Two years since the formation of Cenagas, Mexico’s natural gas pipeline system operator, Cenagas Director General David Madero sat down with political scientist and NGI correspondent Dwight Dyer to talk about what’s ahead for infrastructure as the country’s natural gas market evolution unfolds.
Part three of a three-part series
This year is a transitional one for Centro Nacional de Control del Gas Natural (Cenagas), with the operator beefing up capabilities as well as information technology infrastructure. This includes supervisory control and data acquisition systems, and technology to enable hydraulic modeling in the pipeline network.
“We are spending a large amount, in U.S. dollars,” Cenagas Director General David Madero told NGI, “so this is a big challenge.
“The other challenge we face is physical. Since Pemex [Petróleos Mexicanos] stopped owning these natural gas pipelines, there has been a pause in investments, so we have to spend to ensure the integrity of some pipelines, corrective actions, to ensure the pipelines are in better shape.
“...And then, finally, we need to invest in some safety features, for example, odorization…[T]he [Pemex] pipeline system is relatively old -- 38 years old, on average -- so maintenance includes repairing parts of the system, renovating others and redesigning some others from scratch. We will tackle the easier parts first, starting with repairs, then renovating ducts, valves and stations, lastly, perhaps, redesigning a whole duct to have better pressure and operating conditions.”
Cenagas is not doing this work internally but has contracted with others to assess the legacy pipelines of Pemex.
To see NGI’s full exclusive interview with Madero, download the Inside Cenagas Special Report.
“...[W]e are looking forward to launching our risk-based maintenance program,” Madero said. “This way, we will have a very clear idea of where to begin repairs to maintain our transportation capacity and, eventually, increase it. Right now, the main emergencies come from landslides or floods that uncover the pipelines, so we need to repair them, relatively simple repairs, but we need to protect the infrastructure.”
The Cenagas safety program is to be developed internally and not by a contractor, Madero said.
“The hardest part is not developing it but rather implementing it,” he said. “In this respect, Cenagas’ top management is very committed to this, with particular emphasis on honesty and communication to ensure on a daily basis that the system sends the right signals regarding safety.
“We are working closely with the Energy Safety and Environmental Agency [Agencia de Seguridad Energia y Ambiente (ASEA)], which itself has a titanic set of tasks. ASEA’s policy most likely will ask for us to have a work safety program according to international best practices. We are very much aligned with ASEA and are developing our own industrial safety program.”
Madero emphasized the Cenagas focus on building a constructive relationship with ASEA and Mexico’s Comision Reguladora de Energia (CRE). “To the extent that we can build an environment based on collaboration and trust, both sides will enjoy a better relationship,” he said. “Just like financial regulators build an environment of trust with the banks, so their relations are much more productive, we are working closely with our regulatory agencies.”
Some of the safety practices to be developed by Cenagas could come from the United States, but Madero emphasized that the arm of U.S. regulatory agencies -- the U.S. Federal Energy Regulatory Commission and the Pipeline and Hazardous Materials Safety Administration, for instance -- stops at the border.
“The [U.S. and Mexico] ducts are interconnected. Doubtless, safety practices in the United States adhere to high standards, and what we are looking for is to have the best operational practices, some of which we can bring from the United States, for sure,” Madero said. “Some of the best consultants used by transport companies in the United States are also advising us, so we will count with the best safety practices.”
One problem faced by Mexican oil and natural gas infrastructure operators that is not as common in the United States is damage to pipelines -- sometimes catastrophic with loss of life -- due to attempts at energy commodity theft. There have been instances where thieves, thinking they were tapping a Pemex oil pipeline have drilled into a natural gas pipeline instead, with predictable results.
“These are highly dangerous situations because the natural gas pipelines operate at very high pressure, and drilling into it can cause large loss of life,” Madero said. “When criminals are involved, the situation is complicated because we can only react to it. We are trying to make our signaling very clear so the dangers are understood...to dissuade criminals who are looking for oil products pipelines. Unfortunately, it is often the case that several pipelines share the right of way, so our options are limited.”
To combat accidental damage to pipelines caused by construction excavation and the like, Cenagas is working with the Mexican Natural Gas Association to raise awareness about the need to locate pipelines before digging begins.
“We are working to have a national helpline to find out if you are digging next to a pipeline. Nowadays, it is very easy to have access to coordinates, and in this way we are working with communities, with people who need to dig because the pipelines are not buried very deep, so the danger can be large,” Madero said.
Physical security for the country’s natural gas pipelines is still provided by Pemex, Madero said. But as with much of the country’s pipeline grid, this circumstance is evolving as well.
“Physical security can be a complex issue,” Madero said. “There are times where you need support from the armed forces in places where organized crime has a strong presence. Right now, we are working with Pemex, through the contract they have signed with the Defense Secretariat, but we have started developing our own contacts with the Defense and Navy secretariats to have the capacity to react to any incidents.”
For additional insight on Mexico’s rapidly evolving natural gas market, check out NGI’s previous Special Report titled Mexico: A Whole New Natural Gas Market Opening Close to Home.
David Madero graduated from the Instituto Tecnológico Autónomo de México with a master's degree in economics and holds a doctorate in economics from the University of California, Los Angeles. He has more than 20 years of federal government experience and was appointed to his post at Cenagas in August 2014. While working at the Ministry of Energy, he oversaw oil/natural gas activities in the upstream, midstream and downstream sectors.
NGI correspondent Dwight Dyer holds a doctorate in political science from UC, Berkeley. He has worked for the Mexican government and currently is an independent consultant on political and security risks related to Mexico's energy sector reform.