INDUSTRY BRIEFS

March 8, 1999
Boral Ltd.,

Coalbed methane

Boral Ltd., Sydney, signed a 20-year, $265 million (Australian) contract with BP Australia to supply coalbed methane for BP's Bulwer Island refinery at Brisbane. The gas will be reformed to produce synthesis gas, the hydrogen component of which will be fed to a hydrocracker being built at the refinery-the first such unit in Australia. The syngas also will be used as fuel for a $75 million cogeneration plant being built as part of the refinery's $400 million clean fuels project. BP intends to reduce the sulfur content of the refinery's diesel output to 50 ppm vs. the current Australian limit of 5,000 ppm.

Companies

Stockholders of Kerr-McGee Corp., Oklahoma City, and Oryx Energy Co., Dallas, approved the $1.83 billion purchase of Oryx by Kerr-McGee (OGJ, Oct. 26, 1998, p. 38). The merger, which will create the fourth largest U.S. independent oil and gas exploration and production company, will result in the loss of about 530 jobs.

Oneok Inc.,
Tulsa, plans to acquire the Oklahoma midstream natural gas gathering and processing assets of Koch Midstream Enterprises Inc., Wichita, for $285 million. The deal includes eight natural gas processing plants and about 3,250 miles of gathering pipeline, which connect 1,460 gas wells. The plants have a total capacity of 515 MMcfd.

Finland's Fortum Corp.
changed the names of its units Neste Oy and Imatran Voima to Fortum Oil & Gas Oy and Fortum Power & Heat Oy, respectively.

Seitel Inc.
unit Olympic Seismic Ltd., Calgary, acquired Amoco Canada Petroleum Ltd.'s seismic database for an undisclosed sum. Seitel also purchased Amoco Canada's lease to its 35,000 sq ft dedicated data storage facility at Calgary. Seitel says the purchase makes it the owner of the largest seismic data library in North America.

An investment group
led by New York merchant bank Castle Harlan acquired Verdugt BV Group, BP Amoco plc's acid-salt group of companies, based in Tiel, the Netherlands, for an undisclosed price. Verdugt's organic salts are used in the food, chemical, pharmaceutical, and agricultural industries. The sale is part of BP Amoco's divestitures aimed at focusing its chemicals business on petroleum-derived products.

Shell U.K. Exploration & Production,
the operating joint venture of Shell U.K. Ltd. and Esso Exploration & Production U.K. Ltd., acquired a 22.2222% interest in the northern part of U.K. North Sea Block 49/30a from Amoco U.K. Petroleum Ltd. Amoco operated the partial block, but interest holder BG plc has taken over the role.

Chevron Corp.
executed a new joint operating agreement with Pogo Producing Co. and Palang Sophon Ltd. for Block B8/32 in the Gulf of Thailand. Under the agreement's terms, once Chevron's acquisition of Rutherford-Moran Oil Corp. (RMOC) closes, Chevron will gain operatorship of the block from Pogo Producing Co., plus RMOC's 46.34% interest in the block. Chevron also will acquire Palang Sophon's 5.32% interest in the block at that time. Closure of the merger of Chevron and RMOC was contingent on execution of the new operating agreement (OGJ, Jan. 4, 1999, p. 30).

NGL

Texaco Inc. signed a long-term agreement to supply propane, ethane, and natural gasoline to Union Carbide Corp.'s Taft, La., ethylene plant. The supply agreement supports a planned increase in the plant's capacity. Texaco will lay a $16.6 million, 29-mile pipeline between Baton Rouge and New Orleans to transport propane to the plant. The pipeline is expected to come on line in first quarter 2000. Union Carbide will receive ethane and natural gasoline from Texaco through the Texaco expanded NGL distribution system (Tends), a 500-mile system servicing southern Louisiana.

Exploration

Santa Fe Energy Resources (Thailand) signed a petroleum concession agreement with the Thailand Ministry of Industry for Block B7/38 in the Gulf of Thailand. The 2.3 million acre block is 200 miles south-southwest of Bangkok. Santa Fe committed to an initial 3-year, $9 million minimum work program that includes performing a 3D seismic survey and drilling one well.

Joint venture partners
Cairn Energy plc, Edinburgh, and Shell Bangladesh Exploration & Development BV were selected by Bangladesh Oil, Gas, & Mineral Corp. (Petrobangla) for the award of a license for Block 10 in Bangladesh. The partners were earlier awarded Block 5. Cairn and Shell have begun negotiations with Petrobangla over production-sharing contract conditions for the two licenses.

Agip Angola Exploration BV
signed a production-sharing agreement on Block 25 in deep water off Angola, 390 km south of Luanda. Interest holders are operator Agip 40%; Esso Exploration & Production (Block 25) Ltd. 35%; and Sonangol P&P SARL, a unit of state firm Sonangol, 25%.

Geothermal

Caithness Energy LLC, New York, closed the purchase of Omaha-based CalEnergy Co. Inc.'s interest in the Coso geothermal power projects for an aggregate $277 million (OGJ, Feb. 15, 1999, p. 36).

Power

El Paso Energy Corp., Houston, acquired a 50% interest in CalEnergy unit CE Generation LLC for a combination of cash, equity, and debt totaling $259.6 million. CE Generation owns 12 U.S. power generating plants and two others under construction at Salton Sea lake in California. The 14 power plants include 10 geothermal projects near the Imperial Valley in southern California and 4 natural gas-fired cogeneration plants in New York, Pennsylvania, Texas, and Arizona. The 14 units have a combined generating capacity of 896 MW.

Hungarian utility MVM
let contract to Arlington, Va.-based AES Corp. unit AES Phoenix to build, own, and operate a 190 MW gas-fired, combined-cycle power plant at Tiszaujvaros, Hungary. MVM will buy power from the Phoenix plant under a 15-20 year power purchase agreement, yet to be signed. The Phoenix plant, which will obtain its fuel from either Hungarian oil and gas firm MOL Rt. or Russia's Gazprom, is expected to be operational in 2004.

Terminals

GATX Terminals Corp., Chicago, signed an agreement with Mieco Inc., a U.S. unit of Japan's Marubeni Corp., to form a limited partnership that will acquire Mieco's distillate blending and distribution business. The combine, to be named GATX Product Services LP and based in Houston, should be operational by the end of this month.

Seaway Pipeline Co.,
a general partnership of ARCO and Phillips Petroleum Co. units, approved the construction of two crude oil storage tanks at its Jones Creek tank farm near Texas City, Tex. The new tanks will expand Seaway's Jones Creek shell tank storage capacity by 62% to 2.6 million bbl and increase capacity of its crude oil pipeline system by more than 13% to about 250,000 b/d. The added capacity will be available in January 2000.

Environment

U.S. Environmental Protection Agency is requiring Motiva Enterprises LLC to remove petroleum contaminants from groundwater at its Pickett Road terminal in Fairfax, Va. The long-term, $15 million cleanup plan involves the continued operation of a pump-and-treat system, the drilling of wells to flush the groundwater, and the use of vacuum-enhanced recovery in non-residential areas. Motiva is cleaning an underground plume of 100,000-200,000 gal of petroleum products found in 1990 beneath the terminal, formerly known as Star terminal. EPA wants the groundwater restored to drinking water standards.

Drilling-production

Enron Oil & Gas China Ltd. drilled a natural gas well in Bajiaochang field on Chauanzhong block, in China's Sichuan province, about 1,000 miles southwest of Beijing. Jiao 58-E, drilled to about 10,000 ft, cut 120 ft of net gas pay in the Xiang Xi 4 formation. The zone was hydraulically fractured with 537,600 lb of high-strength proppant and produced at rates as high as 10 MMcfd, following post-frac cleanup. Enron plans to test the well for long-term production this spring.

The first development phase
of Elf Aquitaine's deepwater Girassol field off Angola may be delayed slightly. In an effort to cut costs, the 50-50 Bouygues Offshore-ETPM joint venture, Mar Profundo Girassol, is changing its plans for the Girassol floating production, storage, and offloading vessel, which it is supplying to Elf under a $700 million turnkey contract. Mar Profundo will issue an international call for bids for installation of the deck onto the steel hull, which is being built by Hyundai Heavy Industries Ltd. in South Korea (OGJ, July 20, 1998, p. 42). Mar Profundo says it is considering installing the deck at a site other than Fos-sur-Mer, France, as originally planned.

Apache Corp.,
Houston, acquired a farmout spanning three Polish Oil & Gas Co. (POGC) concessions comprising about 200,000 acres near Krakow. Operator Apache and partners FX Energy Inc., Salt Lake City, and POGC plan to begin production on the Lachowice concession from existing POGC wells within the next few months. The partners also have the option to take part in the development of adjoining POGC concessions, Zywiec-Wadowice and Stryszawa-Lanckorona. The companies will each earn one-third interests in the concessions' production and reserves once facilities are completed.

Lasmo Oil Pakistan Ltd.,
a unit of Lasmo plc, London, let contract to the AMEC Process & Energy unit of London-based AMEC plc for the front-end engineering design of the Bhit gas project in Pakistan. Bhit is postulated to hold 0.6-1.9 tcf of gas and lies 170 km northeast of Karachi. AMEC will evaluate supplying treated gas to the existing Sui Southern gas pipeline transmission system, which carries gas from central Pakistan to Karachi, through an envisioned 275 MMcfd line. Development is expected to include a gas processing plant to remove water and CO2 and recover nitrogen.

Petrochemicals

Amoco Canada is proceeding with construction of a linear alpha olefins (LAO) plant at Joffre, Alta., after delaying groundbreaking late last year (OGJ, Sept. 28, 1998, p. 44). Amoco Canada Chemical Co. let contract to Kellogg Brown & Root, Houston, for engineering, procurement, and construction of the Prairie Rose plant. The plant, slated for start-up in 2001, will be Canada's only producer of LAOs and will sell up to 50% of its production to Alberta-based polyethylene makers. It will have a capacity of 550 million lb/year.

Montell Polyolefins Co. NV
and India's Machino Plastics Ltd. formed a 50-50 joint venture to develop, produce, and market polyolefins based on advanced materials for customers in India. Machino-Montell-India Ltd. (MMI) will produce polypropylene-based compounds, materials based on polymers made with Montell's Catalloy process, and materials based on Montell's high-melt-strength polypropylene resins. MMI intends to expand its production capacity this year and to improve its competitiveness by incorporating Montell operating practices. The company will sell products to India's booming automotive, appliance, industrial, and consumer markets.

Refining

Tosco Corp., Stamford, Conn., will idle its Avon refinery at San Francisco for an estimated 30 days while it performs a safety review of the plant. The decision follows a fatal fire in the crude distillation unit on Feb. 23, which killed three workers. Tosco has not estimated the impact of the plant's shutdown on its first and second quarter results. The Avon refinery represents about 15% of Tosco's refining capacity.

Pak-Arab Refinery Co. Ltd.,
a joint venture of the Pakistan and Abu Dhabi governments, will commission an $886 million refinery at Mahmood Kot, near Multan City, Punjab province, by September 2000. The 100,000 b/d refinery will bring Pakistan's total distillation capacity to 228,000 b/d.

Marketing

Caltex Australia Ltd. will launch a new brand image for its service stations, convenience stores, and supermarkets in Australia during 1999. The company has secured the rights from Caltex Corp. to use the international Caltex logo; the makeover will cost $15 million (Australian). The change involves the continuing expansion of the company's retail initiatives, including renaming its existing stores Star Mart, and expanding its convenience store network to 150 from 110 during 1999 and to about 200 stores by 2002. Caltex will retain the Ampol brand in areas where it has a particularly strong recognition factor and customer loyalty.

Pipelines

Trans Quebec & Maritimes Pipeline, Calgary, completed its 132.2-mile, 24-in., $270 million (Canadian) gas pipeline from Lachanaie, Que., to Pittsburg, N.H. (OGJ, Aug. 25, 1997, p. 29).

Kinder Morgan Energy Partners LP,
Houston, plans to undertake an $18 million expansion of its San Diego products pipeline system. The expansion will involve laying 23 miles of 16-in. pipeline and installing associated facilities. Approval for the project-which will increase Kinder Morgan's capacity by 25% to 144,000 b/d of gasoline, diesel, and jet fuel-is expected in fall of 1999.

Safety

EPA is requiring chemical plants keeping hazardous chemicals on site to submit risk-management plans by June 21. Plans must include an evaluation of the potential chemical hazards, detailed prevention procedures, and an emergency response procedure.

Copyright 1999 Oil & Gas Journal. All Rights Reserved.