INDUSTRY BRIEFS

Retail marketing

Marathon Ashland Petroleum LLC (MAP), Findlay, Ohio, signed an agreement with Ultramar Diamond Shamrock Corp. (UDS), San Antonio, to acquire UDS's Michigan-based convenience stores, jobber network, and terminals. MAP will acquire 179 UDS-owned and operated stores, five product terminals, and supply contracts for about 240 UDS-branded jobber station sites. Also included in the sale is UDS's Michigan pipelines. MAP intends to assign Wolverine Pipeline Co., Dallas, the right to purchase the pipelines. MAP owners are Marathon Oil Co. 62% and Ashland Inc. 38%.

Refining

Ultramar Diamond Shamrock will shut down its 50,000 b/d refinery at Alma, Mich., on Oct. 1, 1999, or upon closing of the sale of its Michigan retail-related assets, whichever comes first (see above brief). The Alma refinery, although offered among the Michigan sale properties, did not receive a bid. The refinery has 250 employees.

Petroleos Mexicanos
signed a contract with Marathon Ashland Petroleum on May 20 to supply 90,000 b/d of Maya crude to MAP's Garyville, La., refinery. The contract will take effect once MAP has completed work on the refinery, which is to include the addition of new units to better handle the heavy oil. The work is expected to be completed by yearend 2001, said Pemex.

Drilling-production

Cudd Well Control Co. extinguished one of five wells that caught fire following a blowout of well 121-B in Bombay High field (OGJ, Mar. 22, 1999, p. 46). Cudd drilled two relief wells for India's Oil & Natural Gas Corp., one to a depth of 2 km below the sea floor, which extinguished Well 121-C. Cudd will use the second relief well, drilled to 1.88 km, to cut gas flow to Well 121-D.

Occidental Petroleum Corp.,
Los Angeles, signed a production-sharing agreement and two unified operating agreements (UOA) for Limoncocha and Eden-Yuturi fields on its 494,000-acre Block 15 in the eastern Oriente basin of Ecuador. Under the UOAs, Oxy's oil and gas unit will operate the fields while sharing management responsibilities with state oil firm Petroecuador. Oxy has made six discoveries on Block 15 since acquiring it in 1985; these wells produce 16,500 b/d (net) of oil. Development of Eden-Yuturi will begin after the completion of a heavy oil pipeline.

PanCanadian Petroleum Ltd.,
Calgary, and partners began construction of a central control and warehouse complex for an enhanced recovery project in Weyburn oil field in Saskatchewan (OGJ, Mar. 15, 1999, p. 32). The $1.1 billion (Canadian) carbon dioxide miscible flood project will use CO2 to extend life of the reservoir by 25 years. It is expected to increase production to 30,000 b/d by 2008 from 20,000 b/d.

CMS Energy Corp.
unit CMS Oil & Gas Co., Dearborn, Mich., let contract to Global Industries Ltd. subsidiary Global Offshore International Ltd., Houston, for engineering, procurement, fabrication, transportation, installation, and start-up services for pipelines and platforms related to Alba field development off Equatorial Guinea. The project involves a four-pile production platform, a tripod well protector platform, two in-field flow lines, and a 20-in. trunk line to Bioko Island. Installation will begin fourth quarter 1999, and start-up is slated for first quarter 2000. Alba will handle 250 MMscfd of natural gas and associated condensate.

Enterprise Oil plc,
London, received U.K. approval to develop Cook field on North Sea Block 21/20a. The field lies in 94 m of water and will be developed with two subsea wellheads tied back with an 8-in. flow line to the Anasuria floating production, storage, and offloading vessel, operated by Shell U.K. Exploration & Production on Block 21/24. Cook has estimated reserves of 20 million bbl of oil and 15 bcf of gas and is expected to be developed for £60 million. Enterprise plans to bring the first well-expected to produce up to 10,000 b/d of oil-into production in July 2000. The second well will be brought on stream in 2001 and will double output.

Shell U.K. Exploration & Production
extended for 5 years a contract with B.J. Services Co., Aberdeen, for the provision of coiled tubing and nitrogen services in Shell's southern North Sea fields. The new contract, valued at more than £20 million, comprises underbalanced drilling, leak detection, pipeline pigging, pressure testing, and temporary isolations.

Texaco North Sea U.K. Co.
let a £35 million, 5-year contract to John Wood Group plc, Aberdeen, for engineering and construction services in its North Sea Captain, Erskine, Galley, Strathspey, and Tartan fields. Work will include project management, feasibility studies, front-end engineering, detailed design, construction commissioning, procurement, warehousing, fabric maintenance, and operations support.

Exploration

SOCO Vietnam Ltd., a 70%-owned subsidiary of SOCO International plc, London, signed a heads of agreement with Vietnamese state firm Petrovietnam for rights to negotiate a contract to operate Block 16-1 in the South China Sea. SOCO expects to set up a deal for exploration and production on the block, on which it will serve as operator and hold a 30% interest. Petrovietnam will own 41%, and other foreign firms will take the rest.

Gas gathering

Koch Midstream Services Co., Houston, acquired the West Texas natural gas gathering and treating assets of Glossop Gas Co. LC. Included in the transaction was Glossop's Chenot Putnam gathering system and treating plant in Pecos County, Texas. The plant is capable of processing 10 MMcfd of gas, and the gathering system includes 33.5 miles of high-pressure gathering pipeline.

Pipelines

TransCanada PipeLines Ltd., Calgary, will cut natural gas transmission on its Nova pipeline system in Alberta by 1 bcfd during May 31-June 9. The company said it will take about 100 miles of 36-in. pipe out of service to check for signs of stress-related cracking. The system normally transports 12.5 bcfd to domestic and export points.

Sempra Energy International,
a unit of Sempra Energy, San Diego, began laying a 23-mile, $35 million natural gas pipeline that will transport gas from the U.S./Mexican border to the Presidente Juarez power plant at Rosarito, Baja California (OGJ, Sept. 7, 1998, p. 42). The plant, fueled by oil, will be converted to gas before deliveries begin in December 1999.

Conoco Indonesia Inc.
let contracts valued at $335 million to Indonesia's PT McDermott and McDermott South East Asia Pte. Ltd. to lay a 300-mile, 28-in., subsea natural gas pipeline from gas fields in the West Natuna Sea to Singapore (OGJ, Sept. 7, 1998, Newsletter). McDermott's KP 1 and DB 26 vessels will install the pipeline, which will transport 325 MMcfd of natural gas under terms signed by the West Natuna Sea operators, state oil firm Pertamina, and Singapore's Sembcorp Gas Pte. Ltd. The line is expected to be completed in 2001.

Enbridge Pipelines Inc.,
Calgary, reported a break and shutdown May 20 of a heavy oil export pipeline. The company shut down the 650,000 b/d Line 3 after an estimated 6,000 bbl of heavy crude were spilled in a rural area about 5 miles east of Regina, Sask. Enbridge said repair and cleanup crews were on site, and it expects a quick resumption of service.

BC Gas Inc.,
Vancouver, B.C., received approval from the British Columbia Utilities Commission (BCUC) to build the $350 million (Canadian) Southern Crossing natural gas pipeline project from Yahk to Oliver, B.C. (OGJ, Dec. 14, 1998, p. 40). BCUC gave BC Gas the option to complete the project by the 2000-01 heating season or 1 year later; a timing decision is being made. The project will supply markets in southern British Columbia.

The threat to winter gas supplies
to Australia's Victoria state was eased with the completion of an upgrade of the gas pipeline connecting New South Wales and Victoria. A new compressor increased the line's capacity so that it can carry 10% of Victoria's winter peak needs. In addition, a new pipeline from western Victoria that will connect with Victoria's main grid will bolster supplies by about 20% of the state's peak demand. The increases restore some comfort to consumers concerned that repairs to the damaged Longford gas plant will not be completed before the Southern Hemisphere's winter (OGJ, Oct. 5, 1998, p. 39).

Companies

GPU Inc., Morristown, N.J., acquired Transmission Pipelines Australia (TPA), offered for sale by the government of Victoria state. GPU offered $1.025 billion (Australian) for TPA, which was sold as a result of the privatization of Victoria state's natural gas industry. TPA comprises 1,105 miles of pipeline in two systems and supplies all of the natural gas consumed in Victoria.

Saga Petroleum AS
sold an 18.5% interest in licenses containing the Corrib discovery and Shannon prospect off Ireland to Marathon International Petroleum Hibernia Ltd. for £12.8 million. The sale covered anticipated spending on exploration in Corrib to the end of 1999, said Saga. Saga retained a stake in the PL 2/93 and 3/94 production license areas. Revised interests are operator Enterprise Oil plc 45%, Saga 21.5%, Marathon 18.5%, and Statoil Exploration (Ireland) Ltd. 15%. Enterprise is drilling an appraisal well in Corrib and intends to drill a new-pool wildcat in Shannon later in 1999.

OMV Australia Pty. Ltd.,
a unit of Austria's OMV AG, suffered a setback in its bid to take over Cultus Petroleum NL, Sydney, with the release of an independent valuation of Cultus. Grant Samuel & Associates values Cultus at $1.04-1.39 (Australian)/share, while OMV offered 66¢, or 70¢ if it acquires 90% or more of the company. Cultus's largest shareholder, New Zealand merchant bank Fay Richwhite with 21%, has rejected the OMV offer outright, making it impossible for OMV to reach the 90% threshold. OMV said the Grant Samuel valuation is unrealistic and excessive, at 178% above the pre-bid Cultus share price of 50¢.

Black Sea Energy Ltd.,
Calgary, is changing its name to Ivanhoe Energy Inc. Ivanhoe will have three operating divisions-in Russia, the U.S., and China. Also, the company will take over Sunwing Energy Ltd., which has production in China (OGJ, May 24, 1999, p. 46). Black Sea was developing Tura oil field in western Siberia but has experienced problems with a Russian partner that is the subject of litigation.

Weatherford International Inc.,
Houston, will acquire Dailey International Inc., Conroe, Tex., for $195 million. Dailey's outstanding $275 million senior debt will be exchanged for $185 million in Weatherford stock, while Dailey equity security holders will receive $10 million in shared stock.

Costilla Energy Inc.,
Midland, Tex., will cut its work force to reduce overhead expenses by about $675,000/quarter. The cuts will affect 34 workers in Midland and eight in Corpus Christi, Tex.

Tesoro Marine Services,
the Houston-based unit of Tesoro Petroleum Corp., San Antonio, will acquire the U.S. West Coast marine fuels operations of BP Amoco plc unit BP Marine for an undisclosed sum. The transaction includes terminals in Los Angeles, Seattle, and Port Angeles and Portland, Wash.; they have a total capacity of 605,000 bbl.

Tankers

National Iranian Oil Tanker Co. let contract to Hyundai Heavy Industries Co., Seoul, for the construction of five very large crude carriers. Delivery of the 300,000-dwt carriers is slated for April 2001-02. According to South Korea Shipbuilders' Association, the order comes at a time when new shipbuilding has decreased by about 50% in the first 4 months of 1999, to 1.2 million dwt for 34 vessels vs. 2.2 million dwt for 41 vessels a year ago.

F.T. Everard & Sons Ltd.,
London, acquired four 3,000-dwt coastal tankers from Shell U.K. Oil Products Ltd. and Irish Shell Ltd. Under contract, Everard will take over provision of Shell's British Isles coastal tanker deliveries. Although the contract's value was not disclosed, it will require the distribution of white oil and fuel oil to Shell's U.K. and Ireland marine terminals for an initial 3-year period. Shell's coastal fleet staff will be transferred to Everard or offered "substantial" severance terms; no layoffs are anticipated, said Everard.

Petrochemicals

Polipropileno del Caribe SA, Bogota, licensed the Novolon gas-phase polypropylene (PP) technology from Targor GmbH, the PP joint venture of BASF AG and Hoechst AG. Polipropileno del Caribe plans to build a 140,000 metric ton/year PP plant at Cartagena, Colombia, and is already planning to expand capacity as the local market increases-first to 180,000 tons/year and later to 225,000 tons/year. Also under the deal, Targo will supply Polipropileno del Caribe with its Metocene range of metallocene catalysts.

General Electric
unit GE Plastics plans to build a $20 million plastics compounding plant on Thailand's east coast. Production from the 30,000 metric ton/year plant will include Lexan-brand polycarbonate (PC), Cycolac-brand acrylonitrile butadiene styrene (ABS), Cycoloy-brand PC-ABS, and Noryl-brand polyphenylene oxide. Thailand's demand for engineering plastics is 100,000 tons/year. About 20% of the plant's output will be for direct export and the remainder will be sold to producers of derivative products for export. The plant is slated for start-up in mid-2000.

Safety

American Petroleum Institute said a survey of 118 U.S. oil companies indicates a continuing trend of lower work-place accident rates in 1998. According to API, there were 2,723 injuries and 187 work-related illnesses among the 212,850 employees of the participating companies. That was a 1.34 incident rate per 100 full time employees last year, vs. 1.95 in 1997.