Company: ChevronTexaco, Gazprom consider joint projects

Oct. 11, 2004
ChevronTexaco Corp. and OAO Gazprom announced a memorandum of understanding calling for a 6-month feasibility study concerning joint oil and natural gas projects in Russia and the US.

ChevronTexaco Corp. and OAO Gazprom announced a memorandum of understanding calling for a 6-month feasibility study concerning joint oil and natural gas projects in Russia and the US.

Plans call for ChevronTexaco and Gazprom to evaluate a possible integrated LNG project in Russia and Gazprom's potential participation in a ChevronTexaco-led gas import terminal project in North America, said Chevron Neftegaz Inc.

In other recent upstream news:

  • Midnight Oil & Gas Ltd., Calgary, plans to buy all of Tulsa-based Vintage Petroleum Inc.'s interests in Canada.
  • Kerr-McGee North Sea (UK) Ltd. is to buy a stake in four exploration licenses covering five blocks in the central North Sea from BP PLC.
  • Houston independent Houston Exploration Co. agreed to acquire producing assets in the shallow-water Gulf of Mexico in two separate transactions. It will pay $113.5 million for assets from a private company and $31.5 million for assets from BP Exploration & Production Inc.

In recent midstream news:

  • Buckeye Pipe Line Co. LLC, the general partner of Buckeye Partners LP, Emmaus, Pa., closed on the purchase of five product pipelines and 24 terminals in the US Midwest from Shell Oil Products US for $517 million.
  • Oneok Inc., Tulsa, agreed to purchase Northern Plains Natural Gas Co. for $175 million from CCE Holdings LLC, a joint venture of Southern Union Co. and GE Energy Financial Services.

ChevronTexaco-Gazprom

The companies will study ChevronTexaco's potential participation in existing Gazprom projects in northwestern Siberia and the possible joint participation in other oil and gas opportunities.

ChevronTexaco Chairman and CEO Dave O'Reilly said, "The development of a global, integrated natural gas business is a cornerstone of our own growth strategy."

Gazprom Chairman Alexey Miller said, "For Gazprom, access to the American gas market is strategically important, and in addition, we are keen to bring advanced LNG production and transportation technologies to Russia."

Previously, Gazprom announced plans for feasibility studies with Statoil ASA (OGJ Online, Sept. 10, 2004). Gazprom and OAO NK Rosneft Sept. 8 signed an MOU with Statoil to conduct studies investigating the feasibility of joint participation in LNG projects.

Midnight-Vintage

The boards of Vintage and Midnight have approved a June 30 agreement whereby Vintage will sell all of its interests in Canada to Midnight for $350 million (Can.), including working capital of about $27.5 million.

Closing is scheduled for Nov. 30 subject to a financing contingency that must be satisfied by early October and the approval by Midnight's shareholders.

The sale proceeds will be used to reduce Vintage's net debt-to-book capitalization ratio below 40%, achieving the company's stated financial target, and to enhance its flexibility to fund future production growth, Vintage said.

Kerr-McGee, BP

Commercial terms of the transaction were not disclosed, but Kerr-McGee said that it would operate four of the five blocks that it is buying from BP.

Kerr-McGee is acquiring 66% of Block 22/25a (excluding the Mirren and Merganser fields). In addition, it is acquiring a 50% stake each in Block 23/26aS (excluding the Machar and Erskine fields), Block 30/1a, and Block 30/1e.

The company also acquired a 65% nonoperating interest in Block 22/15.

"Acquiring positions in these blocks bolsters our commitment to exploring the central North Sea, one of our core operating areas," said Terence Jupp, Kerr-McGee's UK managing director.

In addition to pursuing an active new business development program, Kerr-McGee said it expects to drill 4-6 exploration wells/year in the North Sea.

Houston Exploration

Houston Exploration is buying producing assets from a private company for $113.5 million, less $7 million if closing is on or before Oct. 29, effective retroactive to Aug. 1. The name of the private company was not disclosed.

The properties, which are 81% natural gas, have proven reserves of 63 bcfe. Production is 17 MMcfed net from 12 fields. Houston Exploration plans to operate 85% of the proven reserves with an average interest of 62%.

In addition, Houston Exploration is buying interests in two offshore fields that are 85% gas from BP Exploration & Production.

The fields have proven reserves of 16 bcfe and production of 5 MMcfed net. Closing was expected on Sept. 30, effective retroactive to Aug. 1.

Houston Exploration plans to operate 100% of the properties with an average interest of 85%.

Buckeye-Shell

Buckeye said that the previously announced price of $530 million was reduced by $13 million to account for the elimination of a Niles, Mich., terminal from the transaction.

The US Federal Trade Commission requested exclusion of the Niles terminal, saying that Buckeye would have had too much market share if that terminal were kept in the deal.

Buckeye said the Shell Oil pipeline systems and terminals expand its presence in the Midwest.

In a separate transaction, Magellan Midstream Partners LP, Tulsa, finalized its purchase of more than 2,000 miles of product pipeline and storage assets—four systems total—in Texas, Oklahoma, Kansas, and Colorado for about $490 million, from Shell Oil Products (OGJ Online, June 28, 2004).

Oneok

Oneok is buying Northern Plains, which together with its wholly owned subsidiary Pan Border Gas Co., owns 82.5% of the general partnership interest and 500,000 limited partnership units in Northern Border Partners LP.

The transaction also includes NBP Services Corp., which provides administrative and operating services to Northern Border Partners.

The transaction is subject to CCE Holdings closing its acquisition of CrossCountry Energy LLC from Enron Corp. and certain of its affiliates, expected by mid-December.

CrossCountry Energy currently holds Enron's North American pipeline interests, including 100% of Northern Plains.