INDUSTRY BRIEFS

Gas distribution

Mexico's Energy Regulatory Commission awarded an exclusive concession to KN Energy Inc., Lakewood, Colo., to build and operate a $21.3 million natural gas distribution system in Hermosillo, Mexico. The project includes a franchise territory of about 800,000 people in Sonora state. KN will build main and distribution lines to serve 26,250 customers of all classes during the first 5 years of the concession. KN also holds the right to build a 90-mile, 16-in. pipeline from Hermosillo to the Gulf of California at Guaymas. The construction firm Grupo Marhnos, Mexico City, holds a 25% interest in the venture.

Pipelines

Interprovincial Pipe Line Inc. (IPL), Edmonton, applied to Canada's National Energy Board (NEB) to reverse the flow to west from east of its Line 9 crude pipeline from Montreal to Sarnia, Ont. The 517-mile reversal project would allow shipment of imported crude to Ontario refiners from the Portland/Montreal pipeline system and cost about $89 million (Canadian), with start-up expected Apr. 1, 1998. Line capacity could increase later to 240,000 b/d from the current 160,000 b/d. Refiners Imperial Oil Ltd., Petro-Canada, Shell Canada Ltd., and NOVA Chemicals (Canada) Ltd. have committed to use the line.

Woodside Petroleum Ltd., Melbourne, applied for environmental approval of a second 134-km, $500 million (Australian) pipeline to shore from its North Rankin/Goodwyn fields on Australia's North West Shelf. Woodside also seeks to increase its North West Shelf gas processing capacity to about 805 MMcfd from 505 MMcfd. The added capacity for both is to be in service by 2000. The new pipeline is a key part of a planned expansion in North West Shelf LNG capacity slated for 2003 (OGJ, Mar. 10, 1997, Newsletter).

Questar Gas Management Co., a unit of Questar Corp., Salt Lake City, paid $4 million to Interline Resources Corp., Alpine, Utah, for its Monument Butte gas pipeline. The system consists of 28 miles of main line and 40 miles of laterals connecting 146 wells and five compressors in the Uintah basin of eastern Utah. Gas sales in 1996 from this system were 4.4 MMcfd. The sale, effective Apr. 30, 1997, includes 12 producing oil wells that Interline owns in the same area.

Enterprise Products Co., Houston, will expand its LPG systems in southern Louisiana. The company will increase propane injection into the Dixie pipeline at Grangeville to 36,000 b/d and at Breaux Bridge to 48,000 b/d. The expansions will allow Enterprise to handle increased volumes expected late in 1997 and beyond as a result of expanding gas production in the Gulf of Mexico.

Drilling-production

Chevron Corp. unit Cabinda Gulf Oil Co. and partners started production from North N'Dola oil field in Area C off Angola and expects output to reach 20,000 b/d by yearend. Chevron said output from North N'Dola will help the group hike its Angolan oil production to 600,000 b/d by 2002 from the current level of about 420,000 b/d. Interests are Angola's state-owned Sonangol 41%, Cabinda Gulf 39.2%, Elf Angola 10%, and Agip Angola Ltd. 9.8%.

ARCO British Ltd. plans to develop Bladon discovery on U.K. North Sea Block 16/21d as a single well tied back to its Blenheim field 5.3 km south. Bladon has estimated reserves of 4.5 million bbl of oil and is due on stream in mid-July. Bladon production will boost throughput of Petrojarl 1 floating production, storage, and offloading (FPSO) ship to 18,000 b/d. Blenheim, which produces through three wells, fell from a peak of 34,000 b/d (OGJ, Apr. 17, 1995, p. 27), but addition of Bladon output will extend Blenheim field life enough to yield a further 1.5 million bbl of oil.

Shell U.K. Exploration & Production, through Reda Production Services, hired Bristol Babcock, Kidderminster, U.K., to supply electrical submersible pump management systems for Reda pumps installed in two Shell-operated U.K. North Sea fields. The systems will manage six pumps for Shell Brent Alpha and one for Shell Gannet E. The Gannet pump is on a 14-km multiphase subsea tie-in. Both systems will come on line this summer. The systems provide real-time Scada information for Shell engineers and enable Reda engineers to perform system monitoring and management of pump systems.

Esso Norge AS let a $45 million contract to Halliburton AS, Tananger, Norway, for tieback and pipeline systems to develop Jotun discovery in the Norwegian North Sea. Halliburton will carry out engineering, procurement, installation, and commissioning of risers, flow lines, and umbilicals between Jotun's FPSO and wellhead platform. Jotun contains an estimated 200 million bbl of oil equivalent (boe) of reserves. First production is due in 1999 (OGJ, May 27, 1996, p. 28).

Trinidad Exploration & Development Co. (TED) and Trans-Dominion Energy Corp. (TDE), Calgary, signed an agreement to drill three shallow wells on TED's leases on the Cedros peninsula in the Maturin basin of southwestern Trinidad. The program will re-test Pliocene reservoirs on the Beaulieu anticline, which produced oil early in the century and is adjacent to Iacacus field. After the initial three-well program, the companies plan to jointly develop the area, acquire additional leases, and carry out an exploration program to evaluate deeper reservoirs.

Seagull Energy Corp., Houston, completed nine development wells since the start of 1997 in the Arkoma basin of western Arkansas, with combined flow rate exceeding 50 MMcfd. The largest to date was the 3-5 Armbruster stepout, drilled to about 9,500 ft in Logan County. The well flowed 19.8 MMcfd from middle and lower Hale sands, one of the highest test rates for an Arkansas well recently. Successful wells are being tied into production units, with the 3-5 Armbruster slated to begin flowing by month's end. Further drilling is planned following seismic surveys of the area, where Seagull recently increased its leasehold position by more than 4,000 net acres.

Fina Exploration Minh Hai BV confirmed an extension into Block 46 of the Bunga Kekwa field off Southwest Viet Nam. The 46-CN-1X well flowed 6,700 b/d of 40° gravity oil from the lowest tested intervals and 49 MMcfd of gas and 440 b/d of condensate from the upper tested intervals. Bunga Kekwa was discovered on Block PM3 of the commercial arrangement area between Viet Nam and Malaysia (OGJ, Mar. 31, 1997, p. 36). Fina holds a 75% interest in Block 46, Sodec Vietnam 25%.

NGL

Amoco Canada Petroleum Ltd. and TransCanada PipeLines Ltd., both of Calgary, will build a $100 million (Canadian) natural gas liquids extraction plant on an existing Amoco site at Empress, Alta. The plant will produce as much as 25,000 b/d of liquids, including ethane, propane, butane, and condensate. It will be jointly owned by Amoco and Alberta Natural Gas Co., a Trans- Canada unit. Subject to regulatory approvals, the plant is scheduled for start-up in August 1999.

Government

The U.K.'s new Labour Party government effectively eliminated a set-aside energy ministry after its victory in May's general election. John Battle is to be minister of state for manufacturing and services/science and technology, handling telecommunications, energy, and environment issues. Battle takes over from Lord Fraser of Carmyllie, who was solely minister of energy. Margaret Beckett is the new head of the Department of Trade and Industry, as president of the board of trade.

Canada's NEB reorganized operations into five internal units to increase efficiency. The new units include: applications, which handles review and processing of applications relating to facilities, tolls, and exports, including environmental assessments and financial surveillance; operations, which covers pipeline safety and environmental monitoring, as well as exploration and production in frontier areas; and commodities, which oversees reserves assessment, industry monitoring, market studies, electricity, and supply and demand projections. Other units are information management and corporate services.

Companies

Norcen Energy Resources Ltd., Calgary, will pay as much as $302.9 million to acquire Bahamas-based Basic Petroleum International Ltd., including operations in Guatemala. The offer is conditional on receiving more than 50% of Basic's common shares. Norcen already has approval from shareholders representing 47% of shares. Norcen will spend more than $100 million in the next few years to almost double Basic's current production of 23,000 b/d.

ITT Industries Inc., White Plains, N.Y., and Goulds Pumps Inc., Fairport, N.Y., approved a definitive agreement for ITT Industries to acquire Goulds for about $815 million cash and assume Goulds' $119 million debt. The combination, expected to close in June, will make ITT Industries the world's largest pump producer. Goulds had 1996 revenues of $774 million.

Parker Drilling Co., Tulsa, will pay $195 million to acquire Hercules Offshore Corp. and Hercules Rig Corp., both of Houston. Hercules Rig owns seven jack up rigs and three self-erecting platform rigs in the Gulf of Mexico, as well as a platform rig on bareboat charter to a firm in Brazil. Hercules Offshore, a drilling contractor, is currently owned by Trenergy (Malaysia) Bhd., a publicly owned Malaysian company. The acquisition follows Parker's recent purchases of Mallard Bay Drilling Inc. and Quail Tools, both of New Iberia, La. (OGJ, Nov. 25, 1996, p. 36), and Parker's pending agreement to purchase the assets of Bolivia's largest private drilling contractor, Bolifor SA.

Exploration

Qatar General Petroleum Corp. (QGPC) found two gas accumulations in the southern part of onshore Dukhan field. The DK-508 new pool wildcat cut pays in the Hamlah Dolomite and Khuff formations at 8,700 ft and 10,350 ft, respectively. The upper pay flowed 14 MMcfd of gas and 2,000 b/d of condensate on test, while the lower flowed 47 MMcfd of lean gas through a 64/64-in. choke. The accumulations were described as modest in size. Appraisal will be needed to estimate reserves and plan for development.

Saga Petroleum AS, Sandvika, Norway, plans to double exploration spending this year, compared with recent years, to $110 million. Almost half will be spent on projects outside Norway, mainly in the U.K. The company's main target in the next few years will be developing the recent Kristin and Lavrans discoveries in the Norwegian Sea. Kristin reserves are estimated at 700 million boe, about 60% gas and 40% condensate. Lavrans is expected to be of similar size. Both are larger than any other discovery on the Norwegian continental shelf in the last 10 years.

Refining

Citgo Petroleum Corp., Tulsa, contained a fire that erupted May 12 in a depropanizer tank at the alkylation unit of its 130,000 b/d Corpus Christi, Tex., refinery. The alkylation unit was damaged and out of operation at presstime last week, but other units temporarily shut down after the fire were returned to service. Citgo said the cause of the fire is unknown, but police speculated it could have been due to lightning. There were no injuries.

Petrochemicals

Saudi Basic Industries Corp. (Sabic) and 50-50 joint venture partner Mobil Corp. let contract to a unit of Fluor Daniel Inc., Irvine, Calif., to oversee a $2 billion project to double production capacity at its Yanbu petrochemical complex in Saudi Arabia. The project will include construction of an 800,000 metric ton/year ethylene cracker, a 535,000 ton/year polyethylene plant, and a 260,000 ton/year polypropylene unit (OGJ, May 20, 1996, p. 39). Fluor will be project manager and provide engineering, procurement, and construction services for associated utilities and offsite work.

Sabic unit Al-Jubail Fertilizer Co. (Samad) issued a letter of intent to Lurgi AG, Frankfurt, for basic engineering design of the Middle East's first phthalic anhydride (PAN) plant. The plant is to start up in fourth quarter 1999 and will use the Wacker process to yield as much as 50,000 metric tons/year. Sixty percent of plant output is expected to be exported.

Amoco Chemicals let contract to Parsons Process Group Inc., a unit of Parsons Corp., Pasadena, Calif., for preliminary engineering of a major linear alpha-olefins unit near Red Deer, Alta. The grassroots unit carries an estimated price tag of $250 million (Canadian) and is slated for completion in mid-2000, with preliminary engineering to be complete in 1998.

Spills

Texas General Land Office spill response team contained within 24 hr a light oil spill of less than 5,000 bbl from a 12-in. pipeline owned by Koch Pipeline Co. The pipeline, which extends from Refugio to Ingleside, Tex., ruptured May 12 near Bayside, Tex., about 30 miles north of Corpus Christi. The spill was contained in a low area about 1/2 mile north of the Aransas River, 2-3 miles from the Gulf Coast. About 10 acres were affected. Cleanup crews built earthen trenches for containment and were using vacuum trucks for cleanup at presstime last week. After the mechanical portion of the cleanup is complete, bioremediation is planned to clean up oil in marsh areas. Cause of the rupture was unknown at presstime.

Exports-imports

Nescor Energy Co., Austin, and Sinochem International Oil Co., Beijing, signed a crude oil purchase agreement under which Sinochem will buy all of the crude produced by Nescor in Mongolia for use in Sinopec's Shijiazhuang refinery. Nescor will deliver the oil to Sinochem by rail from the Mongolia/Chinese border. The company will begin producing about 2,000 b/d within the next 4 months and reach 8,000 b/d within 30 months, primarily from Tsagaan Els field. Deliveries of crude under the agreement are expected to start by the end of summer.