INDUSTRY BRIEFS

Correction

Philippe Trépant was incorrectly identified as a refinery official with Elf Aquitaine (OGJ, May 25, 1998, p. 25). Trépant is President of Union Française des Industries Pétroliéres, a French oil trade group. He formerly was employed by Elf.

Pipelines

Northern Border Pipeline Co., Omaha, will apply in the fall to the Federal Energy Regulatory Commission for approval of its $165 million Northern Border Project 2000. Pipeline capacity would be increased by 58 MMcfd from Monchy, Sask., to Ventura, Iowa; 195 MMcfd in Iowa-Illinois; and 545 MMcfd to North Hayden, Ind., which would connect with Northern Indiana Public Service Co.'s (Nipsco) system. The company estimates a Nov. 1, 2000, in-service date. The project would provide Canadian natural gas to U.S. markets and afford shippers on the Northern Border system access to northern Indiana's industrial zone, including Nipsco, which has a load requirement of more than 300 bcf/year.

Petrochemicals

Eastern Petrochemical Co., a 50-50 joint venture of Saudi Basic Industries Corp. and Saudi Petrochemical Development Co., a Japanese concern led by Mitsubishi Corp., let turnkey contracts to Mitsubishi Heavy Industries Ltd. of Japan to upgrade two linear low density polyethylene (Lldpe) plants. Combined capacity of the two Lldpe plants will increase by 300,000 metric tons/year. Scheduled for completion in June 2000, the debottlenecking will also help increase production of polyethylene products including some grades of alpha olefins and high density polyethylene.

Refining

Petroleos Mexicanos-Refinación let contract to M.W. Kellogg Technology Co., Houston, a unit of Dresser Industries Inc., for the basic design and license of three grassroots fluid catalytic cracking units. Of the three proposed crackers in Mexico, one will be in Salina Cruz, with a capacity of 28,000 b/sd; another in Tula, with a capacity of 25,500 b/sd; and a third in Minatitlan with a capacity of 42,000 b/sd.

Petrovietnam,
Viet Nam's state owned oil company, will form a joint venture with Zarubezhneft, Russia's oil exporting firm, to construct and operate the $1.3 billion Dung Quat refinery in central Viet Nam. The 130,000 b/d capacity plant is scheduled for start-up in 2001 and will be the country's first oil refinery. France's Total withdrew from the project in January (OGJ, Jan. 12, 1998, p. 31).

Groundbreaking commenced
for construction of Sudan's second crude oil refinery at El-Gily, 100 km north of Khartoum. The $600 million refinery will have capacity of 50,000 b/d. Construction of a 1,610-km pipeline is also set to begin. The pipeline will have a 150,000 b/d capacity to transport crude from Heglig fields in southern Sudan to the Port of Sudan.

Neste Oy
will double production to 38,000 b/d of premium diesel at its Porvoo, Finland, refinery to meet increased export demand in northwest Europe. The company will spend 170 million markka to modify existing refining units. The additional capacity should be on stream late in 1999.

State of Alaska
approved supplying an additional 28,000 b/d of royalty oil to Mapco Alaska Petroleum Inc., Anchorage, for processing at its North Pole refinery. This brings Mapco's total royalty oil supply to 63,000 b/d. The oil will come from Alaska's 12.5% royalty share of oil production from Prudhoe Bay field. Mapco will pay the state "the going rate for oil" plus 15¢/bbl, similar to other recent royalty contracts.

Exploration

State Oil Co. of the Azerbaijan Republic (Socar) awarded a 25-year production-sharing-agreement (PSA) on the 550 sq km offshore area of Araz-Kurdashi-Shirvan Deniz in the Caspian Sea to Italy's Agip SpA 25%, Japan's Mitsui & Co. Ltd. 15%, and Turkish state oil company TPAO 5%. Socar 50% said the PSA has a 3-year exploration phase with an option for a 2-year extension. Agip is operator of the area. An additional 5% interest remains unassigned.

U.S. Minerals Management Service
extended by 30 days its evaluation of bids received in Central Gulf of Mexico Lease Sale 169 (OGJ, Mar. 23, 1998, p. 32). MMS said it needed until July 15 "due to the unusually high number of bids."

Angolan state oil firm
Sonangol awarded operatorship of deepwater Block 25 to Agip Angola Ltd. The block covers 4,852 sq km in water depths of 700-2,200 m and is 390 km south of Luanda. Block interest holders are Agip 40%, Esso Exploration & Production (Block 25) Ltd. 35%, and Sonangol 25%.

Drilling-production

TransTexas Gas Corp. reported its State Tract 352 No. 1 well in Galveston Bay flowed on test 53.9 MMcfd of natural gas and 6,264 b/d of crude and condensate. TransTexas said the well also confirmed the extension of the Eagle Bay gas field into the second fault block, and it readied a third well to commence production. The well cut total net pay of 124 ft in four zones at 15,200-16,260 ft. The well also cut 84 ft of net pay in the same sand that produced in State Tract 331 No. 1 and 331 No. 3 wells. The test of the latest well expands the primary Vicksburg pay sand and increased TransTexas' current net proved reserves in Eagle Bay to 251.5 bcfe.

Tatarstan,
an autonomous Russian republic, is planning to expand oil production to 30 million tons/year from its current 25 million ton/year level. Oil companies launched in the last 12 months, instead of the republic's oil holding company Tatneft, will account for the planned increment. The 18 companies involved will develop 40 oil deposits discovered in the 1960s. The project involves the Yelginskoye oil deposit operated by Tatnefteotdacha, one of the new companies. According to Tatnefteotdacha, the 18 companies will introduce improved and enhanced recovery methods to boost production to 6,900 b/d by 2001 from 1,960 b/d this year.

Socar
awarded a production sharing agreement (PSA) for Azerbaijan's Southwest Qobustan area, about 50 miles from Baku, to Union Texas Qobustan Ltd., a unit of Union Texas Petroleum Holdings Inc., Houston, and Commonwealth Oil & Gas Co. Ltd., a unit of A&B Geoscience Corp., Vancouver, B.C. The PSA involves three blocks covering 143,000 acres. Operator Union Texas 40% and Commonwealth Oil 40% will implement well workovers and a development drilling program with first production to begin late in 1999. The PSA includes a minimum 3-year work program that requires drilling seven wells and rehabilitating seven existing wells, at an estimated cost of about $20 million.

China Offshore Oil Bohai Corp.
(Coobc) reported that caissons are being sunk to support offshore oil wells in the Jinzhou 9-3 oil field in China's Bohai Bay. The field is scheduled to begin producing in 1999. Conventional construction methods would have proved too costly, according to Coobc. Following 8 years of studies, Coobc chose 13.8-m tall and 38 m diameter caissons for efficiency and safety (OGJ, July, 14, 1997, p. 65). The facilities are designed for 27 oil wells, 26 water injection wells, and 1 natural gas well.

Coobc
will jointly develop two large oil fields in the central part of China's Bohai Bay in a bid to boost the region's crude production capacity by 80,000 b/d. Production from the two fields, Qinhuangdao 32-6 and Nanbao 35-2, will be piped inland through the Port of Jingtang in Tangshan city in north China. Eleven wells have been drilled in Qinhuangdao 32-6 field. The distance between the two fields is 20 km, making it feasible to jointly develop a 70-sq km oil-bearing area in central Bohai Bay. Construction includes seven conventional platforms, two pipelines, and marine terminals. Both oil fields will begin producing in 2004.

Amoco Corp.
found significant new natural gas reserves in Judge Digby field in the Tuscaloosa trend, northwest of Baton Rouge. The discovery well, Parlange No. 8, is producing 25 MMcfd of natural gas from a depth of 22,000 ft. Amoco's success on all five wells it drilled at Judge Digby, including four discoveries and one extension, has increased production in the field to 87 MMcfd of gas and 450 b/d of condensate. Current reserve estimates are more than 400 bcf of gas. The company said it has spent about $78 million for 3D seismic and drilling five wells in the field. Amoco is operator with an 85% interest in the field.

Petroleos de Venezuela SA
(Pdvsa) let a contract worth about $800 million to a consortium led by Wood Group Engineering Ltd., Aberdeen, for a 16-year waterflood project on Lake Maracaibo, Venezuela. The consortium will construct, operate, and maintain five new water injection platforms and associated pipelines. The work includes operating fifteen existing platforms and related onshore treatment facilities. Construction of a new platform will begin by the fourth quarter. Pdvsa also has an option with the consortium for five additional platforms. Other group members are: Camco International Inc., Houston; Constructora Camsa CA, an operating unit of Willbros Group Inc., Tulsa; and Venezolana de Proyectos Integrados, Caracas.

Amoco Egypt Oil Co.
disclosed that its South Gharib SG310-4 well in the Gulf of Suez is an oil discovery and potentially the largest Amoco has made in the gulf since 1989. The well cut 250 ft of net pay in two zones in Miocene upper Rudeis and is flowing about 18,800 b/d of oil from the shallower of two zones. Amoco estimates reserves for the new find at 25 million bbl. The well was drilled from an existing platform in July field and is producing. A second well, SG 310-5, is drilling ahead, and one or two additional wells are anticipated to develop the field. The discovery is on the South Gharib concession, 1.8 km west of Amoco's giant July field, and can be developed from existing infrastructure.

Exports-imports

Ruhrgas AG awarded gas supply contracts to Russia's Gazprom through 2020. The contracts are an extension of several existing contracts with Gazprom and ensures the Russian gas giant will supply 13 billion cu m/year of gas to Ruhrgas's system in Germany beginning in 2008. Ruhrgas will transport Gazprom's gas to other western European countries.

Myanma Oil & Gas Enterprise
(MOGE), Myanmar's state oil company, said that the new export target for natural gas produced from Yetagun field for delivery to Thailand in 2000 will be 400 MMcfd, up from 200 MMcfd. Three of eight planned wells in the field off the country's Tanintharyi coast are to be completed this year; the other five are to be drilled in 1999. The field is part of the Yetagun gas project jointly operated under a profit-sharing contract by MOGE, Britain's Premier Petroleum Ltd., Malaysia's Petronas Carigai Snd. Bhd., Japan's Nippon Oil Co., and Thailand's state-owned Petroleum Authority of Thailand.

Companies

Amoco Orient Petroleum Co. is selling its 24.5% working interest in the Liuhua field partnership in the South China Sea off China. Liuhua is Amoco's only upstream oil and gas asset in China. The company's share of Liuhua is being offered for sale as part of a continuing review of its worldwide exploration and production portfolio.

Orica Ltd.,
Melbourne, agreed to a $1 billion (Australian) merger with Kemcor, an Australian petrochemicals joint venture of Mobil Corp. and Exxon Corp. Orica claims the new entity would become the eighth largest polyethylene producer in the Asia-Pacific region with annual sales of $700 million (Australian). The plan includes combining the polyethylene, polypropylene, synthetic rubber, and engineering plastics operations of the two manufacturers. Orica will hold a 47% stake in the venture; Mobil and Exxon each have a 26.5% equity ownership. The combine would be headquartered in Melbourne at Kemcor's Altona site. If the merger wins approval from the Australian Competition and Consumer Commission, operations as a single entity could begin in the fourth quarter.

Lubrizol Corp.,
Cleveland, is acquiring BP Chemicals (Additives) Ltd.'s Adibis lubricant and fuel additives unit for an undisclosed price. With sales of $150 million in 1997, U.K.-based Adibis has a strong market presence in Denmark, Australia, and South Africa. Adibis will bring to Lubrizol complementary patented technology, proprietary lubricant additive components, and a larger market position in fuel additives, which is an area Lubrizol has targeted for growth. Lubrizol will continue to supply Adibis customers. BP Chemicals will supply components and additive packages to Lubrizol from its site at Hull, England, under a 2-year manufacturing agreement. The transaction is expected to close in July.

Italian energy firm
ENI will contract out its information technology (IT) infrastructure to U.S.-based Electronic Data Systems Corp. (EDS). ENI will commit all its data center and personal computer network management to a newly formed Italian company in which EDS will own 80% of the shares. About 300 employees from Enidata, ENI's IT company, will become employees of the new company to handle these activities. A contract will be finalized in the coming months and begin outsourcing operations will begin early in 1999.

ARCO
plans to cut its 82.2% ownership in ARCO Chemical Co. to 50%. ARCO owns about 80 million of the 97 million outstanding shares of ARCO Chemical. The transaction will result in ARCO eliminating about $1 billion of ARCO Chemical debt from its balance sheets. Assuming a June 2 closing price of $56.31/share, the after-tax proceeds of $1.4 billion from the ARCO Chemical transaction will go to repay short-term borrowings incurred in conjunction with ARCO's $2.6 billion cash tender offer for Union Texas Petroleum (OGJ, May 11, 1998, p. 36). The transaction is expected to close by late July.

PanCanadian Petroleum Ltd.,
Calgary, trimmed its 1998 capital spending by another $90 million (Canadian) to $870 million in response to declining oil prices. The company had planned a $1 billion capital budget, but reduced that to $960 million in May. The company also cut 200 jobs earlier this year. It expects to meet a gas production target of 800 MMcfd this year, but oil production will decline marginally from its forecast of 148,000 b/d. The company plans a total of 1,075 wells this year.