INDUSTRY BRIEFS

May 13, 1996
Williams Field Services Corp., a unit of Williams Cos. Inc., Tulsa, started commercial operations at its 62,000 kw cogeneration plant, built alongside its Milagro gas treating plant near Farmington, N.M. It produces about 300,000 lb/hr of steam used to remove CO2 at the Milagro plant. Power is sold to Louis Dreyfus Electric Power Inc. under a long term contract. China National Chemical Construction Corp.

Cogeneration

Williams Field Services Corp., a unit of Williams Cos. Inc., Tulsa, started commercial operations at its 62,000 kw cogeneration plant, built alongside its Milagro gas treating plant near Farmington, N.M. It produces about 300,000 lb/hr of steam used to remove CO2 at the Milagro plant. Power is sold to Louis Dreyfus Electric Power Inc. under a long term contract.

Petrochemicals

China National Chemical Construction Corp. (Cnccp) will install new production trains and revamp existing units as part of an upgrading of the Shaanxi, China, ammonia plant under a $250 million loan from the Asian Development Bank. Cnccp this month issued a tender for the project with a June 20 deadline for bids.

Drilling-production

Mobil Corp. completed purchase of a 25% interest in Kazakhstan's Tengiz oil field (OGJ, Apr. 22, Newsletter). Other interests owners are operator Chevron Corp. 50% and state owned Tengizmunaigaz 25%. The accord follows signing of a protocol to restructure Caspian Pipeline Consortium, formed to back a 900 mile pipeline from Tengiz to the Black Sea (OGJ, May 6, Newsletter). CPC pipeline interests now are Chevron 15%, Lukoil 12.5%, Mobil and Rosneft 7.5% each, British Gas plc and Agip SpA 2% each, Oryx Energy Co. and Kazakmunaigaz 1.75% each, with the remaining 50% divided among governments of Kazakhstan, Russia, and Oman.

Amerada Hess Corp. agreed to sell nine U.S. exploration and production properties to eight undisclosed buyers for about $324 million in the Gulf of Mexico, Alabama/Mississippi, Colorado/ New Mexico, Louisiana, Montana/North Dakota, Oklahoma, South Dakota, and Texas. The leases hold about 55 million bbl of oil equivalent (BOE) and produce 12,000 b/d of crude oil and 83 MMcfd of gas.

Total Myanmar E&P let a $180 million contract to J. Ray McDermott, New Orleans, for engineering, supply, construction, and other work related to installation of two wellhead platforms and quarters, flare, and production platforms in Yadana gas field in the Gulf of Martaban off Myanmar. The facilities, rated at about 900 MMcfd capacity, are to be complete by May 1998.

Enron Oil & Gas India Ltd. let a $20 million contract to McDermott-ETPM East Inc., a venture of J. Ray McDermott and France's ETPM SA, for engineering, procurement, fabrication, and precommissioning of two wellhead platforms and a flare structure for Panna field off India. Work is to be complete in first quarter 1997.

Bluewater Offshore Production Systems Ltd., Essen, Belgium, let contract for conversion of a tanker into a floating production storage and offloading system to Harland & Wolff Ltd., Belfast. Bluewater is under contract from Amerada Hess Ltd. to produce oil from North Sea Durward and Dauntless fields. The tanker arrived at the shipyard early this month and is slated for completion by October when it will move to Teesside, U.K., for fitting of modules. First oil is slated for early 1997.

Coplex Resources NL, Hobart, Tasmania, received approval from Empresa Colombiana de Petroleos (Ecopetrol) to deliver crude from Colombia's Rubiales oil field via the state firm's export pipeline. Coplex plans to sell the crude to an Ecopetrol refinery or for export. Rubiales production is expected to climb from 800 b/d to 3,000 b/d by yearend and 10,000 b/d by late 1997.

Petroleo Brasileiro SA let a $42.5 million contract to Kvaerner AS, Oslo, for 23 christmas trees for installation in 1,000 m of water in Brazil's Campos basin. Ten production and six water injection trees will be installed in Albacora field, five production trees in Marlim field, and two production trees in adjacent RJS-377 block. Deliveries are to begin in 9 months and take 31 months.

Minerals Management Service proposed a rule to double the 90 day interval allowed between production, drilling, or workover operations for leases continued beyond their primary term. Currently, a lease expires if no activities occur in the final 90 days prior to expiration. MMS said changes in industry exploration practices have increased the time needed to collect and analyze data associated with drilling operations.

Destec Energy Inc., Houston, agreed to acquire from Snyder Oil Corp. (SOCO), Fort Worth, a 45% interest in producing gas leases and related undeveloped leases and a gas pipeline in Northwest Colorado's Piceance basin for about $22 million. SOCO will retain a majority working interest in the properties and continue to operate the wells. Destec signed a joint venture agreement with SOCO covering long term development of the leases and associated gas pipelines.

Companies

SOCO closed the merger of Gerrity Oil & Gas Corp., Denver, into Patina Oil & Gas Corp. The latter was formed to consolidate SOCO and Gerrity assets in Colorado's Wattenberg oil field (OGJ, Jan. 22, p. 25).

Petro-Canada, Calgary, is talking to a number of companies about a possible trade of some of its East Coast Canada properties for prospects or producing properties elsewhere in the world. Petro-Canada owns a 25% interest in 615 million bbl Hibernia oil field, slated to start production of 135,000 b/d in 1997. It also holds a 49% interest in 400 million bbl Terra Nova field on the Grand Banks, now close to development.

Dragon Oil plc, Dublin, bid to take control of Larmag Energy Assets Ltd., Amsterdam, which holds exploration and production assets in the Caspian Sea off Turkmenistan (OGJ, Jan. 30, 1995, p. 36). Dragon aims to raise $75.8 million through conversion of loans and a share offering to acquire a 60% interest in Larmag. The purchase would more than double Dragon's reserves to 170 million BOE and increase its production to 30,000 BOE/day from the current 500 BOE/day.

Morgan Hydrocarbons Inc. will acquire International Colin Energy Corp. for $100 million (Canadian). Both are Calgary firms. The combined companies will have production of about 23,000 BOE/day and 1.1 million acres of net undeveloped acreage. The acquisition will increase Morgan's reserves by 27.5 million BOE of light oil and natural gas.

Spills

Exxon Co. U.S.A. and Clean Seas standby emergency response teams contained a 50 bbl oil spill at Exxon's Platform Heritage in the Santa Barbara Channel off California. The spill created a sheen 6-7 miles offshore but did not pose a threat to the coast or result in reported harm to wildlife. The platform was immediately shut in after the incident and remains closed. Cause of the spill was not disclosed.

American Petroleum Institute will distribute a series of technical reports prepared by the Marine Spill Response Corp.'s research and development division. The R&D program, which ended last December, was designed to enable oil spill response groups to react more rapidly and effectively to accidents, with the goal of substantially reducing environmental damages caused by a spill.

U.S. Coast Guard issued a notice of proposed rulemaking regarding spill response plans for tankers and marine terminals handling hazardous substances, such as chemical shipments. The proposed rule is similar to existing rules on crude oil.

A federal jury in San Juan, P.R., indicted Bunker Group Puerto Rico and its general manager Pedro River, Bunker Group Inc., and New England Marine Services for their role in a January 1994 barge accident that spilled about 18,000 bbl of oil. Prosecutors alleged the defendants operated an unseaworthy vessel and failed to notify the Coast Guard of a hazardous condition on the vessel. The spill cleanup cost $81 million. The companies could be fined more than $100 million.

Cook Inlet Pipeline Co. agreed with U.S. Environmental Protection Agency to pay a $344,000 penalty to settle a complaint that it did not have permits when it stored wastes in six unlined ponds in 1992 and earlier. EPA said benzene and other contaminants apparently leaked into groundwater near the company's Drift River terminal on the western shore of Alaska's Cook Inlet.

Gas storage

American Gas Association objected to the Energy Information Administration's plan to release data to the public that companies report to EIA on gas storage Form 191. AGA said the data are proprietary and could place the storage operator and its customers at a competitive disadvantage. EIA must obtain approval for the change from the Office of Management and Budget, which has rejected it twice.

Pipelines

IPL Energy Inc., Calgary, will acquire at least a 10% interest in a $3 billion (Canadian), 1.2 bcfd gas pipeline from Northeast British Columbia to the Chicago area. The Northern Area Transportation Study (NATS) project, slated to start up in 2002, is backed by a group of 20 producers. NATS budgeted $30 million this year for regulatory filings with the U.S. Federal Energy Regulatory Commission and will file in 1997 with Canada's National Energy Board.

FERC approved an agreement between Pacific Gas Transmission Co. (PGT), San Francisco, and Canadian gas shippers to gradually cut tolls on PGT's expanded Alberta-California system. During 8 years, the settlement will equalize toll rates between shipping gas on the original PGT line and a 1993 expansion that doubled PGT capacity. The deal is expected to save Canadian shippers as much as $54 million (Canadian)/year. Tolls on the expansion line have been about 60% higher since it opened.

Elf Angola let a $14 million contract to Stolt Comex Seaway SA, Aberdeen, for installation and commissioning of 46 km of pipelines in fields off Angola. Later this year the contractor will lay pipelines serving Buffalo, Palanca, Pacassa, Impala, and Cobo fields. The contract calls for laying five 4 in., two 6 in., and two 8 in. pipelines in 40-100 m of water. The Seaway Falcon ship will lay the pipe, and Seaway Harrier will construct pipeline crossings, install risers and spool pieces, and perform tie-in and testing.

TransColorado GasTransmission Co., wants to change its schedule to build a 311 mile, 22 and 24 in. pipeline from western Colorado to New Mexico's San Juan basin, citing producers there that could benefit from phased construction. It asked FERC to approve a first phase involving 21/2 miles of pipeline linking a proposed 120 MMcfd gas treating plant in La Plata County, Colo., to an interconnect with TransColorado's proposed 24 in. main line in San Juan County, N.M. It also wants to lay 221/2 miles of 24 in. line from the 21/2 mile line to El Paso Natural Gas Co.'s 34 in. and 42 in. systems in San Juan County.

Valero Energy Corp .plans to lay a gas gathering system in Webb and Duval counties, Tex., that will gather production in the Vaquillas Ranch area of the Lobo trend and deliver the gas to Valero's 20 in. line to its Shilling gas processing plant near Freer, Tex. The project involves about 42 miles of gathering line and a 19 mile residue line from the Shilling plant with total capacity of 200 MMcfd, expandable to 300 MMcfd with added compression. Construction is to begin this month, with service to begin by yearend.

Valero will transport 75 MMcfd of gas for Swift Energy Co., Houston, from Swift's interests in AWP Olmos field in McMullen County, Tex. Valero will lay about 13 miles of 12 in. pipeline to deliver gas to Valero's Armstrong gas processing plant in Dewitt County, Tex. Residue gas will be delivered for Swift's account into any of 15 interstate and intrastate pipelines. Completion is expected by midyear.

Refining

About 180 union workers at the 41,000 b/d Frontier refinery at Cheyenne, Wyo., went on strike May 8 after contracts between owner Wainoco Oil Co., Houston, and Oil, Chemical & Atomic Workers Union and trade unions expired. The refinery is being operated by management, supervisory, and contract personnel. Throughput remains unaffected.

EPA lowered the floor for the lower Reid vapor pressure limit for simple model reformulated gasoline sold in California to 6.4 psi from 6.6 psi. EPA said the step will give refiners more flexibility, make the simple model consistent with an Rvp of 6.4 psi in the complex model, and speed certification of California Phase 2 RFG.

Terminals

Kuwait National Petroleum Co. will spend more than $100 million to upgrade the products export terminal at its 425,000 b/d Mina al Ahmadi refinery. Plans call for upgrading the site's north pier and replacing its south pier, built in the 1940s. A tender for an engineering design contract is to begin soon, followed by award of construction contracts.

Safety

U.K. Health & Safety Executive published two research reports on thermal radiation models for use in risk assessment at sites storing or handling large volume of flammable materials. The first report reviews available models for pool fire behavior and details an improved version. The second details effects of thermal radiation on persons caught in pool fires, jet fires, fireballs, and flash fires. HSE also released results of research into gas explosion models that may spawn changes to some U.K. North Sea platforms (see related story p. 38).

Copyright 1996 Oil & Gas Journal. All Rights Reserved.