Table of Contents

• Texas production data show rapid gas depletion
  Gas-well producing rates in Texas from newer wells have a significantly sharper decline in the early years compared to wells completed in the 1970s and 1980s. This suggests that increased drilling will be necessary to sustain the state's gas production. These results are from a study made to gain insight on how U.S. production-decline rates have changed in the last 30 years. This understanding on deliverability from new wells is important for determining how many new wells have to be
• Simulator helps analyze horizontal-well tests
  Pressure analysis [21,383 bytes] A reservoir simulator provides a means for analyzing horizontal-well tests that are a challenge because of their anisotropy and multiflow regimes. To demonstrate the capabilities of a reservoir simulator for this type of analysis, a simplified well test was simulated using Oasis, PRC Inc.'s in-house desktop reservoir simulator. Important flow events and their timings are highlighted and cross-checked with analytical predictions. Effects of layering and
• FPSO bound for Ross/Parry field
  Copyright 1999 Oil & Gas Journal. All Rights Reserved.
• Norwegian center tests intelligent completion equipment
  A new center for testing innovative downhole equipment has been established at the Rogaland Research Institute at Stavanger. Saga Petroleum ASA was instrumental in creating the center, and according to Saga, the facility is the only one of its kind in the world. The center aims to enhance the quality and operation of sophisticated well completion equipment. It will emphasize the testing, under simulated well conditions, of intelligent completion equipment (Fig. 1). Saga calls this equipment a
• Saga chief quits as Hydro bid approved
  No sooner did Norway's Saga Petroleum AS accept a takeover bid by Norsk Hydro AS than its chairman resigned, citing a nationalization plan. Norsk Hydro fended off Elf Aquitaine SA for control of the Oslo-based independent, after Elf made a final all-cash offer for Saga on June 10 of 125 kroner/share ($15.94/share). Having not previously submitted a detailed offer, that same day, Hydro offered Saga 135 kroner/share ($17.22/share), comprising one Hydro share for every three Saga shares plus
• Dynegy, Illinova to form gas and power major
  Dunegy-Illinova combined operations [295,510 bytes] Natural gas and power marketer Dynegy Inc., Houston, and energy services firm Illinova Corp., Decatur, Ill., have signed a definitive merger agreement. The deal is valued at an estimated $2 billion. The firms will join to create a $7.5 billion energy products and services conglomerate. Its operations, mostly in the U.S., will cover a range of sectors, from gas gathering and processing facilities through energy marketing and management services.
• Costs soar, replacement rates dropped in 1998
  U.S. Oil company operational performance* [94,600 bytes] Nineteen ninety-eight was an abysmal year for the U.S. upstream oil and gas industry, according to John S. Herold Inc., Stamford, Conn. In its annual reserve replacement cost analysis, Herold revealed just how poorly the U.S. exploration and production sector performed last year. After-tax profits for a group of 50 companies fell 86% last year vs. 1997 levels.
• Upstream spending defies industry decline
  Petroleum company performance measures* [117,224 bytes] Capital spending on worldwide exploration and development rose steadily during 1994-98, despite a decline in return on capital employed that began in 1996 and reached a dismal 3.1% last year vs. 9% in 1997. This is one of the conclusions of Ernst & Young LLP's annual industry performance analysis, the results of which were released recently.
• Peru's Camisea tender process to continue
  Peru's Camisea committee will continue to sell bid documents for the development of the Camisea natural gas fields until Aug. 6, 1999, and for the related gas transportation and distribution concession until July 22, according to a spokesman for the committee.
• Dubai, Pakistan join U.A.E. gas megaproject
  The U.A.E.-based U.A.E. Offsets Group (UOG) has garnered more support for its Dolphin natural gas initiative in recent weeks. The Dolphin program is designed to connect Qatar's copious gas supplies with growing demand in the Persian Gulf region and beyond. Early this month, UOG announced that Oman agreed to join the Persian Gulf-region natural gas-based industrial initiative (OGJ, June 7, 1999, Newsletter). Since then, Dubai and Pakistan have added their names to the list of participants.
• Change in China
  Two major Chinese oil firms have announced plans to cut about 976,000 jobs over the next 5 years in order to reduce costs and better compete in the global market. China National Petroleum Corp. (CNPC) will cut its work force to 1 million by 2004 from the current 1.5 million. China National Petrochemical Corp. (Sinopec) plans to reduce staff to 714,000 from 1.19 million by 2003. As a result of the government's policy of full employment, both of China's major oil concerns have been
• INDUSTRY BRIEFS
  A June 10 explosion

• DOE's security troubles
  It would be supremely ironic if an illicit transfer of information brought down the U.S. Department of Energy. Yet the prospect looms. Fierce criticism hit the department last week from a group appointed by President Bill Clinton to investigate security lapses. The problem had nothing to do with energy but rather with one of the department's greater concerns-nuclear weapons technology. The incident revived an old question: Why call this agency an energy department?

• Elf U.K. expands HP-HT expertise with Elgin-Franklin development
  The Elgin-Franklin PUQ platform under construction at Barmac's Nigg yard in Scotland. The jackup platform's three legs will each be 145 m tall. The photograph shows one of the legs rising from within a ring beam, which is mounted over the piles ready to be used during the offshore piling process. Photo courtesy of Elf. Projected Elgin-Franklin liquids output, gas sales [131,761 bytes] Elgin-Franklin Fields' characteristics [51,415 bytes] Elgin-Franklin export routes [84,064 bytes]
• Solving Elgin-Franklin jack up jigsaw puzzle
  The Elgin-Franklin production jack up (JU) is being built in a graving dock at the Barmac joint venture fabrication yard at Nigg, northern Scotland. The central processing, utilities, and quarters (PUQ) jack up platform is being built by the Barmac consortium of Brown & Root Ltd. and McDermott International Inc. and is roughly 80% complete. The platform was built to the TPG 500 design of Technip SA, Paris, which was involved with the Barmac partners in designing the platform.
• OPEC cutback accord beginning to register
  OPEC crude oil production [88,634 bytes] Organization of Petroleum Exporting Countries members trimmed their total output in May, helping justify a recent rebound in crude oil prices. Under a production cutback deal that took effect Apr. 1, OPEC's April production average was down significantly but still fell short of a pledge agreed to in March (OGJ, May 24, 1999, p. 44). However, the latest OPEC production estimates from Middle East Economic Survey (MEES) show that OPEC's compliance

• Pinch analysis used in retrofit design of distillation units
  A substantial reduction in energy consumption can be achieved at the Petroleos Mexicanos (Pemex) refinery of Tula, Hidalgo, Mexico, by retrofitting one of two distillation plants. As part of a larger program to reduce energy consumption in Mexican refineries, Pemex commissioned Instituto Mexicano del Petroleo (IMP) to identify opportunities for reduced energy consumption in the refinery of Tula, Hidalgo.
• GTL bounces back
  The announcement by Sasol Ltd. and Chevron Corp. of a gas-to-liquids (GTL) joint venture has produced an unexpected reaction from rival Syntroleum Corp., Tulsa. Sasol and Chevron plan to use Sasol's Slurry Phase Distillate technology in conjunction with Chevron's Isocracking technology in a number of GTL projects worldwide (OGJ, June 14, 1999, p. 30). Normally, one would expect a rival, particularly a comparatively small company such as Syntroleum, to go in for a little wailing and

• PC program estimates TEG circulation rate, number of trays
  Equations for calculating the TEG circulation rate, number of actual trays [45,772] Example [134,204 bytes] A computer program has been developed that enables process engineers and designers to estimate the circulation rate of lean triethylene glycol (TEG) needed to dry natural gas in glycol dehydrators that use a tray column. The program (TEG.TRAY) determines the total amount of water vapor to be removed from the natural gas to achieve the required exit-gas water content and the circulation

• Canadian ethylene demand to increase through 2005
  Ethylene demand in Canada is projected to increase from 3.3 million tons in 1998 to 5.4 million tons in 2005. This is an annual average growth rate of 6.4%. Fig. 1 [107,550 bytes] shows the expected demand and supply of ethylene in Canada for this period. This supply/demand balance is among the conclusions of Chem Systems Inc., Tarrytown, N.Y., in its report entitled, "Canadian Energy and Petrochemical Supply/Demand and Economics."
• Work to speed up on Central Asia gas pipeline
  Pakistan, Afghanistan, and Turkmenistan have agreed to accelerate work on a stalled gas pipeline project and have asked the CentGas consortium to find a project leader to replace Unocal Corp.

• Elf discovers Elgin-Franklin gas-condensate satellite
  In March, Elf Exploration U.K. plc disclosed a gas-condensate discovery near its Elgin and Franklin fields, which are currently under development. Joel Fort, Elf Exploration U.K.'s Central Graben asset manager, said the Elgin-Franklin-Shearwater area is underexplored, as was proved by the recent discovery on Block 29/4d, known provisionally as West Elgin. "Early seismic did not show any prospects in this area," said Fort, "because it is very deep and the reservoirs are high-pressure,
• Study of reservoir properties can yield exploration clues
  Past exploration methods have been primarily concerned with, and concentrated on, the search for structural and stratigraphic traps by seismic or subsurface mapping. As many of these traps have contained only small amounts of oil or have been dry, this approach obviously does not answer all the questions about where to find oil reserves.
• Area Drilling
  Red Sea Oil Corp. and Lundin Oil AB plan to start production from En Naga North and West fields on NC 177 in the southern Sirte basin within 12 months after approval of a development plan. The firms filed the plan with a management committee controlled by Libyan National Oil Co. Peak production is estimated at 22,000 b/d 24 months after start-up (OGJ, Dec. 14, 1998, p. 88). The firms will continue exploring the block using $43.6 million (Canadian) raised in a rights offering, with C1-NC 177 to

OGJ Newsletter

• OGJ Newsletter
  U.S. INDUSTRY SCOREBOARD 6/21 [43,579 bytes] While one planned industry takeover appears to be nearing a resolution, two other proposed mergers are being scrutinized more closely.