produces high quality water that requires much less treatment to remove impurities prior to reinjection back into the formation or before release back into the environment. These are products that the Mexican energy market can, and surely will benefit from.

How does Dow differentiate itself from its competitors?

We are an innovative company that invests a lot in R&D and manages to maintain a strong position ahead of the pack. We achieve this by collaborating closely with our clients, the oilfield service companies, in improving and pushing the boundaries of our chemical technologies. A recent example would be our development of polymers that can withstand higher temperatures without degradation thus allowing for the production of ever deeper reservoirs. Sustainability has also been a hallmark of Dow long before it became a buzzword that all companies adhere to. This also singles us out from our competitors.

 

To read more articles and interviews from Mexico, and to download the latest free report on the country, click here.

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