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Interview

Paulo Lopes, Director, Valerus Geogas, Brazil

Paulo Lopes, Director of Valerus Geogas, describes the company’s success in rural locations, accessed by arduous journeys requiring innovative logistical solutions. He illustrates his company’s ingenious modular response, and how his company is assisting delivery of gas plants many times faster than conventional construction methods would allow.

 

Last year in Maranhão, Valerus Geogas completed a 12-mile gas pipeline that is feeding a gas treatment unit over 90,000 m2 in area, which currently supplies an electric power station. What did this project do to push boundaries for Valerus Geogas?

This was a very special project. It was the first time responsibility for a project of such scope was given to a single entity, in this case Valerus Geogas. It was a challenging project because the contract provider wanted the facility to be running in a very short timeframe. Our business fulfilled all the terms and conditions set out for the work by the owner of the site constructing pipelines, providing the parts and engineering, and undertaking testing and commissioning of all the equipment required for the project. It was the first time that a company delivered a development like this, where the gas was taken from the wellhead and supplied directly to the consumer. Valerus Geogas is still the only company in Brazil that undertakes project delivery of this scope—a complete and comprehensive solutions delivery.

Parnaíba Gás Natural, the company receiving gas at the facility, now supplies around 1GW of power daily to the Brazilian electrical grid. It is an important project for all of Brazil.

The principle attention of the oil and gas industry in Brazil seems to be offshore; yet, in 2012 you stated that an onshore project was ‘your showcase’ project. Why are terrestrial projects your focus?

At the moment onshore work remains the focus of Valerus Geogas, because Brazil is still making onshore discoveries. Exploration is still in its infancy, but there are now newer, more experienced players who are starting in this sector, prospecting for supplies of oil or gas. Onshore concessions are being granted, which is increasing the pace of operations across the country.

Maranhão is a location where Petrobras is working, and Parnaíba and Sergipe are other focal points for activity in the gas compression and treatment business. The latter state, Sergipe, is of great interest because the gas brought from offshore in that region still requires processing before being sent to the customers.

Minas Gerais has also been a center for development of shale gas. At the moment shale gas is at the exploratory stage in Brazil, and the market certainly cannot be described as developed as in the United States of America where prices have fallen significantly. Once the industry takes these resources past a phase of testing, the situation will be clearer.

Valerus Geogas worked on sites at Tapinhoã and Congonhas to produce gas compression station projects. Part of the company’s strategy to achieve this work quickly relied on a significant amount of prefabrication. What was the reasoning for this strategy?

Prefabrication is a specialty of Valerus Geogas, and is a highly useful skill in advancing our operations efficiently. With prefabrication, one can attend to several jobs and stages in the production process simultaneously, rather than proceeding in a lumbering, slow manner. It is possible to build the parts, prepare the site at the same time and then assemble them in far less time than following traditional practices. Indeed, the more modules that can be prepared off site, the better. Another reason that building in a parallel fashion rather than operating consecutively is a prudent course of action is that the chances of having unforeseen circumstances hamper operations are less likely—be it from inclement weather or any other cause.

How does infrastructure, or lack thereof, affect Brazil’s gas industry?

Infrastructure greatly affects our activities, and at times our ability to reach our site of operation. For example, arriving in Parnaíba, it seemed as if the geophysical survey staff and the drilling team had been the original discoverers of the country there; the area seemed almost like a virgin wilderness. For this reason, Valerus Geogas used marine transport until São Luís port, and from there used large trucks to reach the site.

Valerus Geogas also tries, where possible, to develop local fabrication facilities, typically sourcing pipes and the more standardized equipment in this manner. Only the core equipment then requires transport, cutting down on the cost and time taken up by logistics.

Valerus Geogas has worked closely with Petrobras on previous projects. With Petrobras so eager to improve productivity, and increase efficiency, what is Valerus Geogas doing to further these qualities within the company in the hope of gaining further contracts from Petrobras?

Valerus Geogas’ principle is rapid delivery, assisted by our solid strategy and modular construction methods. The company is capable of delivering a project in a third of the time that might be expected from traditional approaches. Valerus Geogas’ engineers are highly efficient, its supply chain streamlined, and operating reliably and consistently in this manner will guarantee future interest from Petrobras.

Valerus Geogas consortium maintains inventory of critical items for the manufacture of natural gas processing plants, so it can meet the needs of customers in record time. Knowing that, how would you respond to those who say that it is not possible to obtain engines, compressors and coolers readily or easily in Brazil?

In part, I agree. Compressors are similar to turbines, and in a highly developed market, significant levels of demand are required to warrant production of these sophisticated pieces of equipment. It requires more than basic machinery to fabricate these items than the type that is used to produce say, pipes. The cost of producing parts and the training required by staff constructing these high tech units means that this equipment is not common.

Investment of the scale that can produce compressors requires access to the international market and the levels of demand that can reward that investment. This money has been directed to factories established in the USA, in Italy and in Germany for example. Pre-existing competition from these countries means that starting production of compressors in Brazil would be difficult, and is likely the reason that they will, for the immediate future, continue to be procured from further afield.

How does Valerus Geogas work with the maintenance and after sales support market?

Valerus Geogas is well equipped to service this market. Pieces and equipment can be packaged and sold for repair—here is a clear commercial opening in this respect. Slowly, I expect Valerus Geogas to take up more market share and provide for a wider clientele as well.

Valerus Geogas has expertise to import parts and reassemble them for use. We have as well a highly trained staff to repair equipment when required to ensure gas plant operations proceed optimally for our clients.

Valerus Geogas’ website states that the company has 25 percent of the gas compressor market. How do you ensure you gain ground compared to your competitors and what further opportunities does this share offer you already?

Valerus Geogas is focused on future developments that will allow the company to repeat the success we experienced with our Maranhão project. Independent companies, such as the one VG completed this project for are not likely to have the full range of in-house skills to undertake a project like this. Petrobras, as a larger entity, does and this is why VG is prioritizing creating business links with smaller companies in need of gas solutions, which our company can provide. The key aim for growing our client list is to provide turnkey solutions, complete from start to finish.

Opportunities, such as those that will arise with new discoveries of oil and gas, will become the subject of increasing competition. The Parnaíba basin has its own challenges including a basalt layer, which is almost the equivalent to a pre-salt layer onshore! Since 1997, more companies have moved into the Brazilian oil and gas sector after Petrobras lost sole access to the market. Valerus Geogas will be ambitious in obtaining further contracts, and continue to demonstrate the company’s proficiencies in doing so.

As director of Geogas, what role do you expect gas to fulfill in Brazil’s energy matrix in ten years’ time?

At the moment, the gas market has very healthy prospects. As a feedstock for electricity generation, there is significant demand for fuel. Even though Brazil still generates a huge amount of its power from hydro-electricity, the requirement for dispatchable power means that gas will be in strong demand in the near and more distant future. For this reason, one area I would like to see Valerus Geogas diversify into is liquid natural gas processing, particularly deploying small scale processing units for this fuel.

The position that Valerus Geogas has gained with the Parnaíba project is important; it is a demonstration of the company’s abilities, and competitors have been shown wanting in comparison. With the right backing, Valerus Geogas is able to construct a project three or five times larger than Parnaíba. Our company is ready for any challenge.

 

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

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