Table of Contents

• DOT stats indicate need to refocus pipeline accident prevention
  Analysis of the most recently available data from the U.S. Department of Transportation (DOT) 1 indicates that, despite emphasis by regulators and operators, the rate at which pipeline accidents occur shows no significant change over the last 16 years. That is the result of an update by EFA Technologies Inc., Sacramento, to its initial study of DOT pipeline-safety statistics (OGJ, July 12, 1993, p. 104).
• Study of X-100 line pipe costs points to potential savings
  A collaborative program is being carried out by BG Technology, Shell Global Solutions, and BP Exploration to assess the potential of high strength, Grade X-100 steel line pipe for reducing the costs of pipelines for gas transportation. The 3-year program includes comprehensive material testing of prototype UOE SAW X-100 line pipe obtained from four manufacturers. Reported here is the accompanying techno-economic assessment showing the commercial advantages of using X-100 line pipe.
• Remote corrosion monitoring addresses pipelines, plant sites
  A flexible transducer system has been fitted to a pipe Fig 1. With ultrasonic techniques and a novel method of transducer arrangement, a newly developed remote corrosion-monitoring system can monitor oil and gas pipelines in remote and hostile environments as well as process plants in hazardous locations.
• Oil firms' share prices plunged during 1998
  Low energy prices, driven by reduced demand due to the Asian financial crisis and mild winter weather in North America, took a toll on energy stock prices worldwide in 1998. And 1999 is expected to be another tough year for the industry. This is the conclusion of John S. Herold Inc., Houston, in its annual oil market performance review. From the end of 1996 to the end of 1998, Herold notes, oil prices plunged by $15/bbl, or 54%, and natural gas has done only slightly better, falling $0.80/
• U.S. reserve values decline as acquisition activity rises
  U.S. reserve values fell in fourth quarter 1998 and for the year as a whole, according to Cornerstone Ventures LP's latest report. For the fourth quarter, based on 41 transactions for which transaction values and reserve quantities were reported, the median reserves value fell to $4.72/boe from a revised value of $5.00/boe for the third quarter. The number of transactions was up also, with a total of 73 deals closing in the fourth quarter vs. 45 in the third, according to the Houston-based
• U.S. oil, gas asset sales hit record in 1998
  Total U.S. oil and gas property sales reached a record $82.1 billion in 1998, according to a review of acquisition and divestment (A&D) transactions by Randall & Dewey Inc., Houston (see chart, top left on p. 25). The yearend total is more than triple the $23.9 billion in property sales calculated for 1997 (OGJ, Apr. 20, 1998, p. 41). The amount also surpasses any previous year's total since Randall & Dewey began tracking such sales transactions beginning in 1989.
• Canadian M&A activity up, financings on the decrease
  Canadian oil and gas merger and acquisition (M&A) activity in 1998 reached a record high value of $24.9 billion (Canadian). This was 51% greater than the previous record of $16.5 billion, set in 1997 (see chart, below). Despite this flurry of new M&A activity, reserve acquisition prices fell 6% to a median of $6.18/boe in 1998 from the 1997 price of $6.58/boe. Conversely, in 1997, reserve acquisition prices jumped 6% from the $6.22/boe price realized in 1996 (OGJ, Mar. 9, 1998, p. 41).
• Industry disappointed by 1999 U.K. budget
  The U.K. petroleum industry has voiced its disappointment with the U.K. government's 1999 budget, under which taxes on transportation fuels will be increased in a bid to curb objectionable air emissions. In a budget speech before Parliament on Mar. 9, Chancellor Gordon Brown introduced measures intended to reduce emissions of the greenhouse gas carbon dioxide. "Our government's target," said Brown, "is to reduce greenhouse emissions by 12.5% by 2010. Today, I will announce a program of
• Coalbed methane project eyed for SE Queensland
  Privately owned Australian companies Transfield Pty. Ltd. and Tri-Star Petroleum Corp. have unveiled plans for a $1 billion (Australian) coalbed methane (CBM) project in the Bowen basin of southeastern Queensland. The project could rival a Chevron Corp. group's Papua New Guinea gas pipeline project in terms of supplying potential gas customers in the state (OGJ, Sept. 7, 1998, p. 38).
• Forward thinkers seek Asian bargains
  Although Asia's economic doldrums have not lifted, two companies have opened their checkbooks and are seeking investment opportunities. The first bargain hunter in line was Conoco Inc., which intends to boost its presence through an investment of $2 billion in the Asia-Pacific region over the next 5 years. The firm's global sales amounted to $23 billion last year, of which 1% came from Asia. Within 5 years, Conoco aims to earn 5% of its revenues from Asian countries.
• Crude oil prices rise ahead of OPEC meeting
  Crude oil prices have risen to their highest level in months, ahead of the meeting of Organization of Petroleum Exporting Countries ministers scheduled for Mar. 23 in Vienna. While the price rise appears to be linked to the meeting, there is little confidence, either among industry analysts or even OPEC oil ministers, that the gathering will lead to a market-moving agreement. Brent crude for April delivery closed at $12.07/bbl in London trading on Mar. 8, having risen from $10.82/bbl on Mar. 1.
• Aker unveils low-CO 2 natural gas-fired power process
  Aker Maritime AS, Oslo, has unveiled a new technology for generating power from natural gas without emissions of carbon dioxide and nitrogen oxides. The technology is expected to find a niche for power generation both in Norway, which imposes heavy taxes on producers of CO 2 , and in other countries seeking to reduce greenhouse gas emissions. Aker says conventional power generation technologies are either incapable of removing all the CO 2 and NO x emissions or produce other objectionable waste
• U.K. engineers push 'clean' energy options
  The Institute of Mechanical Engineers (IMechE) has called on the U.K. government to speed up the development of wind power and encourage a market for cars running on alternate fuels. In a follow-up to the government's consultation paper on climate change, IMechE backed the government's view that the U.K. should maintain a balanced portfolio of electricity generating fuels, mainly coal, gas, nuclear, and renewables.
• INDUSTRY BRIEFS
  Aux Sable Liquid Products LP let contract to Morrison Knudsen Corp., Boise, Ida., to build a natural gas liquids extraction and fractionation plant near Joliet, Ill., at the point where the Alliance natural gas/NGL pipeline will terminate. Morrison Knudsen's project management will involve construction of the plant, including extraction, ethane recovery, and fractionation units. The facility, slated for completion in 2000, will process up to 1.6 bcfd of gas. Nigeria Liquefied Natural Gas

• OPEC and its competitors
  When members of the Organization of Petroleum Exporting Countries meet next week in Vienna, they should spend time discussing exploration and development in places like the Caspian Sea and offshore West Africa. For OPEC, the activity means future competition. Action has slowed in both exploratory theaters, especially in the Caspian region. Recent drilling there has produced disappointment. The Caspian International Petroleum Co. consortium folded in January. Unconfirmed reports circulated last

• Advances in resistivity processing improve well interpretation
  A new method for processing propagation resistivity log data allows for the simultaneous correction of anisotropy and dielectric constants, helping to improve horizontal and vertical well interpretation. This method uses all measured data to identify, differentiate, and correct for environmental effects. The method also corrects for bed-boundary effects using a distance to the nearest bed calculation. Without the removal of these effects, determining R t (true resistivity) and analyzing the
• Royalty rule revival
  Just before leaving office last month, Minerals Management Service Director Cynthia Quarterman made a last-ditch attempt to save the complex royalty payment rule she had been pushing for 3 years. Producers say the rule is so unworkable it reminds them of the government's 1970s regulations setting myriad prices for crude, products, and natural gas. Those were regulatory nightmares; some of the oil price refund cases still are pending at the Department of Energy. MMS revised its royalty rule
• Great Plains to sell CO 2 for EOR
  U.S. Energy Sec. Bill Richardson has announced an agreement that will help keep the Great Plains coal gasification plant near Beulah, N.D., in operation by selling its carbon dioxide by-product to producers for enhanced oil recovery projects. "This agreement secures the long-term future of a facility that is vital to North Dakota's economy and to the 700 North Dakota citizens employed there and hundreds more in adjacent coal mines and regional businesses," Richardson said.
• SE Asia's refining surplus typifies bad choices in decisions to add capacity
  Southeast Asia Refining Capacity [124,383 bytes] This Management Perspective is the last in a three-part series on consolidation in Asia's refining-marketing sector. This week, a Sterling Group analyst looks at what is needed to resolve the dilemma of surplus capacity in Southeast Asia and how that relates to refiners worldwide. These days, when anything goes wrong in the Pacific Rim, many analysts are quick to condemn the region's economic crisis as the root cause.
• California: A case study on overbuilding capacity
  An ideal case study on the refining industry's compulsion to overbuild can be gleaned from the CARB (California Air Resources Board) gasoline saga of the early 1990s. All of the major drivers of overbuilding played a hand (see related story, p. 17): from incremental-barrel economics to overly optimistic margin forecasts; from dreams of future inadequate supply to the fear of being left out and losing control.
• 1998 a boom year for European downstream
  Most of the petroleum industry was hit hard by low oil prices last year, but for the European downstream industry, 1998 will be remembered as a record year. This is the view of Petroleum Finance Co. (Petrofinance), Paris, which said the average downstream return on assets was about 9.3% last year, the highest level in Europe since 1991, when the Persian Gulf war artificially boosted profits.

• Flow models time 4D seismic surveys
  Integrated flow models can be used to optimize the timing of 4D seismic surveys for gathering reservoir engineering information, as well as for tracking flood fronts Consensus building between disciplines is an essential task in the reservoir-modeling process. The emergence of time-lapse (4D) seismic monitoring has expanded the role of seismic analysis to include estimation of fluid types, flow patterns, and rock properties over the extent of the reservoir. 1 2

• Tune-up of amine system avoids costly new system
  Refinery amine-treatment systems can be tuned-up to increase reliability, lower operating costs, reduce corrosion, and increase treating capacity. These benefits were achieved at Saudi Aramco-Mobil Refining Co.'s Yanbu, Saudi Arabia, refinery through proper filter selection, appropriate flash-drum modifications, bulk amine delivery, increased amine concentration, and increased acid-gas loading.

• Russia offers three Barents Sea blocks
  The Russian Ministry of Natural Resources has offered three Barents Sea licenses through the Krasnodar regional branch of state geological authority Rosmorgeoinfo. Two blocks are being offered to foreign oil companies in partnerships with Russian companies, while the third is being offered only to Russian companies. The three blocks lie in the Pechora Bay area of the Barents Sea off northern Russia (see map, this page). The two blocks open to western bidders are Block 1, called Kolokolmorsky,
• Potential untested under 50 million acres in Peru
  Along the extensive continental margin of Peru 1 ( Fig. 1 [127,766 bytes] ) ( Fig. 2 [103,263 bytes] ) are at least 10 sedimentary basins-some partly onshore, 2 some entirely on the continental shelf, 3 others on the continental slope 4 -and only two have really been tested for oil and gas. They are the Talara basin, which has already accumulated close to 300 million bbl from its offshore sector, and the Tumbes sub-basin, with several shut-in gas fields discovered offshore.

OGJ Newsletter

• OGJ Newsletter
  Oil prices have soared to their highest level since November. Markets have become galvanized with fresh optimism that more production cuts will come as the OPEC meeting Mar. 23 in Vienna approaches (see related story, p. 28).
• Area Drilling
  The Department of Energy granted Pacrim Energy Ltd. et al. a nonexclusive geophysical permit for an area known as the Bamban-Clark-Manila Corridor (BCMC). The permit area comprises 358,560 acres. Pacrim believes the area likely gas prone. Possible markets are industries at Clark, the former U.S. air base, Subic Bay, and several power plants that feed the Luzon grid. Gas has been proven to be present 40 km northeast of the BCMC at the Amoco Victoria 1, drilled in 1979 on a farmout from Houston