We are in the era of post-conventional oil. The words of Shale Oil, Shale Gas, multidirectional drilling, hydraulic or fracking, well-pad, etc… are already beginning to sound to us. As published by The Economist last October. A new “black gold” fever is expected in the coming years in regions where until now were not considered oil companies, many of them in the first world.
What awaits us? We are prepared? Much has been said so far and with much controversy about the consequences of this type of exploitation in the aquifers and in the subsoil, which I would like to leave this article beyond consideration, to focus on the direct and very significant impact in the landscape of these territories in the form of hills cut with oil platforms on their tops, an intricate network of open roads that do not lead anywhere until then known, rivers and streams visibly affected due to the extraction of materials and water for the construction, as well as deforestation, among other effects.
It happens that in unconventional reservoirs, due to the low permeability of the rock, production per well is generally low and unstable over time, therefore, thousands of these must be drilled in each small territory, and the most usual is that the channeling of crude oil through pipelines to the separation batteries is not profitable. Consequently, oil transportation is usually carried out in tanker trucks through these roads, which were also indispensable during drilling work.
Although there are proven methods to minimize the damage of these jobs and they are not too expensive or complicated, their implementation is surprisingly rare.
The case of the Chicontepec project in Mexico
To illustrate the above, I would like to explain the case of the Chicontepec (PATG) project in Mexico in which I actively participated as a consultant in the design of processes, especially with regard to coordination between companies and in the implementation of measures environmental mitigation, for this it followed the recommendations of the diagnosis of the United Nations Development Plan.
In principle everything sounds good. But how did things work in practice? Between 2008 and 2010, every day at dawn, from cities like Poza Rica an army of construction companies left for the jungle and rural areas. Army is the word that seems most appropriate for its quasi-military logistics. PEMEX, the oil company, provides its contractors with coordinates and a start date for the drilling works that sometimes seem like a true quasi-impossible mission, immediately you have to locate the place, which may be on top of a pre-Columbian pyramid, (I personally had to discover three of them buried in the exact place marked by the coordinates) in a spring that cannot be seen from the satellite or anywhere else, although generally they are on a hill.Next, the area's environmental impact study, geotechnical and geohydrological study, topographic study, obtain permits from the National Institute of Anthropology, design the platform and the most suitable layout of the access roads, and negotiate with each of the owners and residents of the area the corresponding compensation. All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transportation with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.geotechnical and geohydrological study, topographic study, obtain permits from the National Institute of Anthropology, design the platform and the most suitable layout of the access roads and negotiate the corresponding compensation with each of the owners and residents of the area. All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transportation with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.geotechnical and geohydrological study, topographic study, obtain permits from the National Institute of Anthropology, design the platform and the most suitable layout of the access roads and negotiate the corresponding compensation with each of the owners and residents of the area. All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transportation with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.design the platform and the most adequate layout of the access roads and negotiate with each of the owners and residents of the area the corresponding compensation. All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transportation with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.design the platform and the most suitable layout of the access roads and negotiate the corresponding compensation with each of the owners and residents of the area. All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transport with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transportation with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.All this in a matter of days or a maximum of weeks before starting the construction itself, locating the most suitable material banks (generally in the closest rivers), obtaining extraction permits and agreeing on transportation with the corresponding unions. Faced with any delay, there are multiple companies that expect millionaire compensation for having their equipment stopped without working.
If understanding and working in terms of formal procedures within a company is difficult, especially in the construction industry, synchronizing the processes of hundreds of companies in a multi-billion dollar macro project, it is more than challenging. It is the closest thing to being in a production chain at the regional level, if for some small detail an activity is not carried out on time, the entire chain could collapse. And in each "activity" there is a contract involved, someone who pays, someone who charges, and many other interests at stake.
In retrospect, as a totally honest assessment, the Chicontepec project has been a failure so far, no economic benefit was achieved and substantial environmental damage did occur. This sounds like dumping dirt on top of my own work, but the question needs to be answered: Were the work procedures poorly designed?
Story of a failure
Based on empirical data from companies working in Mexico and Texas, in 2008 the drilling time in Chicontepec (Mexico) was similar to that obtained in the United States, and our cost was substantially lower (and that than most contractor companies involved did not have any previous experience) Our work procedures and plans for quality, safety, health at work and environmental protection were exported (copied) to be used in their headquarters, for example, through my company The Integral Management Society, from Mexico, we help achieve certification for San Antonio Internacional and Dowell Schlumberger. Within the country, PEMEX, initially conceived that Chicontepec was a model of sustainable development,and that was noticeable in terms of greater rigor compared to companies that came from other regions such as Campeche or Tamaulipas.
What happened then? By 2013, drilling time in Texas and its cost had been reduced to just a quarter of what it initially took while in Chicontepec we were still exactly the same…. the American oil industry had taken a leap to become the closest thing to a large-scale factory or assembly plant, a complete revolution in synchrony and specialization. Something as impressive as reducing work time by 75% in 5 years, involves only completing each new project 10% faster than the previous one. In Mexico, sadly, even with the same work procedures, in practice they have not been carried out.
To standardize processes, you also have to standardize profits, and that requires stable long-term investments. In these years there have been too many changes of managers in PEMEX North Region and too many contracting companies that come and go. Each new manager is urged for quick and magical solutions, and comes with his entourage of suppliers to achieve it, these suppliers subcontract a good part of the activities without any type of stability and the environment generated is «either I get rich or I get poor, but it must happen today.
The reality is that it is very difficult to follow work procedures under the feeling of crisis or chaos. Most of the companies to which we provide consulting have a business horizon of 6 months, that is, at this time, they either make the investment profitable or consider it as a loss, internationally, this time can be up to 10 years. The same occurs with those responsible for transnational companies, and auditors, including those of PEMEX's Sustainable Development.
What awaits us in the future and what really interests us
Currently, the project is called Chicontepec 14, I was supporting companies before Chicontepec I. Less than 6 years have passed since then and when I explain to the newcomers that I was there, they look at me like a prehistoric dinosaur. But it wasn't just me there, so were the rivers, mountains, and stretches of jungle, or what's left of them. It is also very complex to monitor the affectations in periods of 6 months.
Something change? Yes, these days, the work on the comprehensive contracts is beginning, these are for the next 30 years and to start these contracts a prior environmental evaluation must be carried out and this must be delivered and approved by the parastatal. Comments on whether or not PEMEX is sold to foreigners are being made, and in this case what will happen with the money from the sale, or from the contracts, or from the increase in production that is promised…. In short, how much we have to do, that's what really worries us, but sooner or later what "touches us" or whoever "touches" we will spend… but the mountains and rivers will still be there. ? What will be their impact and how can we take advantage of them? Isn't that the true heritage of a country for future generations? Well there is hardly any interest,nor pressure to publish these environmental assessments that have been carried out and the management plans for the next 30 years. What can we expect then?
Information based on the presentation and the responses to the participating entrepreneurs during Iván Abril Palma's conference on the Gulf Tertiary Oil Project at the UNAM University in Mexico City in November 2013.
