Table of Contents

• Low oil prices cause U.S. and Canadian firms to curtail capital outlays in 1999
  How U.S. Petroleum Capital Spending Has Varied [89,506 bytes] Where funds go for 1999 U.S. Projects [116,339 bytes] Non-north American spending plans of 32 U.S. companies [116,339 bytes] Canadian spending plans [111,379 bytes] Oil and gas company U.S. capital spending is expected to fall sharply in 1999, driven by extremely low oil prices and weak natural gas prices. Companies also plan to slash investments in areas outside of the U.S. and Canada for the same reasons, and because of uncertainty
• Salomon: U.S. leads decline in E&P spending
  E&P Spending Outside North America [252,022 bytes] Canadian E&P spending [197,938 bytes] Breakout of U.S. spending [336,985 bytes] Worldwide exploration and production expenditures are in the most severe contraction since 1986, says Salomon Smith Barney, New York. According to the firm's annual survey of upstream spending, global E&P outlays will decline by 11% in 1999 from 1998's level.
• Iran's bid to lure oil investment succeeding despite U.S. sanctions
  Iran's oil production [60,760 bytes] Iran:July 1998 presentation buy back projects [111,627 bytes] Iran continues to mark success with its efforts to attract foreign investment to its petroleum sector, despite the continuing specter of U.S. economic sanctions targeting such investments.
• A new No. 2: BP Amoco to merge with ARCO
  How BP Amoco/Arco Combined Assets Would Look [214,086 bytes] Supermajor BP Amoco plc, itself the freshly new product of a merger, has agreed to combine with ARCO in a $26.8 billion merger that would create the world's second-biggest petroleum company. The all-share transaction, approved by both companies' boards at presstime last week, will involve the exchange of 0.82 BP Amoco American Depositary Share (ADS) for each ARCO share.
• INDUSTRY BRIEFS
  A Mar. 25 explosion and fire in the hydrocracker at Chevron Corp.'s Richmond, Calif., refinery was isolated, and the fire was extinguished in only 2 hr, said Chevron. At presstime, the unit remained shut down, and the cause of the explosion was under investigation. Production of gasoline is continuing at the refinery, although at reduced levels. None of the 30 workers at the unit was injured. Uzbekistan's Uzbekneftigas
• Yergin's outlook
  Daniel Yergin, chairman of Cambridge Energy Research Associates, doesn't see a strong rebound for oil prices this year. He said that, even if the Organization of Petroleum Exporting Countries' agreement holds, the price for West Texas intermediate will hover at $14.50-15.00/bbl. "Everybody is justifiably cautious and skeptical," he told a meeting of the National Ocean Industries Association in Washington, D.C., late last month.
• Oil price climb continues after OPEC agreement
  Oil prices have continued to climb following the production-cutting deal by the Organization of Petroleum Exporting Countries (OPEC) and certain key non-OPEC exporters. Yet a price rise of more than $4/bbl in the past month appears to be based more on anticipation that the promised cuts will appear than on experience of past OPEC performance, although there is growing evidence of a recent hike in oil demand.

• The MTBE bomb
  Urgent message from U.S. refiners to state and federal governments: If you drop bombs in the area of fuel chemistry, pick good targets. California Gov. Gray Davis dropped a bomb Mar. 25 when he ordered phased removal of methyl tertiary butyl ether (MTBE) from gasoline. Refiners use the substance chiefly to meet oxygen mandates for the reformulated fuel required in areas not meeting federal standards for ozone pollution. California has its own reformulation requirements, the nation's

• Total seeks to replicate its Sirri development success off Iran
  Overview of Sirri Production Scheme [204,137 bytes] France's Total is banking on its successful start-up of Sirri A and E oil fields in the Persian Gulf off Iran to help leverage its efforts to win other upstream projects in the country. Total earlier this year confirmed that it is in negotiations with Tehran over its participation in the Sirri C and D field developments (see related story, p. 29).
• Peru schedules a new Camisea project tender for 1999
  Peru will call an international tender this year to develop the world-class Camisea natural gas project, probably in the second half. Jorge Camet, former finance minister and currently president of the Camisea executive committee, on behalf of Peruvian President Alberto Fujimori, said on Mar. 23 that details of the tender would be announced "in a couple of weeks."

• Liquid-ring vacuum compressors stabilize Oman crude
  Liquid-ring vacuum compressors (LRVC) placed in upstream oil production facilities in Oman have stabilized the true vapor pressure (TVP) of crude.
• California plans to ban MTBE from gasoline
  California Gov. Gray Davis has issued an executive order to ban the use of methyl tertiary butyl ether in gasoline sold in the state by Dec. 31, 2002. Davis has requested that the California Environmental Protection Agency implement the executive order, and that the California Energy Commission and California Air Resources Board (CARB) devise a timetable for the gasoline additive's removal by 2003. The move should be seen a step toward the eventual prohibition of MTBE use in the state, and

• CFD-aided design improves FCC performance
  Total Raffinage Distribution SA and Institut Français du Pétrole (IFP) successfully modified commercially available computational fluid dynamics (CFD) code to more accurately represent fluid-solid flow in a fluid catalytic cracking unit (FCCU). Using this modified code in 1994, Total simulated the nonuniform catalyst flow in Total's refinery near Dunkirk, France. From this simulation, they were able to correct the catalyst flow by adding several steam jets to the J-bend.
• NELSON-FARRAR COST INDEXES
  Copyright 1999 Oil & Gas Journal. All Rights Reserved.
• Waterjet-surface preparation removes epoxy from tank floor
  Clark Refining & Marketing Inc. saved about $75,000 by using a proprietary waterjet system vs. a gritblast system to remove an epoxy liner inside one of its refining tanks. The tank is located at Clark's Port Arthur, Tex., refinery. Flow International Corp., Kent, Wash., manufactures the HydroCat equipment that was used to remove the coating. In 1998, Clark decided to inspect a fuels-storage tank that had been out of service for 6 years. The tank was originally built in 1954. It was a large
• Indexes for selected equipment show moderate increase
  Indexes for Selected Equipment Items [95,404 bytes] Itemized Refining Cost Indexes [198,913 bytes] Itemized Refining Cost Indexes [17,886 bytes] Costs for six selected equipment items used in refining construction operations have been surveyed for the 3 years, 1996-1998. The accompanying table shows Nelson-Farrar equipment indexes for these items of equipment. Valves and fittings showed the greatest increases in cost, rising from 1,446.4 in the first quarter of 1996 to 1,526.9 in the last

• Decommissioning concrete C 3 tank poses safety concerns
  These steel tanks at Winnepeg's Wilkes Ave. peak-shaving station were decommissioned without problem; no structural defects were found (Fig. 1). This concrete tank is the first in LPG service to be decommissioned (Fig. 2).[29,551 bytes] The recent, first-ever decommissioning of a concrete storage tank in LPG service indicates the need for greater safety precautions for tanks that lack a vapor barrier in contact with the stored product. Such precautions are particularly necessary if tank

• Mobil finds more gas in SE Peru, near Camisea fields
  Mobil Exploration & Producing Peru Inc. continues to find more gas in southeastern Peru, bolstering prospects for the Camisea gas project that it once had co-sponsored. Although they withdrew from the Camisea project last year, Mobil and partner Royal Dutch/Shell remain interested in pursuing the project, for which the Peruvian government will hold a new tender this year (see related story, this page). Mobil is testing a potential gas find in the Candamo 1-X exploratory well on the Madre de
• Geology's big issue
  Conferences offer a chance to learn about parts of the industry one does not normally encounter, and a chance to put questions to the experts. At the Offshore West Africa conference in Abidjan, Ivory Coast, Mar. 23-25, came an opportunity to dispel some of the ignorance of geology that has landed me in trouble in the past (OGJ, Nov. 10, 1997, p. 41). The big question for geologists is how to identify hydrocarbons from a mass of seismic and well log data in which oil and gas reservoirs look much
• Oil, gas field growth projections: wishful thinking or reality?
  Inferred reserves, defined as expected additions to proved reserves in fields already discovered-are observed as "field growth." They accounted for 65% of the total oil and 34% of the total gas assessed in the U.S. Geological Survey's 1995 National Assessment of oil and gas in onshore and state offshore areas. 1 Specifically, the USGS predicted that the known recovery of pre-1992 discoveries in the Lower 48 states will grow by 47 billion bbl of oil and 290 tcf of dry gas (304 tcf of wet
• NASA, Geosat to conduct sensor research probe
  An estimated 46.9 tcf of natural gas remains in the major Cretaceous-age reservoirs in the Greater Green River and Wind River basins of the U.S. Rocky Mountains. This figure does not include coalbed methane and low permeability sandstone and shale reservoirs. Researchers from the National Aeronautics and Space Administration and the Geosat Committee will apply an airborne hyperspectral instrument to help find these reserves in a program open to industry participants (OGJ, Oct. 5, 1998, p. 113).

OGJ Newsletter

• OGJ Newsletter
  U.S. INDUSTRY SCOREBOARD 4/5 [44,127 bytes] Topping oil industry news is the planned merger of BP Amoco and ARCO (see story, p. 38). The deal to create the world's second-largest oil company comes only 3 months after completion of the BP-Amoco merger.
• Area Drilling
  Lasmo plc and its partners opened a second gas field on the Kirthar concession on the Kirthar fold belt in western Sindh province (see map, OGJ, Jan. 27, 1997, p. 31). The Badhra-2 wildcat, drilled to 3,495 m on a large surface anticline, found gas shows in several formations.