INDUSTRY BRIEFS

Gas storage

Australia's Victoria government plans to use partly depleted onshore fields North Paaratte, Wallaby Creek, Grumby, and Iona in the Port Campbell region as storage for gas piped from the Bass Strait in summer and released in winter for peak shaving. That would leave the Bass Strait main trunk line free to move gas to eastern Victoria. As a result, BHP Petroleum Pty. Ltd. will suspend work on Minerva gas field, discovered in 1993 in the Otway basin. Minerva, 12 km off Port Campbell, is seen as a potential western Victoria rival to Bass Strait gas. Minerva's future depends on securing a baseload buyer.

Companies

KCS Energy Inc., Edison, N.J., completed a cash-stock acquisition of InterCoast Oil & Gas Co. and two gas marketing units of MidAmerican Energy Holdings Co., GED Energy Services Inc. and InterCoast Gas Service Co., for about $210 million cash and 435,000 KCS common stock warrants. All companies being acquired are based in Tulsa. InterCoast Oil & Gas, formerly Medallion Production Co., has been renamed KCS Medallion Resources Inc.

Drilling-production

Phillips Petroleum Co. began production from Mahogany platform after completing the first of four predrilled wells as part of Ship Shoal South Addition Block 349/359 subsalt development in the Gulf of Mexico (OGJ, Sept. 23, 1996, p. 32). After completing all predrilled wells, drilling of a fifth well will resume after being suspended to install the platform and pipeline facilities. Production in 1997 is expected to average 22,000 b/d of oil and 30 MMcfd of gas. Six producers are planned, with the last to be on stream early in 1998. Interests are Phillips and Anadarko Petroleum Corp. 37.5% each and Amoco Corp. 25%.

Esso Australia Ltd. and BHP produced first oil on schedule from Bream B concrete gravity platform, placed in Australia's Bass Strait this past October. First of 15 wells came on stream at 4,000 b/d late in December. Remaining wells will be drilled during the next 12 months.

ARCO and Qatar General Petroleum Corp., operators of Qatar's Al Rayyan oil field, disclosed field output reached 32,000 b/d in December 1996 with all four wells in operation, following Nov. 12, 1996, start-up. Operators will decide if more development is warranted after using temporary production facilities for about 9 months. A seismic program is under way to further delineate the field.

Enterprise Oil Norge AS second appraisal well on Block 30/5 in the Norwegian North Sea flowed on test at a maximum rate of 3,208 b/d of oil and condensate and 34.6 MMcfd of gas from lower Jurassic. Well appraised a structure discovered by the 30/8-1S well, drilled in 1995. Combined results of the two wells were said to be encouraging in view of the proximity of Oseberg field infrastructure. The 30/5-2 well was drilled jointly by Norske Shell AS, which owns the license outright, and the Block 30/8 license group Den norske stats oljeselskap AS 60%, Norsk Hydro AS 25%, and Enterprise Oil 15%.

Elf Exploration U.K. plc let a $48 million contract to Dresser Industries Inc., Aberdeen, to provide drilling and completion fluids during development of Elgin and Franklin fields in the U.K. North Sea. Development drilling is expected to take more than 4 years, including drilling and completion of at least 10 wells. Downhole pressures and temperatures are expected to exceed 16,000 psi and 400° F., respectively, at depths of more than 18,000 ft. Elf plans to begin Elgin and Franklin production in 2000 (OGJ, Aug. 19, 1996, p. 49).

Smedvig Offshore AS, Stavanger, Norway, signed a letter of intent with Hitec AS for a new workover rig for the greater Ekofisk area. The modular rig, which will be prepared for a possible upgrade for light drilling service and well intervention, primarily will be used to plug and abandon old wells. Delivery is planned for late in 1997.

Enserch Exploration Inc., Dallas, estimated its 3-SB well, part of the Cooper project in the deepwater Garden Banks in the Gulf of Mexico, will have initial output of 20-25 MMcfd based on initial flow rates. Well, on Block 387, was drilled to 19,000 ft TD and completed in a 50-ft sand interval at a depth of 18,170 ft. Production is slated to begin later this month. Separately, Enserch's 2-A well on Block 388 reached 9,835 ft TD, finding three pay zones at 7,200-9,800 ft. Initial output is expected next month.

Exploration

Socar, Azerbaijan's state-owned oil company, may soon approve a contract covering Lenkoran/Talysh Deniz exploration block in the Caspian Sea off Azerbaijan. Water depths over the 450-sq km block are 20-200 m. It includes two undrilled prospects, Lenkoran Deniz and Talysh Deniz. Closest production is Neftechala field onshore, about 70 km away. Elf, reported to have negotiated terms of a memorandum of understanding, is expected to operate. Project could total $2 billion to develop. Total has received approval for an interest, and other possible participants include Germany's Deminex AG and Mobil Corp.

Petrolera Santa Fe (Ecuador) Ltd., a unit of Santa Fe Energy Resources Inc., Houston, plans further exploratory drilling in mid-1997 following its 1 Cristal discovery on Diamante prospect on Block 11 in Ecuador's Oriente region (OGJ, Nov. 4, 1996, p. 27). Its Rubi prospect will be drilled next to test a separate structure. During initial testing, 1 Cristal well flowed on pump at an average rate of about 500 b/d of 30° gravity oil from Cretaceous Hollin at 9,764-784 ft. A second well, 1 Betano, has been plugged after finding noncommercial oil.

Oilsands

Crown Energy Corp., Salt Lake City, plans to construct the company's first permanent production complex at its Asphalt Ridge oilsands deposit near Vernal, Utah, after receiving final regulatory approvals. Complex, on 45 acres of its 7,500-acre site, is designed to initially process about 2,000 tons/day of oilsands for an average production of 1,000 b/d of premium asphalt during an estimated 15-year life. Financing options now are being evaluated. Project is an outgrowth of earlier work (OGJ, Dec. 12, 1994, p. 30). Crown expects to begin shipping product during the 1997 road construction season. A capacity expansion is planned in 1998, based on market demand.

Refining

ARCO paid $128 million to increase its stake in Zhenhai Refining & Chemical Co. (ZRCC), China's third-largest refiner. ARCO now owns a 20% interest in ZRCC, up from about 10% previously. ZRCC owns a 130,000 b/d refinery about 100 miles south of Shanghai.

Petrochemicals

Huntsman Corp., Salt Lake City, will pay about $600 million for Texaco Inc.'s propylene oxide/methyl tertiary butyl ether (PO/MTBE) plant at Port Neches, Tex. Plant, operated for Texaco by Huntsman since 1994 start-up, has about 400 million lb/year PO and 15,000 b/d MTBE capacity. Purchase makes Huntsman second-largest MTBE producer in the U.S. after ARCO, with total capacity of more than 27,000 b/d.

Saudi Arabian Fertilizer Co. (Safco), a unit of Saudi Basic Industries Corp., signed a letter of intent with Tecnimont SpA, Milan, to build two new plants at Al Jubail. Company plans to build a 500,000 metric ton/year ammonia plant and a 600,000 ton/year urea plant. First output is anticipated by yearend 1999. Project will hike Safco's total production capacity at Al Jubail and its Dammam fertilizer plant to 1.2 million tons/year of ammonia and more than 1.5 million tons/year of urea.

Chevron Chemical Co. let contract to Brown & Root Inc., Houston, to begin construction this month to modernize its Port Arthur, Tex., cumene plant. Project, slated for completion in September 1997, will increase capacity to 455,000 metric tons/year from 205,000 tons/year. In related activity, Chevron licensed UOP's Q-Max process, which uses catalytic alkylation to convert benzene and propylene to high-quality cumene. Unit will use UOP's new zeolite catalyst which, unlike traditional catalysts, is completely regenerable. Start-up is scheduled for fourth quarter 1997.

Kaucuk AS, Czech Republic, let contract to ABB Lummus Global, Bloomfield, N.J., to build a 130,000-metric ton/year styrene monomer plant at Kralupy, Czech Republic. Lummus will be responsible for process licensing, engineering, procurement, construction, and commissioning. Plant will use Lummus/UOP Classic styrene technology. ABB Simcon will provide advanced process control. Start-up is slated for early in 1999.

Gas distribution

Berlin's city authorities may sell a 51% stake in municipal gas supply company Gasag. Plan is part of a privatization program intended to boost the city's ailing finances. Gasag claims to be the largest municipal gas company in western Europe, worth about $600 million. Other shareholders include Ruhrgas AG, RWE-DEA, and Veba Oel AG. Germany's government is working towards liberalization of the country's complex gas market (OGJ, Dec. 30, 1996, p. 23).

Gas processing

Williams Field Services, a unit of Williams Cos. Inc., Tulsa, began operating the 50 MMcfd Dry Trail gas treatment plant for Mobil Exploration & Producing U.S. Inc.'s enhanced oil recovery operations in the Oklahoma Panhandle. Plant removes carbon dioxide and natural gas liquids from gas produced in Mobil's Postle Hough field in Texas County, Okla. Liquefied CO2 is then returned to the field and reinjected into wells by Mobil for EOR. Construction on the Williams-owned plant began in March 1996.

Pipelines

Tennessee Gas Pipeline Co., a unit of El Paso Energy Corp., Houston, and Tesoro Exploration & Production Co. LP, San Antonio, agreed to terminate, effective retroactive to Oct. 1, 1996, the contract under which the pipeline was purchasing natural gas from Tesoro at above-market prices from Bob West field in South Texas. Agreement resolves all claims and litigation between the two companies. Tesoro received about $60 million to settle remaining payments. Contract was slated to expire Jan. 1, 1999.

El Paso Energy settled gas contract disputes with KCS Energy. El Paso agreed to dismiss lawsuits claiming that KCS illegally boosted the BTU content of gas it delivers and increased such deliveries in bad faith. In return, KCS agreed to early termination of the contract, which was set to expire in 1999, under which El Paso was obligated to pay more than $50 million for gas. Settlement lowers gas supply realignment costs to be paid by customers of Tennessee Gas Pipeline.

Indonesia's PT Perusahaan Gas Negara let contract worth $74 million to PT KHI Pipe Industries' Krakatau steel group to supply 550 km of 28-in. steel pipe for a pipeline that will link Caltex's Duri oil field in Riau with Asamera (Overseas) Ltd.'s oil and gas field at Gresik, Sumatra. Asamera is the Indonesian unit of Gulf Canada Resources Ltd., Calgary.

Occidental Philippines Inc. and Shell Philippines Exploration BV received approval of the Philippines energy department to build 80 km of onshore pipeline related to development of the 2.5 tcf Camago-Malampaya gas field (OGJ, Mar. 27, 1995, Newsletter). Project will integrate onshore pipelines with conversion of the mothballed Bataan nuclear power plant into a gas-fired power plant.

ARCO Transportation Alaska Inc. agreed to purchase for $14.1 million about 25% of Mobil Alaska Pipeline Co.'s 4.08% interest in the Trans-Alaska Pipeline System (TAPS). If approved by U.S. Interior Department, ARCO's TAPS equity stake will increase to 22.29% from 21.35% currently.

U.S. Minerals Management Service and Transportation Department signed a memorandum dividing responsibility for regulating pipelines on the Outer Continental Shelf. MMS will have responsibility for producer-operated facilities and pipelines, while Transportation's Research and Special Programs Administration will oversee transmission pipelines and associated pumping or compressor facilities.

Environment

Clean Diesel Technologies Inc. (CDTI), Stamford, Conn., says an independent U.K. engine testing facility found as much as a 70% reduction in particulate emissions on a typical London bus diesel engine using CDTI's Platinum Plus catalyst and a diesel oxidation catalyst. Hydrocarbon emissions were reduced 80% and carbon monoxide emissions 45%. Fuel consumption, NOx emissions, and smoke production were reduced as well.

U.S. Justice Department and Tenneco Oil Co. reached a $3.5 million settlement under which Tenneco will build a water system for the Sac and Fox nation to resolve allegations that it polluted groundwater on the tribe's Oklahoma reservation. Tenneco will drill water supply wells and delivery systems for the tribe and install a water recovery system on the Deep Fork River, allowing the tribe to irrigate farm lands.

Exports-imports

Thai officials are having trouble ending rampant smuggling of diesel fuel. Industry sources say the amount of smuggled diesel entering Thailand in 1996 equaled or exceeded the estimated 34,000 b/d in 1995. Contraband accounts for nearly 10% of all diesel fuel used in Thailand each year, sources say, and deprives the national coffers of at least $175 million in tax revenues.