This week’s Interview of the Week is with Michael Ross, Vice President and Country Manager Mexico at Kiewit where we discussed the company’s Puerto Progreso storage terminal and the company’s strengthening position in Mexico.
Q: In which oil and gas segment does Kiewit see the biggest business opportunity in Mexico?
A: We can see a great deal of potential in the midstream sector, especially in the area of fuel storage. We are also working hard to identify more opportunities in other segments of the oil and gas industry; however, it is difficult to identify which project will move forward and will become a reality and which ones are not viable. Kiewit was fortunate to be involved in the development of the Puerto Progreso storage terminal. Progreso is one of the first new liquid fuels terminals in Mexico. We have been working on the Progreso project for over 11 months and we are scheduled to receive the first shipment of fuel on May 28. Progreso is a great example of our commitment to deliver our projects on-time and on-budget.
Q: What challenges did Kiewit find when developing the storage terminal in Puerto Progreso?
A: Before beginning the project, we thought one of the hardest aspects was going to be handling some of the related workers’ unions, as they have a reputation in the country of being hard to deal with. Fortunately, we have had excellent relationships with all the unions we have worked with in Mexico. We believe this is in part due to the union’s recognition that Kiewit wants to provide their members – our employees – with a very safe, clean work environment and that we want to provide good long-term career opportunities for our craftsmen and women. We want to provide our workers with very safe and secure daily working conditions at our sites. We have solved every minor or major conflict with our workers thanks to our relationship with their unions and our shared commitment to delivering the best outcome for the project.
To construct the storage tanks at Progreso, we hired a Mexican tank-building company. The initial work did not go well but Kiewit and the subcontractor worked together to identify a number of time-saving ideas, including the introduction of new equipment that dramatically improved the productivity of the tank-building company’s craftsmen and together we managed to make up lost time and to take the erection of the tank off the critical path. Instead of going through a negative cycle, we decided to be proactive and help the subcontractor with tools, technology and work processes that make them more successful in their work. Their productivity increased so much that the company even bought some of the machinery we lent them.
Q: How attractive are the Mexican upstream and downstream sectors for Kiewit?
A: While we are seeing a great business opportunity in the midstream sector, we do not limit ourselves to only those kinds of projects. Kiewit has strong expertise in the upstream and downstream sectors with several projects in the US and Canada and it is looking to bring these capabilities to Mexico. Most of our experience is from working with private players such as Shell, BP, ExxonMobil and Chevron. We want to keep working with them and also to venture into projects with PEMEX.
Q: How did the first project developed by Kiewit in Mexico secure it a strong foothold in the country?
A: The first job we performed in Mexico was to install two natural gas compression stations for TransCanada in Tula and Valle de Reyes, a project that showcased our capabilities in the oil and gas industry. The biggest difficulties we faced during the project were not technical but on the regulatory side, related to getting all the rights of way and permits. By closely collaborating with TransCanada we finished the project on schedule and in compliance with all safety standards.
Q: What would make a company an ideal partner for Kiewit?
A: We are looking for potential engineering and construction partners. While we have substantial experience in those areas, we still lack experience in the country. Partnerships with these types of companies would help us develop a much broader understanding of how to be a successful EPC company in Mexico.
One of the most important factors we take into account when considering a potential partner is its track record. We emphasize that all of our projects are delivered on-schedule and on-budget and we want our possible partners and subcontractors to value those expectations as much as we do. The company does that by developing excellent estimates that help to minimize changes, surprises and other delays throughout a project. If difficulties arise, we do whatever is needed to get the job done on schedule. One clear example of our commitment occurred during the development of the compression stations for TransCanada. Due to external factors, the compression stations were scheduled to start receiving the natural gas at a later date than originally agreed. Even though this might have been the basis for a time extension for the development of the stations, we decided to stick to the original plan to get the job done by the originally planned date. This decision involved some extra costs to Kiewit but we preferred to demonstrate our commitment and capabilities by carrying out our original plan and finishing the project on time.