INDUSTRY BRIEFS

Companies

Baker Hughes Inc., Houston, signed a definitive agreement with Petrolite Corp., St. Louis, and its principal shareholder, Wm. S. Barnickel & Co., to acquire Petrolite in a stock swap valued at about $692 million. Terms call for a tax-free common stock exchange in which 11.36 million Petrolite shares will be converted into Baker Hughes common, based on an average Baker Hughes $61/share price during a 10-day period shortly before closing. Assuming all approvals, closing is expected in second or third quarter 1997. Petrolite is to be merged into Baker's Performance Chemicals division.

British Gas plc effectively ceased to exist Feb. 17 when London's Stock Exchange began trading shares in its demerged companies. British Gas disclosed late in 1996 it would split into BG plc and Centrica plc, the former to handle lucrative U.K. gas supply and worldwide exploration and production assets and the latter to operate weaker U.K. gas sales, trading, and retail operations (OGJ, Dec. 23, 1996, p. 30).

Viet Nam's state-owned Petrovietnam is studying a proposal by BHP Petroleum Pty. Ltd. and Total to sell their interests in Dai Hung oil field off southern Viet Nam to Malaysia's state-owned Petronas. Petronas is recommended to be operator. Interests are BHP 43.75%, Petronas 20%, Petrovietnam 15%, and Total and Sumitomo Corp. 10.625% each. The field, brought on stream in 1993, was originally thought to contain 700 million-1 billion bbl of reserves but has fallen far short of expectations (OGJ, Dec. 2, 1996, p. 38).

Exploration

Cultus Petroleum NL, Gordon, N.S.W., disclosed Shell Australia Ltd.-operated 2 Cornea wildcat on WA-241-P off Australia's western coast is possibly a 100 million bbl discovery. The well is adjacent acreage up for bid in Australia's next license round. Interests are Shell 50%, Chevron Corp. unit Chevron Asiatic Ltd. 25%, and Cultus 25%.

Arrow Exploration Co., Austin, is producing 1 Maximus, a downdip Giddings field extension, 3 miles southeast of La Grange, Tex. Originally drilled to 12,208-ft TVD to Cretaceous Edwards, the well was plugged back and drilled as an Austin chalk dual-lateral, testing at a rate of 2.06 MMcfd of gas and 1,207 b/d of oil through a 22/64-in. choke with 1,925 psi flowing tubing pressure from A and B chalk zones.

Mobil Corp.'s South Horseshoe Bayou discovery in St. Mary Parish, La., is testing directly into a sales pipeline after reaching 19,000 ft TD and being completed below 17,300 ft, reported interest owner St. Mary Land & Exploration Co., Denver. During production tests, the well flowed at a rate of 20 MMcfd of gas and 200 b/d of condensate through a 19/64-in. choke with flowing tubing pressure exceeding 12,800 psi. St. Mary L&E holds a 25% working interest and about a 40% net revenue interest in the well.

U.S. Bureau of Land Management is asking companies to nominate areas they would like considered for leasing within the National Petroleum Reserve-Alaska. The Interior Department will consider leasing part of a 4.6-million acre area, prompted by discoveries outside NPR-A's northeastern corner.

U.S. Minerals Management Service identified 363 Beaufort Sea blocks covering 1.7 million acres, which it may include in Sale 170 in 1998. MMS said five companies indicated interest. Six previous sales in the region resulted in 28 wildcats but no commercial production.

Drilling-production

MMS rescheduled two previously delayed public meetings on a proposed rule setting the royalty value of crude oil produced from federal lands (OGJ, Feb. 24, 1997, p. 44). New dates are Apr. 15 in the Veterans Affairs Building at Lakewood, Colo., and Apr. 17 in MMS' offices at Houston.

Shell U.K. Exploration & Production let contract to Det Norske Veritas Classification AS (DNV), Oslo, for an independent evaluation of 11 short-listed proposals for disposal of the Brent spar loading buoy. Shell recently disclosed details of schemes and has given contractors until Apr. 30 to develop detailed plans and submit bids (OGJ, Jan. 20, 1997, p. 24). DNV will assess technical, safety, environmental, and economic aspects of the proposals.

Belco Oil & Gas Corp., New York, is drilling a 3,000-ft second horizontal lateral downdip in the Belco-operated 22-1 Turner in St. Landry Parish in the Louisiana Austin chalk trend (OGJ, Dec. 23, 1996, p. 21). The first lateral, drilled 2,700 ft in the chalk from a vertical depth of almost 16,700 ft, tested 17 MMcfd of gas and 5,100 b/d of oil through a 48/64-in. choke with 4,100 psi flowing tubing pressure. Belco expects to put the well on production in 45 days.

Amoco Norway Oil Co. issued a letter of intent to ABB Global Engineering AS, Asker, Norway, and Heerema Toensberg AS, Toensberg, Norway, for a compressor module to be installed on the new Valhall wellhead platform. Under a $14 million contract, ABB will design the 550-metric ton module. Heerema will build it at Toensberg yard and install it using one of its crane barges. The compressor is needed to match pressure in the Norpipe line when Valhall gas is rerouted from Ekofisk complex.

Ural Petroleum Corp., New York, acquired a 22.3% interest in Chernogorskoye LLC, an oil production joint venture in western Siberia, from St. Mary Land & Exploration Co. in a deal valued at $22 million. The interest will be held through a 44.6% interest in the Anderman Smith International-Chernogorskoye Partnership. The JV produces 13,000 b/d from Chernogorskoye oil field, with remaining proved reserves of 75 million bbl.

BHP Petroleum Pty. Ltd., Melbourne, received approval from the Australian Indonesian Joint Authority to develop Elang and Kakatua oil fields on Timor Sea Zone of Cooperation Block 91-12. Fields, holding an estimated 15 million bbl of reserves, will be developed with three subsea wells producing into Skua Venture floating production, storage, and offloading ship. BHP will buy the ship when Skua production ends shortly. Elang and Kakatua are due on stream in third quarter 1998. Peak production of 33,000 b/d is anticipated. Development cost is expected to be $94 million (Australian).

Oilsands

Imperial Oil Ltd., Calgary, applied to Alberta Energy and Utilities Board to expand its Cold Lake, Alta., oilsands complex, including constructing the new Mahkeses complex to produce an additional 30,000 b/d of bitumen and a 220-MW cogeneration complex. Additional work will be aimed at enhancing existing bitumen and steam production. Procurement and construction could begin late in 1997. Start-up is set for late in 1999. Development will add 290 million bbl of proved bitumen reserves. Development costs, pegged at $440 million (Canadian), will increase to $520 million by 2006 as work progresses.

Environment

U.S. Trade and Development Agency approved three grants totaling $1.2 million for environmental cleanup and energy projects in Venezuela, which will facilitate U.S. exports of as much as $113 million in goods and services. The grants will help fund a study to recover low-pressure gas vapors from more than 1,000 Maraven SA wells, a study on how to clean up Lake Maracaibo area waste pits, and a hazardous waste management plan for Maraven.

Natural Gas Supply Association intervened to support the U.S. Environmental Protection Agency's nitrogen oxide control program rule, issued Dec. 19, 1996, which affirms the use of natural gas reburn as a predominant technology for controlling nitrogen oxide from coal-burning cyclone and wet-bottom, wall-fired boilers. A number of utilities have sued challenging the rule.

Refining

Mobil Oil Australia Ltd., Melbourne, resumed construction of its $250 million (Australian) Altona refinery fluid cat cracker after settling a dispute involving alleged cost overruns. The project was originally due on stream early in 1997. New contractors were retained after Toyo Engineering, principal engineering contractor, terminated its contract with John Holland Construction, general contractor. Subsequently, unions sought reemployment of 400 workers previously employed by Holland. Under the settlement, new contractors Stork Wescon Australia, CBI Construction, and Siemens agreed to employ about 70 of their own employees and then hire from a laid-off worker pool.

Reliance Petroleum Ltd., Bombay, let a $60 million contract to Linde AG, Wiesbaden, Germany, to build a new 235 MMcfd hydrogen plant, largest of its kind in India, which will supply hydrogen for a new grassroots refinery at Jamnagar in Gujarat state. The unit is to be on stream by yearend 1998. Linde will perform detail engineering, procurement, construction assistance, commissioning services, and training. The plant, using Linde technology, will process a wide range of feedstocks, including natural gas, refinery offgas, LPG, and naphtha.

Lubes

Deutsche Shell AG let a $6 million contract to Fluor Daniel Ltd., Camberley, U.K., for upgrading its Grasbrook lube oil blending plant at Hamburg. Fluor will be responsible for detailed engineering, procurement, and production management. Shell's $26 million plant revamp is part of rationalization of European lubricants operations.

Star Enterprise, a joint venture of units of Texaco Inc. and Saudi Aramco, selected Chevron Research & Technology Co. to provide technology and catalyst for Star's new 15,000 b/cd lubricating base oil complex at its Port Arthur, Tex., refinery. The unit will use a combination of Chevron and Star technologies (OGJ, Dec. 30, 1996, p. 34). It will allow the shutdown of Star's existing solvent dewaxing capacity.

Pipelines

Chevron Corp. signed a letter of intent with Ghana National Petroleum Corp. (GNPC) to supply Nigerian gas to Ghana via Benin and Togo, aimed at demonstrating commerciality of the proposed West African Gas Pipeline Project (WAGP), the first major regional project utilizing Nigeria's associated natural gas. Chevron and GNPC will submit a proposal to supply gas to the Volta River authority's Takoradi thermal power plant project. Chevron said successful WAGP implementation would lead to development of a regional gas grid and reduce Escravos gas project flaring.

TransColorado Gas Transmission Co., Lakewood, Colo., in a project to link northern San Juan, Piceance, Green River, Uinta, and Paradox basin output with a New Mexico hub, started deliveries in the La Maquina lateral and established a connection to the Manzanares gathering system at La Maquina plant outlet, north of the San Juan basin hub at Blanco, N.M. (OGJ, Oct. 2, 1995, p. 32). The project involves laying 295 miles of 300 MMcfd capacity pipeline to northwestern Colorado. TransColorado is a joint venture of units of El Paso Energy Corp., Houston; KN Energy Inc., Lakewood; and Questar Corp., Salt Lake City.

TransCanada Pipelines Ltd., Calgary, in a planned system expansion, issued precedent agreements for about 1.4 bcfd of new capacity to its Canadian Mainline system in 1998-99, stemming from its summer 1996 Nexus project open season and capacity addition requests of more than 2 bcfd. TransCanada plans to build 475 MMcfd of new pipeline and infrastructure capacity for November 1998 start-up at a cost of about $1.19 billion (Canadian); balance of new capacity will come in service throughout 1999.

Alberta Pipeline Project (APP), Calgary, in response to interest by area producers and shippers, may extend its proposed 404-mile Alberta pipeline to the Kaybob region near Fox Creek, 300 km northwest of Edmonton. APP is a joint venture of ATCO Gas Pipelines, Shell Canada Ltd., and Amoco Canada Petroleum Co. Ltd., all of Calgary. Possible extension would add about 350 km of pipeline to the planned 1.1-1.4 bcfd system (OGJ, Dec. 30, 1996, Newsletter).

Norway's Den norske stats oljeselskap AS (Statoil) will install a T-piece in its Europipe II gas pipeline to accommodate a spur connection to move gas to Denmark. Europipe II will run from Kaarsto, Norway, to Emden, Germany. Deliveries are expected in 1999. Statoil said a planned 120-km, 28-in. spur will carry gas to a receiving station at Nybro, on the west Jutland coast. Norway's Gas Negotiating Committee is talking with Dansk Olie & Naturgas AS for sale of as much as 70.6 bcf/year of gas in 1999.

LNG

Mobil Producing Nigeria Ltd. and Nigeria LNG Ltd. let contract to Dredging International NV, Zwijndrecht, Belgium, to improve access to Nigeria's Bonny River. Dredging will enable large gas carriers to load at the complex under construction. Mobil is building an LPG plant, due on stream in 1998, while Nigeria LNG is building a gas liquefaction plant on an adjacent site, due on stream in 1999. The contractor will remove as much as 8 million cu m of material to create a channel 12.5 m deep and 215 m wide.

Petrochemicals

Fina Oil & Chemical Co., Dallas, let an engineering and procurement contract to Jacobs Engineering Group Inc., Houston, for a ninth, 550-million lb/year polypropylene train at its LaPorte, Tex., complex. Engineering now under way will increase Fina's total polypropylene capacity to 2.15 billion lb/year. The project, when fully implemented, is valued at more than $100 million. Completion is set during second half 1998.