INDUSTRY BRIEFS

Gas processing

Concern about a gas leak prompted more than 200 workers at Esso Australia Ltd.'s Longford gas plant in eastern Gippsland, Victoria, to walk off the job May 7 and 8. An unidentified employee told the local press that operations were continuing as normal at the plant, which is supplied from the Bass Strait oil and gas fields. Last September, an explosion at the Longford plant killed two workers and cut much of Victoria's gas supplies for 10 days (OGJ, Oct. 5, 1998, p. 39).

Refining

Lyondell-Citgo Refining LP, a joint venture of Lyondell Chemical Co. and Citgo Petroleum Corp., reported that one of the two cokers at its Houston refinery was shut down following a fire May 7. Lyondell-Citgo expects the damaged coker to be operating at 50% capacity by about mid-June and to return to full operation in early July. One worker was injured in the fire.

Misr Oil Processing Co. let a $450 million contract to Italy's Snamprogetti SpA for engineering, procurement, and construction of a hydrocracking complex to be built at Egypt's Suez refinery. The complex will process 53,500 b/d of straight-run atmospheric residue. The main conversion unit is a 35,000 b/d vacuum gas oil hydrocracker. The work, which will include major process units, utilities, and offsites, is scheduled for completion by mid-2002.

Exploration

Chevron Canada Resources Ltd. and partners announced results from the K-29 discovery well, 25 km northwest of Fort Liard, N.W.T. The well was drilled to about 10,000 ft TD and cut a gas column of more than 1,200 ft. Based on test results, Chevron calculates that it would produce 70-100 MMcfd of gas. The reservoir is estimated to hold 400-600 bcf of original gas in place. The partners expect to put the well on production by May 2000. Partners include: operator Chevron 43.4318%, Purcell Energy Ltd. 24%, Berkley Petroleum Corp. 21%, Anderson Resources Ltd. 4.1%, Paramount Resources Ltd. 2.7602%, Ranger Oil Ltd. 1.197%, Numac Energy Inc. 0.82%, Founders Energy Ltd. 0.336%, and Ascot Energy Resources Ltd. 0.21%.

Pipelines

KN Energy Inc., Lakewood, Colo., plans to build a 129-mile, 36-in. high-pressure natural gas pipeline from the emerging gas supply hub at Joliet, Ill., to Hales Corners, Wis. Construction of the pipeline, dubbed Horizon, is expected to start in spring 2001 and to be completed by fall 2001. The line will transport 0.63-1.2 bcfd of gas and will connect with pipelines owned by KN unit Natural Gas Pipeline Co. of America, Nicor Gas, and Alliance Pipeline Partners. Project costs are estimated at $150-250 million.

Williams Gas Pipeline-Transco let contract to Gulf Interstate Engineering Co., Houston, for management, engineering, design, and procurement services on its MarketLink and SouthCoast pipeline expansion projects. The work includes the installation of four 15,000-hp natural gas turbocompressors and two 16,500-hp electric compressors at stations in Pennsylvania, New Jersey, Alabama, and Georgia. An in-service date of November 2000 is anticipated.

Coalbed methane

EuroGas Inc., New York, began drilling a coalbed methane gas well in Tiahlivska No. 1 mine near Velyky Mosty in the Lublin coal basin in western Ukraine. Well A is programmed to about 1,100 m TD. The drilling program is part of a joint operational agreement between EuroGas and Ukraine state-owned geological firm ZahidUkrGeologia. If tests are successful, the partners will drill confirmation wells this summer. Each partner holds a 50% interest in the project; EuroGas will receive 70% of the revenues until payout.

Companies

Enron Capital & Trade Resources Canada Corp. made a $200 million (Canadian) offer for the assets of Blue Range Resource Corp., Calgary, which was taken over recently by Big Bear Exploration Ltd., Calgary (OGJ, May 3, 1999, p. 60). Enron, an unsecured creditor of Blue Range, said the proposal is better than Big Bear's planned sale of Blue Range assets for an estimated $218 million, as it would retain many employees and involve only one buyer. Big Bear has described its acquisition of Blue Range as a "complete disaster" and alleges there were accounting irregularities in Blue Range's stated financial position. Big Bear opposes Enron's offer.

Shareholders of Santa Fe Energy Resources, Houston, and Snyder Oil Corp., Fort Worth, approved the merger of the two companies, and the deal was finalized shortly thereafter. The newly formed company is called Santa Fe Snyder Corp. (OGJ, Feb. 1, 1999, p. 26).

Coastal Oil & Gas Corp., a unit of Coastal Corp., Houston, will acquire the Gulf of Mexico assets of Titan Exploration Inc., Midland, Tex., for $71.3 million. In a separate transaction, Titan has closed the sale of its Louisiana onshore assets to Phoenix Oil & Gas LLP for $5.4 million. The deals divest Titan from its interests in Louisiana and the Gulf of Mexico.

Commonwealth Oil & Gas Ltd., Newport Pagnell, U.K., bought the 40% interest in the Southwest Gobustan concession in Azerbaijan from Union Texas Qobustan Ltd. for an undisclosed sum. The move gives Commonwealth an 80% interest in the block, and State Oil Co. of the Azerbaijan Republic (Socar) holds 20%. The U.K. independent plans to farm out part of its interest in the license to finance exploration and appraisal work. Commonwealth said the concession contains 15 oil and gas structures, which Socar postulates have combined potential reserves of at least 100 million bbl of oil and 500 bcf of gas.

Vastar Resources Inc., Houston, acquired certain producing properties in the New Mexico San Juan basin from Cross Timbers Oil Co., Fort Worth, for $29.5 million. The assets' reserves are estimated at 32.2 bcf of natural gas and 1.1 million bbl of liquids. Proceeds from the transactions will be used to reduce Cross Timbers's total debt by about 60% from $921 million.

Shareholders of Ocelot Energy Inc., Calgary, voted 99.6% in favor of a proposal to sell the firm's Canadian oil and gas assets to NAL Resources Management Ltd. for $126 million (Canadian). Also approved was the company's name change to Ocelot International Ltd., reflecting the firm's international focus. Ocelot has oil and gas projects in Gabon, Kazakhstan, Tanzania, and Cameroon.

Power

Entergy Corp., New Orleans, is assessing the feasibility of an 800-MW, $320 million natural gas-fired power plant to be built near Fairfield, Tex. Entergy unit Entergy Power Group plans to manage the construction and operation of the plant, while Entergy Power Marketing Corp. would market the power. An early 2002 start-up is envisioned.

Powersenoko Ltd., a unit of power generator Singapore Power Ltd., let a $180 million contract to ASEA Brown Boveri Ltd. (ABB), London, for conversion of an oil-fired steam power plant into a gas-fired combined-cycle plant. The contract includes an option to convert two similar plants, and a first quarter 2001 completion date is anticipated. The conversion will raise the plant's output capacity to 360 MW from 120 MW and will involve modernizing an existing steam turbine and replacing an oil-fired boiler with an ABB gas turbine and heat recovery steam generator.

Mexico's Comisión Federal de Electricidad (CFE) let contract to Intergen unit Intergen Aztec Energy VIII BV to build, own, and operate the El Sauz power project at San Luis de la Paz, Guanajuato state, about 160 miles from Mexico City. The 700-MW, natural gas-fired, combined cycle plant is expected to reach commercial operation in November 2001. CFE has contracted for 85% of the power, with the remaining 15% heading for industrial consumers in the region.

Drilling-production

Chevron U.S.A. Production Co. and BHP Petroleum (Deepwater) Inc., Houston, suspended operations on their Green Canyon 237 No. 2 appraisal well in the Gulf of Mexico after encountering 164 net ft of oil in two horizons. The well is 3,000 ft east-northeast of their first appraisal well, Green Canyon 237 No. 1, which the partners drilled earlier this year (OGJ, Feb. 15, 1999, p. 36). The equal partners expect to spud Grand Canyon 237 No. 3 by July. Operator Chevron and BHP expect to begin production from their deepwater Typhoon project by July 1, 2001.

Enterprise Oil plc, London, began drilling an appraisal well in Corrib field 55 km off County Mayo, Ireland; Enterprise hopes to complete the well by late June or early July. After completing the well, the rig will be moved 8 km south to drill an exploratory well on the Shannon prospect, which Enterprise suspects is on trend with the Corrib structure. Estimates suggest Corrib could hold 1.2 tcf of gas; Enterprise intends to begin producing by 2002-03.

Burlington Resources Inc. unit LL&E Algeria Ltd. and partners announced successful test results from the MLN-6 appraisal well on Menzel Lejmat Block 405 in the Berkine basin in Algeria. Two intervals, on test, flowed at 3,553 b/d of 44° gravity oil and 4.98 MMcfd of gas from the TAG-1 formation through a 1-in. choke with 492 psi flowing wellhead pressure. LL&E holds a 65% interest in the well under a production-sharing agreement with state firm Sonatrach. Talisman Energy Inc. unit Talisman (Algeria) BV holds the remaining 35%.

Shell U.K. Exploration & Production let contract to KCA Drilling Ltd., Aberdeen, to perform drilling on the operator's nine platforms in the East Shetland basin of the U.K. North Sea, including the four Brent field platforms. The contract is potentially worth more than £200 million ($320 million) and will run initially for 5 years from May 1, 1999. Previously, Brent field drilling was carried out by Deutag Overseas (Cura?ao) NV, while KCA drilled from the other five platforms. The East Shetland basin operations were combined to reduce operating costs.

U.S. Occupational Safety and Health Administration (OSHA) proposed $207,750 in fines against three companies involved in a gas well accident near Bryceland, La., last Oct. 24, in which seven workers were fatally burned (OGJ, Nov. 2, 1998, p. 44). OSHA cited Cudd Pressure Controls Inc., Oklahoma City; Sonat Exploration Co., Houston; and Brooks Well Servicing Inc., College Station, Tex. Four employees of Cudd, under contract with Sonat to perform snubbing at the 2 Otto Cummings, were killed. Cudd was fined $125,000. Operator Sonat was fined $77,000. Brooks, provider of the service rig, had five employees working at the site, three of whom died. It was cited for $6,750.

Safety

U.K. Health and Safety Commission (HSC) issued a consultative document outlining plans to charge the offshore oil and gas and onshore gas transportation industries for the regulatory functions of its inspections arm, Health and Safety Executive (HSE). The government asked HSC to introduce charges to operators to recover HSE's costs for assessing safety cases for installations, granting approvals for offshore and gas transport projects, and regulating compliance with safety cases. From Oct. 1, 1999, HSC aims to charge operators for assessing all safety cases, providing advice on safety cases, and inspecting operators' installations and the operations of their contractors.

Petrochemicals

Japan's Mitsubishi Chemical Corp. and Exxon Chemicals Ltd. intend to form a joint venture to build a 100,000 metric ton/year polypropylene plant in Singapore. The plant, to be operated under the name Mytex Polymers Asia-Pacific, is expected to be operational by the end of 2000. It would use feed from Exxon's planned complex on Jurong Island in Singapore (OGJ, Feb. 8, 1999, p. 33). Products made by the joint venture would be sold customers in Asia and Oceania.

Oilsands

Three environmental groups launched lawsuits in the Federal Court of Canada against the federal government and Suncor Energy Inc., Calgary. The suits, filed on behalf of the groups by Sierra Legal Defence Fund, Vancouver, B.C., seek to reverse a decision by Ottawa to refer Suncor's Millennium oilsands expansion project in northern Alberta to Alberta jurisdiction without conducting a full federal environmental review. The groups seeking the action are Environmental Resources Centre and Toxic Watch Society, Edmonton, and the Prairie Acid Rain Coalition.

Exports-imports

Austria's OMV AG signed a gas sales contract with German gas utility Bayernwerk AG, Munich, which extends OMV's current gas operations. Under the contract, Bayernwerk will purchase up to 2 billion cu m/year of natural gas from OMV, to be delivered to either the Oberkappel or ?berackern delivery terminals on the Austrian-German border.

Turkish group Botas signed an agreement to purchase 2.4 billion cu m of liquefied natural gas over the next 2 years from Nigerian Liquefied Natural Gas Co.'s LNG project for $260 million. Botas will begin receiving LNG in October, when the Nigerian LNG project starts up (OGJ, Mar. 22, 1999, p. 45).

Cogeneration

U.K. Department of Trade and Industry (DTI) granted two licenses for construction of gas-fired combined heat and power plants, in spite of its recent crackdown on new gas-fired projects (OGJ, Nov. 2, 1998, p. 35). Scottish & Southern Energy plc plans to build a 13-MW gas-fired combined heat and power plant at a Kimberley-Clark plc paper mill at Barrow-in-Furness, in Northwest England. Meanwhile, Kronospan Ltd., Wrexham, Wales, plans to double the capacity of the existing power and steam plant at its fiberboard factory to 12.4 MW. DTI said, "Good-quality combined heat and power projects would be exempted from the stricter gas consents policy temporarily introduced."