INDUSTRY BRIEFS

Terminals

Caspian Pipeline Consortium (CPC) let a $360 million contract to a consortium of Bouygues and Bouygues Offshore SA for construction of a marine terminal near Novorossiisk, Russia. The facility will be the export terminal for CPC's oil pipeline from Kazakhstan to the Black Sea via Russia. The contract encompasses engineering design, procurement, site preparation, and construction. The terminal will have a storage capacity of 400,000 cu m of oil. The contract includes a 56-in. pipeline between the tank farm and shore facility. Russian firms Kubanneftegastroi and Stavropoltruboprovodstroi will be involved in construction. Completion is slated for yearend 2001.

Petrochemicals

Abu Qir Fertilizers Co. completed construction of an ammonia-urea complex near Alexandria, Egypt. The complex, built by Germany's Krupp Uhde GmbH, has capacity to produce 1,200 metric tons/day of ammonia and 1,925 tons/day of granulated urea. The complex includes an ammonia tank farm, a urea storage facility, a water treatment unit, and a loading station.

Exploration

Oil Search Ltd. and partners plugged and abandoned their Koko 1 wildcat on permit PPL 193 in the foreland region of Papua New Guinea, despite encountering oil. The well cut a 6-m pay zone comprised of a small gas cap over a thin column of heavy oil in the upper Hedinia and lower Imburu formations. The Toro sandstone reservoir contained formation water only, and its development was deemed uneconomical. The find demonstrates that an active and significant hydrocarbon charge is present in the foreland areas, say geologists, especially considering the recent Kimu gas discovery (OGJ, Feb. 22, 1999, p. 30).

Elf Exploration U.K. plc
disclosed a gas/condensate discovery on U.K. North Sea Block 29/4d, less than 5 km from Elgin and Franklin fields, which are under development. The well was drilled with the Transocean Nordic heavy-duty jack up rig and encountered condensate and gas at a depth of 5,600 m. A production test on a limited part of the reservoir yielded a flow rate of 23 MMcfd of gas associated with 2,100 b/d of good-quality condensate, said Elf. The operator said development of this find could benefit from existing infrastructure. The Elgin-Franklin gas/condensate development is due on stream in 2000.

Burlington Resources Inc.,
Houston, announced a discovery on the Block 405 Menzel Lejmat concession in Algeria's Berkine basin. MLC-1 encountered oil in three Triassic zones and perforated a net 103 ft at 10,614-10,755 ft. On test, the well flowed 7,936 b/d of 46.4° gravity oil and 2.2 MMcfd of gas through a 100/64-in. choke. A separate fault structure was tested and proved up the third hydrocarbon-bearing structure on the concession. Burlington is reviewing 3D seismic data with a view to delineation and further exploration. It operates the license under a production-sharing contract with state firm Sonatrach; interests are Burlington 65% and Talisman Energy Inc., Calgary, 35%.

Cogeneration

Dearborn Industrial Generation LLC, a 70-30 combine of CMS Energy Corp., Dearborn, Mich., and DTE Energy Services, Ann Arbor, Mich., will expand its planned 550-MW cogeneration plant at Dearborn to 710 MW (OGJ, Jan. 25, 1999, p. 46). The expansion calls for adding a 160-MW gas combustion turbine. Start-up of the turbine-the first section of the plant to come on line-is slated for July 1999. The cogeneration section will start up in spring of 2000, and the $300 million complex will reach full capacity in mid-2001. MCN Energy Group Inc. unit MichCon, Detroit, has signed a 22-year contract to supply more than 20 bcf/year of natural gas to the plant.

Refining

The U.S. Justice Department said BP Oil Co. agreed to pay a $1.4 million fine for illegally flaring gases containing high concentrations of hydrogen sulfide at its Toledo, Ohio, refinery. The settlement also requires BP to pay $150,000 for a telephone system to notify nearby residents of refinery emergencies and $200,000 for an upgraded radio and paging system for a nearby fire department. BP is installing new sulfur-recovery units at the refinery.

Drilling-production

U.S. well-control firm Cudd Pressure Inc. arrived on Mar. 15 to devise a plan to extinguish a massive fire in an Oil & Natural Gas Corp. offshore gas well in Bombay High field off India's west coast. Well B-121-D blew out and caught fire on Mar. 12. The cause of the blowout is under investigation. No injuries have been reported.

Petroleos de Venezuela SA
(Pdvsa) let contract to Wilpro Energy Services, a combine of Williams and Schlumberger unit Production Operators Inc., for development of the $400 million Pigap II high-pressure natural gas injection facility. The Pigap II project involves construction and operation of gas compression and injection facilities for Santa Barbara and Prital fields in eastern Venezuela. Wilpro replaces a consortium led by El Paso Energy Corp., Houston (OGJ, Nov. 16, 1998, p. 46), which decided in December that it could not meet Pdvsa's requirements.

BP Amoco plc
signed an agreement with Egypt to invest $450 million over the next 6 years to maintain production and extend the life of Egypt's mature Gulf of Suez fields. A joint venture of BP Amoco and Egyptian General Petroleum Co. is producing 300,000 b/d of oil from the Gulf of Suez following a $9 billion investment that has so far yielded more than 4 billion bbl of oil reserves.

Gas marketing

Santos Ltd. signed a gas sales agreement with Gascor Pty Ltd., a firm owned by the state of Victoria, Australia. The contract involves the supply of 9.95 bcf of gas from Santos's wholly owned Fenton Creek and Mylor gas-condensate fields during in June 1999-yearend 2003. The fields, slated to begin producing in June, are on Otway basin PEP 108 in southwestern Victoria. Although for only a small quantity of gas, the contract provides additional flexibility for Victorian gas distributors in meeting the state's peak winter demand, says Santos.

Sui Southern Gas Co. Ltd.
(Ssgcl) signed a purchase agreement for natural gas from Miano field, 35 km north of Kadenwari gas field in Pakistan's Sindh province. Miano is owned by OMV Pakistan Exploration GmbH, British Borneo Exploration & Production Ltd., Oil & Gas Development Co. Ltd., and Pakistan Petroleum Ltd. Miano development costs are expected to total $500 million, and reserves are estimated at 270 bcf of gas. A 35-km pipeline is envisioned to connect Miano to an existing gas processing plant at Kadenwari. The gas will be transported in an existing Ssgcl system. Miano is slated to begin producing 80 MMcfd of gas in mid-2001.

Associations

National Oil Recyclers Association (NORA), Cleveland, will merge with the National Independent Parts Cleaners Association, Canby, Ore. The newly formed association, which will retain the NORA name, will include a parts cleaning council.

Companies

Manitoba Hydro reached an agreement in principle to acquire Centra Gas Manitoba Inc., a natural gas distribution unit of Vancouver, B.C.-based Westcoast Energy Inc., for $245 million (Canadian). The deal is expected to close by the end of April.

Unocal Corp. unit
Spirit Energy 76, Sugar Land, Tex., plans to trade most of its Rocky Mountain oil and gas assets for 5.8 million shares of Tom Brown Inc., Midland, Tex., and $5 million in cash. The deal is valued at $76 million. Spirit Energy will hold 16.52% of Tom Brown's outstanding common stock.

MidAmerican Energy Holdings Co.,
Des Moines, Iowa, and CalEnegy Co. Inc., Omaha, closed their merger agreement on Mar. 12 (OGJ, Aug. 17, 1998, Newsletter).

Teton Petroleum Co.,
Denver, plans to acquire Nafta-B, New York, in a stock-swap transaction. Nafta-B owns 95% of Russian joint stock company Sibinvestnafta and a 20% interest in a Russian oil marketing company. Sibinvestnafta is the owner of the Milky Way license in western Siberia, an area of about 70 sq miles, 3 miles east of Samotlor oil field. Teton says the purchase will give it "additional cash flow for further development of (its) oil properties in western Siberia."

Kerr-McGee Corp.
plans to integrate into its operations Sun Energy Partners LP, a master limited partnership over which it gained control when it merged with Oryx Energy Co. (OGJ, Mar. 8, 1999, p. 40). Kerr-McGee will "roll up" Sun Energy by converting each of the 7,543,000 publicly held units in the partnership into the right to receive $4.52 cash. Kerr-McGee is the managing general partner of Sun Energy.

Encore Acquisition Partners Inc., Fort Worth, signed an agreement to acquire Shell Western E&P Inc.'s interest in the Cedar Creek anticline (CCA) on the southwestern portion of Williston basin in eastern Montana and western North Dakota. Encore will acquire all of Shell's interest in certain major CCA oil fields. With about 500 producing wells, of which 450 are Shell-operated, the assets produce about 14,000 gross b/d of oil.

Power

Sonat Inc. unit Sonat Energy Services Co. and Upson Co. officials will jointly develop a natural gas-fired peaking power plant at Thomaston, Ga. The 680-MW, four-generator plant will produce power during peak periods for the state. Sonat has signed a contract to supply power from the plant to Georgia Power. Sonat expects to invest about $230 million in the project, which is slated to start up in mid-2000.

Enron Corp.
unit Enron International, Houston, and Japan's Tomen Corp. began commercial operation of an 80-MW, No. 6 fuel oil-fired independent power plant at Piti, Guam. The 50-50 partners spent about $155 million on the combined-cycle plant, which is operated by Enron.

Dynegy Inc.,
Houston, plans to invest $100 million to build a 500-MW natural gas-fired power plant in Heard Co., Ga. Construction is slated to begin in early 2000. Dynegy will sell power from the plant on the wholesale market starting in second quarter 2001. The Heard plant, which will receive gas from Williams' Transcontinental Gas Pipe Line, will become Dynegy's fourth power facility in the southeastern U.S.

Pipelines

Shell Deepwater Development Systems Inc. let contract to J. Ray McDermott, New Orleans, for the installation of a 3-mile, dual 5-in. pipeline for the King project in the Gulf of Mexico. Derrick Barge 50 will be used to install the line using the J-Lay system. Beginning at Mississippi Canyon 764 and ending at Mississippi Canyon 807, the pipeline will be laid in water depths of 2,800-3,300 ft. Work on the King project is slated for late 1999. Pipeline installation is expected to take 3 weeks. Shell is development operator for the project. Interests are: Vastar Resources Inc., Houston, 50%; Shell 33.3%; and BP Amoco plc 16.7%.

Alliance Pipeline Ltd.
let a $25 million contract to Emcor Group Inc. unit Comstock Canada Ltd., Winnipeg, Man., to serve as the main contractor for the pipeline's construction. The project includes four compressor stations in Kerrobert, Loreburn, Estlin, and Alameda, Sask., and 19 remote mainline valve RTU facilities, also in Saskatchewan. Comstock's work is scheduled for completion in July 2000.

Unit holders of
Leviathan Gas Pipeline Partners LP, Houston, approved its purchase of a 49% interest in Viosca Knoll Gathering Co. from El Paso Energy (OGJ, Jan. 25, 1999, p. 46). The purchase, which is scheduled to close during second quarter 1999, will increase Leviathan's ownership to 99% and give it the option to increase it further to 100% within 12 months after closing.

Gas processing

Sasol Ltd., Johannesburg, completed the replacement of 16 circulating fluid-bed reactors at its 150,000 b/d synthetic fuels complex at Secunda, South Africa. Eight Sasol Advanced Synthol reactors were installed under a contract with Raytheon Engineers & Constructors, Lexington, Mass. The reactors replace an older type of reactor at the plant.

Energy marketing

Pennsylvania State University awarded natural gas and electricity supply contracts for 20 of its campuses to Columbia Energy Services, Herndon, Va., and Allegheny Energy Supply, Greensburg, Pa. Under the contracts' terms, which took effect Jan. 1, Columbia Energy is providing more than 320 MMcf of gas, and Allegheny Energy is supplying 300 million kw-hr of electricity to the campuses. The length of both contracts was undisclosed. Penn State expects to cut its energy costs by $1.5 million.

Oil storage

Japan's Ministry of International Trade and Industry

(MITI) plans to reduce the Japanese oil industry's mandatory oil stockpiles to help operators cut costs. A likely scenario is the transfer of about 5 million kl-about 10 days' supply-from company stockpiles to government ones. Under the mandatory stockpile system, Japan's oil firms must store oil equal to at least 70 days' worth of supply, while taking the risk of oil price fluctuations. It costs the private sector 70 billion/year to maintain the current storage level, according to a MITI estimate. A committee of the Petroleum Council, the government's advisory panel, is expected to issue a report with its recommendations in June.