The EPC perspective

OE’s Audrey Leon speaks with Scott Munro, McDermott’s Vice President, Americas, Europe and Africa, about recent projects undertaken at the company’s Altamira facility.

PB-Litoral-A topsides floatover operations. Photo from McDermott.

OE: 2015 was a good year for McDermott in Mexico. The company secured contracts for PEMEX’s Ayatsil-A, in January, and Ayatsil-C project, in June. Could you discuss each project scope and where things stand currently?

2015 was a year of significant progress for McDermott in Mexico. The year got off to an excellent start with the transport and installation contract for the Ayatsil A jacket and topsides. This was a fast track project that was completed in Q1 utilizing the McDermott Intermac 600 (I-600) launch barge and Derrick Barge (DB50). These assets bring very specialized capabilities to the market and this, combined with our in-house engineering and project management capability, allowed us to complete the project on time, with an excellent QHSES performance and with a satisfied customer.

The Ayatsil C project adds engineering, procurement and fabrication to the installation skills displayed on the Ayatsil A project. Engineering and procurement are ongoing and the fabrication of the jacket is scheduled to be completed at the Altamira yard in 2016 with installation to follow utilizing the DB50.

OE: What is next for the Altamira yard?

Our Altamira yard is the most modern of McDermott’s wholly owned yards. It has now started to build an enviable reputation for delivery, including its first export project, which was delivered offshore Angola in Q1 2015. The yard continues to support PEMEX with its project needs, but it is also competitive for other markets in the Atlantic basin. We continue to market the yard for these export opportunities.

It is important to also note that we were awarded free trade zone status in 2015, giving McDermott significant cost advantages for the international market. Through 2015 and into early 2016, we have been encouraged by the willingness of our international customers to add Altamira to their lists of approved yards. We also see the opportunity to diversify the client base for the Altamira yard with the arrival of new operators in Mexico due to the recent energy reforms brought in by the country.

OE: With the downturn heavily affecting 2016 budgets, what is McDermott’s take on the entire Gulf of Mexico region? Is there still work to conduct?

To a large extent, our work depends on our clients and their ability to invest, an ability highly linked to the price of oil. We have long-reaching relationships with all of our clients across the globe, and this is also the case with PEMEX.

At the moment, the industry is experiencing a turbulent environment, which poses many difficulties to market players. Our investment in Mexico was driven by a long-term belief in the Mexico energy market and the ability to compete in a global market from this facility. It is important for companies to realize that this industry requires a long-term focus, and in difficult circumstances, companies must adapt to withstand the challenges.

OE: Additionally, given the lowered oil prices, are you still hopeful about the Mexican market given the current climate?

We believe that, in the long term, the Mexican energy market will offer a competitive return for our customers given the resource in place and availability of existing infrastructure. We believe in McDermott’s ability to succeed in this market given McDermott’s three distinct advantages:

First, McDermott offers customers a complete solution made up of resources internal to McDermott. We tackle the project from the engineering perspective through to procurement, construction, transportation, and installation with a comprehensive, in-house approach. McDermott is well-established in Mexico and complies with local content requirements. Moreover, the yard is a free trade zone, which is particularly attractive to international companies as material can arrive at our location without having to enter Mexican territory. PEMEX and foreign companies are able to benefit from the absence of import taxes, and have the ability to transform material in our yard under the same circumstances.

Our second differentiator is our adherence to safety standards. As an example, the Altamira yard has achieved 8.4 million man-hours without a Lost Time Incident to date.

Lastly, we focus on our clients, building a relationship of trust through development, execution and delivery of projects on time and on budget.

In the short term, we will continue servicing the shallow water sector, including PEMEX. Moreover, we are well-positioned to support new operators as the energy reform releases areas for development throughout the Mexican sector of the Gulf of Mexico.