INDUSTRY BRIEFS

Gas processing

Shell Philippines Exploration BV let contract for an undisclosed sum to Foster Wheeler Energy Ltd., Reading, U.K., for engineering, procurement, and construction of an onshore gas processing plant to be linked with the Malampaya deepwater gas development off the Philippines (OGJ, Jan. 19, 1998, p. 22). The twin-train plant, to be built in Tabangao on Luzon Island, will have capacity to process 500 MMcfd of gas. The $4.5 billion Malampaya project will include development of two deepwater fields, construction of a gas evacuation pipeline and processing plant, and development of 2,700 MW of power generation capacity.

Gas supply

A BP Amoco plc-led group of investors will reportedly sign a natural gas sales contract within the next 2 months as part of a gas and power project in Viet Nam worth $2.1 billion, said Petrovietnam. BP Amoco would neither confirm nor deny the contract's signing timeframe, stating that technical and commercial details still have to be worked out. BP Amoco and its partners signed a non-binding memorandum of understanding for the contract on Apr. 29 to develop the Lan Tay and Lan Do natural gas fields off Nam Con Son basin and build a 400-km pipeline to shore. The gas will fuel three planned power plants in southern Viet Nam with a combined capacity of 2,200 MW. First production from the fields is slated for Jan. 1, 2002.

Pipelines

Alberta Energy Co. Ltd. (AEC), Calgary, is considering building a $500 million pipeline in Ecuador and is holding discussions with possible joint-venture partners. AEC recently paid $973 million for Pacalta Resources Ltd., Calgary, which has substantial oil reserves in Ecuador (OGJ, May 3, 1999, p. 60). AEC properties in Ecuador have potential production capacity of up to 80,000 b/d, but pipeline constraints currently limit production to 45,000 b/d. The proposed line would ship up to 250,000 b/d from central Ecuador to the coast. AEC envisions a mid-2001 start-up date.

Midcoast del Bajio SRL de CV,
a joint venture of Midcoast Energy Resources Inc. and Associated Pipe Line Contractors Inc., both of Houston, was awarded a natural gas transportation permit for the Bajio region of central Mexico by Mexico's Energy Regulatory Commission. The permit will allow Midcoast to lay a 59.1-mile, 16-in. pipeline in Guanajuato state from an interconnect with Petroleos Mexicanos' system near Valtierrilla to Leon. Midcoast will hold an open season through July 26 for firm capacity on the proposed line.

Russia's Transneft
plans to build a 240-km pipeline through Russia's Rostov region, enabling it to abandon a 300-km line across Ukraine. That nation has been charging Transneft a transit fee of $2.35/metric ton of oil. The tariff on the new line is expected to be 42¢/ton. Construction of the $100 million project is slated to begin soon and is expected to reach completion in 1 year. The segment will link two lines leading from Russia into Ukraine: Samara-Lysychansk and Tikhoretsk-Lysychansk.

Russia's Kaliningrad provincial enclave
and Gaz-Oil Co. agreed to lay a gas pipeline paralleling an existing pipeline across Lithuania to Kaliningrad from Russia proper. The $220 million line will supply a high-capacity thermal power station under construction and will allow Russian gas supplies to Kaliningrad to increase to 3 billion cu m/year from 0.6 billion cu m by 2010.

U.S. Overseas Private Investment Corp.
(OPIC) approved $200 million in financing to aid Enron Corp. and Royal Dutch/Shell in building a controversial 390-mile gas pipe- line across Bolivia that is part of a larger project that extends to southern Brazil (OGJ, Oct. 12, 1998, p. 44). OPIC did impose environmental restrictions, including the rerouting of nearly 30% of the $570 million project, to avoid a dry tropical forest.

Exploration

Petrobras Bolivia SA and partners made a natural gas discovery on the San Antonio block in Bolivia's Tarija province. Wildcat SBL X-1 cut a 250-m thick portion of Devonian sandstone at 3,000 m. On test, SBL X-1 flowed 800,000 cu m/day of gas and 630 b/d of condensate through a 32/64-in. choke. The well will be deepened to 4,500 m to a San Antonio formation feature thought to contain "abundant" gas reserves. The block's stakeholders are operator Petrobras 35%, Empresa Petrolera Andina 50%, and Total Fina SA 15%. The discovery follows previous finds by Total Fina on the San Alberto block (OGJ, Feb. 1, 1999, p. 34) and XX West block (OGJ, June 14, 1999, p. 38).

Canadian Occidental Petroleum Ltd.
was awarded 100% working interest in exploration Blocks NT98-7 and NT98-8 in the Goulburn graben basin off Northwest Australia. The blocks, which cover a total of 4.3 million acres, contain numerous exploration leads identified from seismic data, said CanOxy. Plans call for further seismic surveys and geological studies prior to drilling a wildcat.

Companies

The planned merger of KN Energy Inc., Lakewood, Colo., and Sempra Energy, San Diego, was terminated June 20 (OGJ, Mar. 1, 1999, p. 27). Reportedly, talks of a merger were severed after KN released preliminary estimates indicating lower-than-expected second quarter earnings. "Continued lack of demand for interstate natural gas transportation in (our) key markets, coupled with weak basis differentialsellipsecontributed to these projected results," said KN.

An Alberta court
ruled several prospective bidders can submit offers for the assets of Blue Range Resource Corp., Calgary, which is insolvent and operating under court protection. At least five prospective buyers are expected to make offers for the company, which has estimated debts of about $272 million (Canadian), including $110 million to a banking syndicate. Bidders are expected to include Canadian Natural Resources Ltd., Magin Energy Inc., and a unit of Enron Corp. Enron recently offered $200 million to buy the Blue Range assets, a move opposed by Big Bear Exploration Ltd., which acquired Blue Range in a $152 million unsolicited takeover (OGJ, May 17, 1999, p. 38).

Talisman Energy Inc.,
Calgary, plans to acquire Highridge Exploration Ltd., Calgary, for $90 million (Canadian) in stock and assumed debt. Private U.S. investment firm Samson Investment Co. made a $74.6 million unsolicited bid for Highridge, which the company's directors advised shareholders to reject. Samson has since withdrawn its offer. Calling the purchase a "land deal," Talisman said the purchase would allow it to increase drilling and production in central Alberta, because Highridge owns 127,284 acres of land nearby. Talisman also said it will examine Rigel Energy Corp., Calgary, which recently opened a data room for potential buyers.

Precision Drilling Corp.
increased its takeover offer for fellow Calgary company Computalog Ltd. by 7.5% to $146.4 million (Canadian) in shares and assumed debt. The company is trying to acquire the 80.2% of Computalog it doesn't already own. Computalog has hired investment bankers to seek alternative bidders.

Argentina's YPF SA
is looking to launch a $200 million OPIC-backed bond in early July, says an Argentine industry source. The OPIC guarantee essentially shields bondholders against currency convertibility risks and puts YPF on par with U.S. borrowers. The securities will be sold to U.S. clients and will have an average life of 5 years. YPF had been thinking about the move for some time, but its proposed takeover by Repsol SA put a freeze on YPF's financing plans (OGJ, May 17, 1999, p. 30). Repsol reportedly gave YPF the green light to continue with plans to extend maturities and roll over debt, said the source.

OMV Australia Pty. Ltd.,
a unit of Austria's OMV AG, increased its two-tiered takeover offer for Cultus Petroleum NL, Sydney, to $0.76 (Australian)/ share-a figure that values Cultus at $155 million. OMV's previous offer was $0.66, which would rise to $0.70 if it reached 90% of its target (OGJ, May 31, 1999, p. 36). The new offer is conditional on OMV gaining 50.1% of Cultus shares and has been extended until the end of June. OMV currently holds conditional entitlement to 12% of Cultus shares.

Petrochemicals

Eastman Chemical Co., Kingsport, Tenn., signed a letter of intent to acquire Chevron Chemical Co. LLC's ethylene methyl acrylate and ethylene butyl acrylate product lines for an undisclosed sum. The divestment of assets will enable Chevron to concentrate on the development of other polymers, the company said. The transaction includes the technology, pat- ents, and trademarks for the product lines but does not include any manufacturing properties.

Drilling-production

Husky Oil Ltd., Calgary, completed the first of two test wells drilled in White Rose field on the Grand Banks off Newfoundland. Coring, logging, and flow testing of the White Rose L-08 well in the Jeanne d'Arc basin showed an extensive, clean reservoir, said Husky. Based on initial production of the appraisal well, Husky estimates White Rose original oil in place at 750 million bbl of light crude, with more than 250 million bbl recoverable. The field is about 30 miles east of Hibernia field, now in production. A second well is planned later this year to determine if the field is commercially viable and to provide an indication of production costs.

Russia's Lukoil
plans to drill four delineation wells this summer in Severnoye field in the northern Caspian Sea. Reserves are estimated at 4.3 billion bbl, and production could peak at 300,000 b/d in 8 years, said Lukoil. The company awarded $120 million in drilling contracts for the project and spent $70 million on geological and environmental surveys on the 8,000 square km concession.

Conoco Indonesia Inc.
cut "extensive" gas-bearing pay with two delineation wells drilled on Block B in the West Natuna Sea. Based on electric logs, pressure data, and formation samples, West Belut 2 and Belut 5 have "potential for high production rates of natural gas with minimal CO2," said Conoco. These wells further delineated natural gas zones in the three-field Belut complex that were reached by the Belut 3 exploration well drilled in 1998 (OGJ, Sept. 14, 1998, p. 38). West and South Belut field interest holders are Conoco 40%, Indonesia Petroleum Ltd. 35%, and Texaco Inc. 25%.

Petro-Canada
and partners let a 2-year, $74 million (Canadian) rig contract to R&B Falcon Corp. for the Terra Nova oil field project off Newfoundland. The semisubmersible Henry Goodrich unit, with capacity to operate in 1,968 ft of water, will begin work in early 2000. The Terra Nova field, under development on the Grand Banks, has estimated reserves of 400 million bbl. Petro-Canada's partners include Mobil Corp., Husky Oil Ltd., Norsk Hydro AS, Murphy Oil Corp., and Mosbacher Operating Ltd.

Petroleo Brasileiro SA
let a 30-month contract to Transocean Offshore Inc., Houston, for its dynamically positioned deepwater drillship Discoverer Seven Seas. The rig, just completing an assignment in the Gulf of Mexico, is expected to begin drilling for Petrobras in August. Petrobras will use the rig mainly in Roncador field in the Campos basin off Brazil. The contract is expected to generate $90 million.

A consortium
of Argentine firms Pluspetrol, YPF SA, and Dong Won plans to spend $12 million to drill two new wells and resume oil production in Palmar Largo in Argentina's Formosa province. Output will most likely go to neighboring Paraguay, which imports oil from Algeria. Paraguay buys 630,000-750,000 bbl/month, and demand is expected to grow sharply in coming years. Palmar Largo crude previously was shipped by railway 500 km to transshipment terminals for further shipping to Paraguay.

Total Offshore Production Systems
(TOPS), a joint venture of R&B Falcon Corp. and Intex Engineering Inc., let contract to Coflexip Stena Offshore unit Duco to provide a 3-mile long umbilical system with working pressures of 3,000-15,000 psi for its Gyrfalcon project in the Gulf of Mexico (OGJ, Jan. 18, 1999, p. 30). The umbilical will tie back the control system for the Gyrfalcon well, which is on Green Canyon Block 20 in 880 ft of water, to Shell Offshore Inc.'s Boxer platform on Green Canyon Block 19. TOPS claims Gyrfalcon to be the world's first 15,000 psi subsea completion and expects it to begin producing in July.

Partners
in Argentina's Santa Cruz I oil and natural gas venture plan to drill three wells this year to develop the 1.7 million acre Austral basin property in Argentina's Santa Cruz Province. Cia. General de Combustibles has a 32.8% stake in the area, while YPF SA, Sudelektra, and local firm and operator Quintana hold the balance. Current production is about 25,000 b/d of 48° gravity oil. Plans call for boosting oil recovery with gas and water injection.

Argentina's Astra Capsa
plans to invest $20 million in 1999 to drill 12 new wells and work over existing ones in its Agua de Cajon natural gas field in Argentina. Expanding gas output will also enable Capsa to export more liquid petroleum gas, mainly to Brazil. The company currently produces 2.6-2.7 million cu m/day of natural gas.

LNG

Portugal's Transgas signed a 20-year contract for an undisclosed sum to purchase 1 billion cu m/year of liquefied natural gas from Nigerian Liquefied Natural Gas (NLNG), which operates Nigeria's LNG export project. Deliveries from the third LNG train are planned to begin in fourth quarter 2002. The new contract follows an agreement between NLNG and Transgas in 1993 for deliveries from NLNG's first two trains, which are to begin in October. With this contract, NLNG has presold all the output from its third train.

Oman LNG LLC
signed an agreement for the delivery of more than 130,000 metric tons of liquefied natural gas over 18 months to Total Fina SA. The first cargo is expected to be lifted during April-May 2000, and the deal is expected to earn the Oman LNG venture more than $15 million. First deliveries of LNG are expected from the twin-train plant early in 2000 (OGJ, Apr. 6, 1998, p. 29).