00:16 Michael Gaines: Hi, and welcome to another episode of NOV Today. I'm your host, Michael Gaines. When it comes to showing up in unexpected places, the oil and gas industry is no stranger to this moniker. There are many examples throughout history where this industry has been a contributor to economic change, both on local and national scales. It is this latter category that I recently journeyed out to discover and learn more about, with a specific emphasis on the country of Mexico and how recent changes in the oil and gas industry are playing a role, both on a broad scale and individually.
00:54 Michael Gaines: As a primer, I went to see Robin Macmillan, NOV's Senior Vice President for Business Development to more clearly understand the recent and historical changes in the oil and gas industry within Mexico. Okay, so I'm here with Robin Macmillan, NOV's Senior Vice President for Business Development. Robin, thank you for being here.
01:13 Robin Macmillan: Pleasure, Michael.
01:14 Michael Gaines: Maybe in the high level, can you explain what's been going on in Mexico with respect to oil and gas exploration and production?
01:23 Robin Macmillan: Well, it's been something over the last few years, something of a Mexican Revolution, actually in the oil and gas industry. Pemex has been the only game in town from an operator's point of view for more than 70 years.
01:35 Michael Gaines: And that's the government-owned petro...
01:36 Robin Macmillan: It's Petroleos Mexicanos.
01:38 Michael Gaines: Right, okay.
01:40 Robin Macmillan: And the production in Mexico has dropped over the last year. I would say, it peaked a few years ago at close to 3.5 million barrels a day, and now it's down to probably about two. And the lack of production, plus the drop-in quality process has basically meant there's been a downward spiral. Pemex had less money to invest. Therefore, there's been lesser activity, therefore, there's been less production, etcetera. So they made the big decision to decide to invite in international operators. And so about four years ago, this was actually a change to the constitution to allow the rest of the world in to actually go searching for hydrocarbons in Mexico.
02:27 Michael Gaines: And that was a huge deal because I think I read a report that said... Pemex said, I guess, a monopoly for north of 75 years, I think. So that was a huge shift.
02:38 Robin Macmillan: That's right, yeah. And I suppose quite a big political shift. And so, I suspect that there's still a debate in the country as to whether this was the right... There's probably a lot of people that are still debating whether it's the right thing to do.
02:58 Michael Gaines: Yeah, sure.
03:00 Robin Macmillan: To allow others to come in, and basically search for Mexican natural resources.
03:06 Michael Gaines: So how has the overall oil and gas industry responded to this change? Have we observed a lot of operators taking advantage of that, as well as contractors and other entities, or has it been a slower maybe uptake?
03:25 Robin Macmillan: It started out slow. The first couple of rounds of bidding, the uptake was disappointing, but they reviewed some of the fiscal arrangements that they've been offering. And the more recent rounds have been a lot more popular, and we've seen bidders from all around the world, just operators from all over the place. So clearly, there are a lot of place in Mexico with a lot of potential, and the international operators have obviously recognized that.
04:01 Michael Gaines: Is there more of a focus for conventional land drilling in some of the shale place or are we looking more offshore deep water projects or that these are balanced?
04:14 Robin Macmillan: There's some of everything. I mean traditionally, most of the production in Mexico has come from shallow water. And there are still a lot of these, of other place in shallow water. But there are now blocks being offered for deep water, but they are also offering blocks on land. And there's an area called Chicontepec, which is notoriously difficult geologically. There's clearly a lot of oil there, but it really hasn't been exploited over the last few years to the extent that was still possible when it was first discovered. So areas like that, also the Eagle Ford Shale doesn't stop at the border. So there are shale place also in Mexico that will be offered.
05:03 Michael Gaines: So at the end of the day, how would you respond to someone that essentially says, "I hear what you're saying, but so what? What does that matter to our global economy? What does that really matter?"
05:15 Robin Macmillan: From a global economy point of view, it's clearly gonna be another producer that wants to increase production. But from an NOV point of view, it's going to provide opportunities. There's gonna be a lot more clients down there, with some of which we already have very good relations. And there's some new operators, and there's a Mexican independent such as Sierra. There are some small US independents like Talos Energy. So from our point of view, it opens up the landscape.
05:49 Michael Gaines: Now that I received a little background and insight from Robin, it was time to take a trip to see firsthand how this new shift is taking place. So, off I went.
06:11 Michael Gaines: Two hours and 12 minutes after take off from Houston, Texas, in the midst of a severe turbulent storm, I safely arrived in the historic city of Puebla, Mexico, situated approximately 2,000 meters above sea level, and about two hours east of Mexico City, Mexico. Known for being the birthplace of the widely celebrated holiday of Cinco de Mayo and mole sauce. Puebla played host to the 2017 Mexican Petroleum Congress. After a brief bus ride from my hotel, I arrived at the bustling Puebla Exhibitor Center with dozens of companies in attendance, inclusive of several major global operators. One colleague that I met at the event, Oscar Aguilar, the Field Engineering Manager for Latin America for Drilling and Intervention, shared his perspective on the business in Mexico.
07:00 Oscar Aguilar: I've been here nearly for almost nine years. Well, basically, in Mexico, we got different type of applications but the main ones that the customers are more interested, are the tough ones. The ones where we have deeper wells, deeper intervals, where we have high temperatures, we have lateral, horizontal. That guy from drilling, where it's very challenging for them to drill, that's where they need other technologies than conventional in order to make their wells, or accomplish their plans in a better way. So maybe...
07:35 Michael Gaines: Combining Robin's historical overview and Oscar's current experience really helped framed the current landscape of Mexico and the impact that the governmental changes have had on the industry. However, I was still missing a deeper personal understanding of what this change means for those who live and work in Mexico. So, I traveled three hours east from Puebla to the coastal city of Veracruz, Mexico.
08:12 Michael Gaines: If you have the opportunity to visit the Tuboscope facility in Veracruz, hopefully you'll have the fortune of getting a great tour like I did from Hiram Carranza and Ruben Tiburcio. Hiram, The HSE representative ensured that as soon as I arrived I was properly briefed on the appropriate HSE considerations for the facility. Later, Ruben provided an overview of the two offerings at the Tuboscope Veracruz facility.
08:38 Ruben Tiburcio: The front one is inspection and non-destructive tests, and then there's the other area, which is the coating.
08:44 Michael Gaines: Okay.
08:45 Ruben Tiburcio: Basically what we do here is internal plastic coating for the pipe. The inside of the pipe, we coated it with some resins, special resins that are... Some of them are liquid, some of them are powder, and the objective of that is to protect the inside of the pipe, make sure it last longer, protect the equipment of the customer and also it helps... It improves the efficiency of the flow, because you don't have any...
09:21 Michael Gaines: Walking along the tour, friendly employees waved, smiled, and showed an intense focus and deliberation about their work. This is no accident. And was, in fact, something that was in part attributable to several individuals at the facility, including the two people I sat down with, Adriana Poches and Alan Frial.
09:42 Michael Gaines: So I wanted to start out by asking your position at NOV and how many years you've been with the company. So we can start with you, Adriana? How long have you been with NOV?
09:56 Adriana Poches: Yeah, I'm coating plant manager, I've been here for six years, that's all in Mexico.
10:08 Michael Gaines: Oh, okay, excellent. And, Alan, how long have you been with NOV?
10:15 Alan Frial: NOV, I started up back in the Philippines, back in '78. [chuckle]
10:20 Michael Gaines: Okay.
10:22 Alan Frial: And I'm currently the operations manager for the Inspection Division.
10:29 Michael Gaines: Okay.
10:29 Alan Frial: In Mexico, and still going.
10:32 Michael Gaines: Adriana, how did you come to work at NOV?
10:37 Adriana Poches: Yeah, It's a long story.
10:39 Michael Gaines: Well, we have some time, so we could...
10:42 Adriana Poches: Yeah, when I finished my college degree, as an Industrial Engineer in Colombia, I had heard some people talking about the oil and gas industry as a good opportunity to grow up in a career, so I decided to look it for. So I began my story in NOV, but in 2010, I need to take rest for personal reasons, but I worked one year in other company in the oil and gas industry. So then, when I surprise to me, in 2011, I was on vacation in Veracruz, with my family, visit my parents because they live there since 1998, and my father told me about the new plant for Tuboscope was built, and they told me, "Oh it's a good opportunity for you to get a job again with NOV." So the rest is history.
12:02 Michael Gaines: Is history, so you literally found work trying to relax on vacation?
12:08 Adriana Poches: Yeah.
12:08 Michael Gaines: Wow. So Alan, if you could go back, and leading up to when you first came to NOV, what did that look like?
12:17 Alan Frial: Well, looking back, I wasn't really going to stay behind in here. Initially, I had a two-year contract to work here in Mexico, then go back to the Philippines, but after two years, I was enjoying the companionship of my fellow workers. I met my future wife, my first wife, so...
12:42 Michael Gaines: Oh wow.
12:43 Alan Frial: I finally decide to stay behind. And here I am, 38 years after that.
12:48 Michael Gaines: Wow.
12:50 Alan Frial: And I really enjoy staying behind, and I've got four kids right now and enjoying every minute of it.
13:00 Michael Gaines: And how old are your kids?
13:02 Alan Frial: My eldest, I've got two boys and two girls, my eldest is 31, and my second is 29, and the third girl, is 23 years old, and the youngest is 17, and still studying.
13:18 Michael Gaines: So Adriana, what are some of the life experiences that maybe you've picked up as you've worked here?
13:27 Adriana Poches: Well, I think that my life experiences that I have learn here, definitely teamwork.
13:38 Michael Gaines: Teamwork, yeah.
13:39 Adriana Poches: Teamwork because I'm way too oriented a detail, and I try to accomplish everything and just want to everything be perfect.
13:53 Michael Gaines: Well, I do that too, so that's okay.
13:54 Adriana Poches: But it's easy if you have a good team, it's easy, and you can enjoy your time, share experiences with other persons. This is my major life experiences. Also, be patient, you just need to be focused on the right things, so the results is coming soon, when you are thinking in the right things. You just need to be patient.
14:33 Michael Gaines: So, Alan, what are major life experiences that you've learned while working in NOV?
14:39 Alan Frial: Definitely since I'm on with Tuboscope, I've learned that quality work, having to do good work, be on time, work hand in hand with your team, deliver a quality good job and on time, is basically what I've seen that makes the clients very happy.
15:03 Michael Gaines: Okay, Adriana, so I know that you can't be all work, obviously, you live in Veracruz so there's some fun that you're having there. So when you're not working, what are some things that you like to do for fun?
15:21 Adriana Poches: I think in this part of my life, I spend time with my family. Definitely spend time with my family, watching movies, playing board games.
15:33 Michael Gaines: Oh, what kind of... What's your favorite board game?
15:35 Adriana Poches: Scrabble.
15:36 Michael Gaines: Scrabble?
15:37 Adriana Poches: Yeah. I love it.
15:37 Michael Gaines: Oh man, I haven't played in a long time.
15:41 Adriana Poches: One is Uno.
15:44 Michael Gaines: Uno, oh man don't tell my kids that, wow.
15:49 Adriana Poches: Or just walking on the beach, but definitely spend time with my family. I love to go to the swimming pool with my son and enjoy my time with him and with my husband.
16:06 Michael Gaines: And so you... So you have one son and you...
16:12 Adriana Poches: I have, I'm pregnant right now.
16:14 Michael Gaines: Congratulations.
16:15 Adriana Poches: Thank you.
16:16 Michael Gaines: Yes.
16:16 Adriana Poches: It's a girl, It's a girl and this is my free time right now.
16:23 Adriana Poches: Preparing everything to receive our daughter.
16:30 Michael Gaines: Okay, Alan. So you seem like a guy that likes to have a little bit of fun every now and then, what would that look like?
16:39 Alan Frial: Well, basically, it doesn't seem like it looks like that, I really...
16:45 Alan Frial: I am a family man, on weekends when I'm out of work, I try to enjoy the family. So, regularly, we'd go out, choose different restaurants to eat on every week. Try to do small trips on nearby towns and try to see people, observe people from a park just sitting down, eating ice cream or whatever. So basically, I spend... I'd like to spend quality time with my family on weekends.
17:19 Michael Gaines: So you said you like to go to different restaurants. So is there a particular restaurant that you seem to go back to more often than not?
17:29 Alan Frial: Yes, there's one in particular.
17:31 Michael Gaines: Okay.
17:31 Alan Frial: And it's very famous in Veracruz, La Parroquia.
17:34 Michael Gaines: La Parroquia, okay.
17:36 Alan Frial: La Parroquia. In English, it's "The Parish".
17:38 Michael Gaines: The Parish, okay.
17:40 Alan Frial: They serve the best coffee, I guess, in Veracruz and basically, they have good food, good food in there, which my kids, they like, they love it very much.
17:53 Michael Gaines: Well, any food that Papa is paying for is always the best food.
17:58 Alan Frial: Is always the best food.
18:01 Michael Gaines: That's great. Okay, well Alan, Adriana, thank you so much for sitting down and talking with me.
18:09 Adriana Poches: Thank you, thank you.
18:10 Alan Frial: Thank you, thank you very much, our pleasure.
18:30 Michael Gaines: Returning to Houston, I landed with a new vision of what the oil and gas industry means in Mexico, and can be certain that whatever the future holds, it would appear that Mexico is well-positioned to take control of its future.
18:43 Michael Gaines: Thanks for listening to this episode of NOV Today. We'd like to hear your feedback, share your thoughts by tweeting us at NOV Global and using the hashtag #NOVToday, or you can contact us by sending an email to [email protected]. For NOV Today, I'm Michael Gaines, thanks for listening and we'll talk to you later.