INDUSTRY BRIEFS

Exports-imports

India agreed to store strategic stocks of imported crude oil to protect against price volatility. A proposal pending since October 1995 gained parliamentary acceptance after product prices skyrocketed last year. India plans to store 12.55 million metric tons of crude to guarantee enough stocks to keep the country's oil refineries operating for 45 days.

Gas distribution

Uruguayan state firm Ancap and Pacific Enterprises, Los Angeles, will build a $150-200 million natural gas and LPG distribution system throughout Uruguay, excluding Montevideo. The system is expected to serve as many as 777,000 customers. Ownership in the system will be Pacific Enterprises 55% and Ancap 45%. Pacific Enterprises expects to be joined by Uni?n Fenosa, Madrid, in the development and operation of the new distribution system, slated to come on stream by 2003.

Tasmania
is negotiating a contract with Duke Energy International LLC, a unit of Duke Energy Corp., Charlotte, N.C., for development of a gas distribution network in the state. The system would be linked to gas produced in the Bass Strait. Tasmania hopes the scheme will spur industrial growth. Currently, natural gas is unavailable there.

Energy marketing

NGC Corp., Houston, and Florida Power Corp. (FPC), St. Petersburg, Fla., agreed to form a power marketing alliance that will operate in the U.S. wholesale electric and natural gas markets. The alliance will broaden each company's ability to conduct electric power and related fuel transactions for customers in Florida and the southeast U.S. The alliance will use personnel from each company who will work from NGC's and FPC's trading floors.

Power

Indian Power Projects Ltd. (IPPL) signed a memorandum of understanding with ARCO to study the feasibility of developing a 2,000 MW gas-fired power generation plant and related LNG terminal at Vembar, near Tuticorin in Tamil Nadu, India. Tamil Nadu state officials approved IPPL's application to construct and operate the power plant. Asea Brown Boveri will conduct engineering, procurement, and construction of the project. ARCO will supply natural gas to the plant.

Exploration

Montenegro's state oil firm Jugopetrol Kotor signed a production sharing agreement (PSA) with Medusa Oil & Gas Ltd., a unit of Ramco Energy plc, Aberdeen, for a 1,548 sq mile block that includes the southern half of offshore Montenegro. Ten percent of the block is onshore. The firms established a joint venture, based in Kotor, to explore the block; it will be owned 51% by Medusa and 49% by Jugopetrol. Medusa will reprocess existing seismic data in the first year of the PSA and shoot seismic or drill an exploratory well in the second year.

Bell Geospace Inc.,
Houston, began a 3D full tensor gradient system data survey and interpretation study of a 12-block area in Mahogany field in the Ship Shoal area off Louisiana. Phillips Petroleum Co., Anadarko Corp., and a third unnamed party hired Bell Geospace to perform the study.

Drilling-production

Amerada Hess Corp. reported that the tower section of the production facility being installed in Baldpate field on Garden Banks Block 260 in the Gulf of Mexico experienced problems following the launch sequence. The tower section prematurely submerged in an upright position below the water line. Efforts to correct the situation were under way at presstime. The effect on the project schedule is unknown. Amerada Hess is operator of Baldpate, with a 50% working interest; the remaining 50% is held by Oryx Energy Co., Dallas.

Seagull Energy Corp.,
Houston, said two delineation wells confirmed discovery of a "new oil province" on the East Beni Suef concession in Egypt's western desert. East Beni Suef 5-X was 30 ft structurally high to its initial discovery well and cut 256 ft of net pay sands in Kharita, lower Bahariya, upper Bahariya, and Abu Roash. On test, the Kharita and lower Bahariya flowed a combined 9,200 b/d of 42° gravity oil. Operator Seagull and 50-50 partner Apache Corp. plan two seismic programs covering 885 km in the area.

Petroleos de Venezuela SA
transferred operations of Venezuela's LL-652 oil field on Lake Maracaibo to a consortium led by Chevron Overseas Petroleum Inc. (OGJ, June 16, 1997, p. 27). The consortium plans to invest $2 billion to tap reserves of more than 500 million bbl over the life of the 20-year operating services agreement. The field has produced 198 million bbl of 36° gravity crude since 1953. Operator Chevron and partners Statoil 30%, ARCO 20%, and Phillips Petroleum Co. 20% plan to produce as much as 115,000 b/d during the next 10 years.

A consortium led by Total
reported first oil from an extended-reach well from Tierra del Fuego to the offshore Ara West field 10 km off Argentina on its Cuenca Marina Austral acreage. On test, the well flowed 17,300 b/d of oil and reached 6,638 m TD and 1,795 m TVD. Total is operator; other interest holders are Deminex Argentina SA and Pan American Energy.

Republic of Ingushetia
formed a joint venture company, South Petroleum LLC, with Pacific Petroleum LLC, Santa Barbara, Calif., and Russian firm ZAO Ruspetroleum LLC. South Petroleum will operate and increase production in the country's two major oil fields, Karabulak-Achaluc and Alkhanchurt. Pacific will spend $8 million to increase production to 5,000 b/d from 1,100 b/d in Karabulak-Achaluc in the first year and restart production at Alkhanchurt, which was shut in during the conflict over Chechnya's attempted secession from Russia. Pacific Petroleum holds a 55% interest in the new concern, ZAO a 30% share, and Ingushetia 15%.

Total
and partner Amoco Corp. reported that a delineation well on the Jusepin permit in Venezuela on test flowed 7,600 b/d of oil. Operator Total said the Jusepin permit in eastern Venezuela came on stream in April 1997 with an initial flow rate of 10,000 b/d. The well will be hooked up to processing facilities in early July, increasing Jusepin output to more than 30,000 b/d.

Gas processing

Amoco Corp. started up its Hugoton Jayhawk gas processing plant at Ulysses, Kan. The plant will process 450 MMcfd and recover 33,000 b/d of natural gas liquids; propane fractionation capacity is 3,000 b/d. Hugoton Jayhawk currently processes 400 MMcfd, of which 280 MMcfd is supplied by Amoco-operated wells. The plant has a nitrogen rejection system to reduce nitrogen levels to 3% from the naturally occurring 15%. Helium recovery is 700 MMcf/year.

NGL

Woodside Offshore Petroleum, a unit of Woodside Petroleum Ltd., Perth, let a $650 million (Australian) contract to expand liquids production capacity at the North West Shelf gas treatment plant near Karratha on Western Australia's Burrup Peninsula (OGJ, May 26, 1997, p. 29). Woodside awarded the Phase 1 front-end engineering contract to a joint venture of: M.W. Kellogg Co., Houston; JGC Corp., Tokyo; and Kaiser Engineers Pty. Ltd. and Clough Engineering Ltd., both of Perth. The project is scheduled for completion late in 2000.

Petrochemicals

Al-Jubail Petrochemical Co., a 50-50 joint venture of Exxon Chemical Arabia Inc. and Saudi Basic Industries Corp., let contracts to build a $1 billion, 200,000 metric ton/year grassroots steam cracker, debottleneck a linear low-density polyethylene (Lldpe) plant, and construct a low-density polyethylene plant at its complex at Al-Jubail, Saudi Arabia. Lummus Alireza Ltd. Co. and ABB Lummus Global BV will build the cracker. Tecnimont Arabia Ltd. and Tecnimont SpA will construct the Lldpe plant. Parsons International and Saudi Arabian Parsons Ltd. will manage the overall expansion and perform the Lldpe plant debottlenecking. Lldpe capacity will increase by 40% to 850,000 tons/year. Work will begin in fourth quarter 1998, with completion set late in 2000.

Saudi-European Petrochemical Co.
(Ibn Zahr) obtained $400 million in loans to finance expansion of its Al-Jubail polypropylene plant. The expansion will double capacity to 640,000 metric tons/year by 2000. Ibn Zahr consists of Saudi Basic Industries Corp. 70%, Neste Oy of Finland, Ecofuel SpA of Italy, and Arab Petroleum Investment Corp.

Refining

Nigerian National Petroleum Corp. said the Nigerian government has released $215 million for the turnaround maintenance of its 110,000 b/d Kaduna crude oil refinery (OGJ, May 18, 1998, p. 44).

Foreland Corp.,
Lakewood, Colo., will acquire the Nevada refining and related transportation assets of Petro Source Corp., Houston, for $5 million in cash, 100,000 common shares of Foreland, and $1 million for Petro Source's current inventory. The acquisition will close on or before June 15. The refineries are in Railroad Valley and Tonopah, Nev., and have combined capacity of 12,000 b/d of oil; current throughput is 2,400 b/d.

Oilsands

U.S. and Canadian courts approved the sale of Albuquerque, N.M.-based Solv-Ex Corp.'s oilsands leases and assets to Koch Exploration Canada Ltd. and United-Tri Star Resources Ltd., both of Calgary. Koch will pay $30 million (Canadian) for 78% of two Solv-Ex leases covering 55,874 acres near Fort McMurray, Alta. United-TriStar of Toronto will pay $5.8 million cash and 5 million shares for the balance. Solv-Ex experienced technical and financial problems developing its leases and sought court protection from creditors in Canada and the U.S. Koch will drill in the fall to evaluate lease prospects and is expected to bring in partners with mining experience in bitumen recovery.

Pipelines

Texaco Inc. and NGC Corp. will form a joint venture to combine certain pipeline assets to create a 290-mile, bidirectional NGL pipeline from Sorrento, La., to Mont Belvieu, Tex. The line will be operational in the fourth quarter. Texaco will contribute 180 miles of a 50,000 b/d NGL pipeline between Sorrento and Lake Charles, La. NGC will contribute 110 miles of a 65,000 b/d NGL pipeline between Lake Charles and Mont Belvieu. This system will connect to third-party NGL storage at Sorrento, Anse La Butte, and Hackberry, La. The pipeline also will connect to fractionation plants at Erath, La., Lake Charles, and Mont Belvieu.

Columbia Gulf Transmission Co.,
Houston, a unit of Columbia Energy Group, announced a reverse open season for capacity turnback on the company's 2,400-mile main line system, which extends from Rayne, La., to Leach, Ky. The 2-week reverse season began May 18 and ends June 1. The minimum contract for capacity turnback will be for the term Nov. 1, 1999-Mar. 31, 2004.

Iroquois Gas Transmission System LP,
Shelton, Conn., announced an open season May 14 for 150 million dekatherms/day of potential long-haul, firm transportation for delivery into the New York City area by November 2000. All bids are due June 12. A minimum 10-year service term is required. Construction of a compressor station will begin this month if enough bids are received to justify the expansion.

Terminals

Petroleo Brasileiro SA began operating a petroleum terminal in the Amazon region, at Travessia on the Solimoes River. Petrobras installed storage facilities for oil and LPG, as well as docks for ships and barges. The terminal will serve as a transfer point to send production to the Manaus refinery. Crude oil from the Urucu area will be transported through a 275-km pipeline. Production in the province has reached 33,000 b/d of oil and 38.5 MMcfd of gas, along with 130 tons/day of LPG (OGJ, Aug. 7, 1995, p. 46).

Futures

Tokyo Commodity Exchange said an easing of legal requirements will allow the exchange to list kerosine and gasoline futures on a trial basis starting in July. The decision was in response to oil industry requests to list kerosine futures as a means of hedging against erratic price movements and to boost the exchange's commodities coverage to include energy resources. The exchange will spend about ¥400 million on the project to develop trading software to track kerosine and gasoline futures.

Companies

Occidental Petroleum Corp. reported that 13 of 87 passengers survived a plane crash in Peru's Amazon jungle. Six Oxy employees were among the fatalities. The plane was transporting Oxy employees and contract workers from Iquitos, Peru, to Andoas, an oil camp in a remote jungle near the Ecuadorian border (OGJ, May 11, 1998, Newsletter). Only one member of Peruvian drilling contractor Petrex's 26-person crew survived. The cause of the crash is still under investigation.

Panaco Inc.,
Kansas City, Mo., will acquire BP Exploration's 100% working interest on East Breaks Blocks 165 and 209 and a 75% working interest in High Island Block 587 off Texas for $19.5 million in cash. Production from the properties is 2,600 b/d of oil and 2,500 MMcfd of gas. Included with the properties are 3D seismic data that cover several adjacent blocks. Panaco will become operator of all three blocks effective June 1.

Russian oil companies
Yukos and Sibneft postponed their planned merger to yearend from July 1, said Yukos Chairman Mikhail Khodorkovsky in Zurich last week. Several stumbling blocks to the merger remain.