Industry Briefs

July 12, 1999
DGN de La Laguna-Durango,a unit of Sempra Energy International, San Diego, was awarded a permit by Mexico`s Energy Regulatory Commission to distribute natural gas in the La Laguna-Durango region of north-central Mexico (OGJ, Apr. 19, 1999, p. 44). The area includes the cities of Torre?n, Coahuila, G?mez Palacio, Ciudad Lerdo, Victoria de Durango, and Durango. DGN will spend $34.4 million to install a 1,030-km gas distribution system to transport 38.5 MMcfd to a customer base that will gro

Gas distribution

DGN de La Laguna-Durango,a unit of Sempra Energy International, San Diego, was awarded a permit by Mexico`s Energy Regulatory Commission to distribute natural gas in the La Laguna-Durango region of north-central Mexico (OGJ, Apr. 19, 1999, p. 44). The area includes the cities of Torre?n, Coahuila, G?mez Palacio, Ciudad Lerdo, Victoria de Durango, and Durango. DGN will spend $34.4 million to install a 1,030-km gas distribution system to transport 38.5 MMcfd to a customer base that will grow to more than 50,000 by June 30, 2004. The customers base will be composed of 53% industrial users, 38% commercial users, and 9% residential users.

Gas supply

Creole Gas Pipeline Corp., a unit of Midcoast Energy Resources Inc., Houston, signed a 5-year contract with Chevron Chemical Co. to supply natural gas to Chevron`s Oak Point chemicals complex at Belle Chasse, La. Creole will provide about 9,500 MMBTU/day, or about 90% of the plant`s gas requirements. In September 1999, Creole will also lay a 7-mile pipeline to transport gas to Chevron`s plant.

Pipelines

KN Energy Inc., Lakewood, Colo., will hold an open season until July 30 to gauge interest in its proposed 108-mile, 24-in. Monterrey natural gas pipeline system, which will connect the firm`s MidCon Texas intrastate pipeline in Starr County, Tex., to Monterrey, Mexico. Construction of the $50 million line is slated to begin by yearend, with completion expected in second quarter 2000. The system will transport 275 MMcfd of gas.

Talisman Energy Inc., Calgary, and its partners commissioned a 1,500-km oil pipeline from production facilities in central Sudan to Port Sudan (OGJ, May 31, 1999, p. 21). First export sales are expected by the end of the third quarter. Interests in the Greater Nile Oil Project are: China National Petroleum Corp., 40%; Petronas Carigali (Nile) Sdn. Bhd., 30%; Talisman (Greater Nile) BV, 25%; and Sudapet Ltd., 5%.

KN Energy received requests for the transportation of more than 800 MMcfd of natural gas in response to the open season held for its proposed Horizon gas pipeline project (OGJ, June 7, 1999, p. 34). Nicor Gas, Naperville, Ill., was among the shippers requesting service, signing a precedent agreement to ship 300 MMcfd on the 36-in. line.

Public Service Commission of Wisconsin gave approval for Wisconsin Gas to transport 650 MMcfd of natural gas on the planned Guardian pipeline project, which will serve markets in northern Illinois and southern Wisconsin starting Nov. 1, 2002 (OGJ, Mar. 29, 1999, p. 27). Partners in the 142-mile, 36-in. line are Wicor Inc., CMS Energy Corp., and Northern States Power Co. unit Viking Gas Transmission Co.

South Carolina Pipeline Corp., a unit of Scana Corp., Columbia, S.C., will extend until July 16 the open season for firm transportation service on its proposed Carolinas natural gas pipeline project. Based on a straight-fixed variable rate design, firm transportation on the proposed line is expected to cost 15-30?/MMBTU, said Scana. The planned interstate system will include much of South Carolina Pipeline`s existing intrastate system, with extensions to various points in North Carolina.

Petrochemicals

The Propileno de Falcon (Profalca) consortium has completed its 140,000 metric ton/year propylene plant near Petroleos de Venezuela SA`s Cardon refinery in Venezuela`s Falcon state (OGJ, May 5, 1997, p. 52). Profalca will begin exporting product from the plant by the end of July. Interests in Profalca are: Koch Petroleum Corp. and Productos Especiales Proesca CA, 35% each; and Inversiones Polar SA and Inepropil CA, 15% each.

Egypt`s MAS Co. signed a license agreement with Targor GmbH-the Mainz, Germany-based poly- propylene joint venture of Hoechst AG, Frankfurt am Main, and BASF AG, Ludwigshafen, Germany-for use of the JV`s Novolen gas-phase technology in a planned 150,000 metric ton/year polypropylene homopolymer plant at Suez, Egypt. The plant is slated to come on stream in mid-2002. It can be expanded to produce a total 225,000 tons/year, including impact copolymers. Krupp-Uhde was selected as turnkey contractor for the plant and will also provide its Star propane dehyrogenation technology.

Drilling-production

Thibodaux 2, a natural gas well that caught fire June 25, was extinguished, according to the well`s operator Meridian Resource Corp., Houston (OGJ, July 5, 1999, p. 38). At presstime, well control teams were finishing dredging around the well before trying to remove the damaged rig. Meridian expects to cap the well by the end of the month, after which time Thibodaux 1 will resume production.

Tuskar Resources plc, Dublin, chartered the Crystal Sea production, storage, and offloading ship from Green Sea AS, a unit of Brovig Offshore AS, Oslo. The ship will be used in Obe field on Block OML 110 off Nigeria beginning in fourth quarter. First oil will be from Obe-4 well at an anticipated rate of 4,000 b/d. Tuskar is considering further development options with a view to raising output to 8,000 b/d. Costs to bring the well into production will be paid by Brovig, which will be repaid out of oil production revenues. Tuskar will share production revenues with indigenous operator and co-venturer Cavendish Petroleum Nigeria Ltd. and anticipates receiving 75% of oil revenues.

Shell U.K. Exploration & Production began oil production from an additional subsea satellite of U.K. North Sea Gannet field, called Gannet G. Production was started through a single wellhead connected by a 5-km pipeline to Gannet platform. A second producer is expected to be drilled, and the development is budgeted at #40 million ($64 million). Gannet G has estimated reserves of 13 million boe. Initial output was 7,500 b/d of oil. Shell Expro is the operating joint venture of Shell U.K. Ltd. and Esso Exploration & Production U.K. Ltd.

Petroleo Brasileiro SA signed a 3-year contract with Diamond Offshore Drilling Inc., Houston, for use of the 7,500-ft, dynamically positioned drillship, Ocean Clipper. Operator Petrobras will use the vessel to drill off Brazil in 1,500 m of water. The contract, which is expected to generate revenues of about $103 million, will begin at the close of fourth quarter 1999. If the rig performs work in water deeper than 1,500 m, additional payments will be made, says Diamond Offshore.

Petro-Canada let a 2-year contract to R&B Falcon Inc. for development work in Terra Nova field off eastern Canada. R&B Falcon will use the fourth-generation semisubmersible Henry Goodrich, which is owned by Arcade Drilling AS, a majority-owned unit of R&B Falcon. Drilling is slated to begin during first quarter 2000. Petro-Canada retains the option to extend the initial term of the contract for up to 3 more years; the value of the contract is estimated at $74 million but could reach as much as $220 million.

Refining

Citgo Petroleum Corp., Tulsa, decided to advance the scheduled maintence turnaround at its Corpus Christi, Tex., refinery. Citgo cited "non-existent" profit margins and oversupply as the primary reasons for the accelerated maintenance schedule. The crude and vacuum distillation units, catalytic reformer, and coker will be shut down temporarily. Due to the work, Citgo anticipates reduced crude runs and gasoline production in July.

Sunoco Inc. will take out of service for 3-4 weeks its 28,000 b/d Unifiner unit at its Philadelphia refinery following a fire that occurred June 21. The firm reportedly will be required to purchase diesel fuel to meet customer commitments.

Companies

An arbitration court in the Volga region of Samara blocked the planned transfer by Russian oil major Yukos of a controlling block of shares in Samaraneftegaz to Yukos-controlled offshore firms and other Yukos allies (OGJ, June 14, 1999, Newsletter). The court ruled in favor of minority and foreign Yukos interest holders on three issues: that they had been illegally excluded from the proposed share issue, that the shares were undervalued, and that the owners of the new shares were being kept secret.

Midcoast Energy Resources acquired Southern Industrial Gas Corp. (Sigco) for an undisclosed sum. Among Sigco`s assets are 15 short-haul natural gas delivery systems in Louisiana and gas marketing operations in Texas, Mississippi, and North Carolina. In total, Sigco`s pipelines transport 1.1 bcf/year of gas.

Newfield Exploration Co., Houston, agreed to acquire Gulf Australia Resources Ltd., a unit of Gulf Canada Resources Ltd., Calgary, for an undisclosed sum. Gulf Australia`s properties include a 50% interest in the venture that owns Jabiru and Challis fields, off northern Western Australia, and their respective floating, production, storage, and offloading vessels. The fields have gross production of 13,000 boed. Included in the sale are interests in 10 adjacent exploration licenses covering 1.2 million net acres, mainly in the Timor Sea. A 3D seismic survey has been performed on about 40% of the area. Newfield expects to drill seven exploratory wells on the acreage during 2000-01.

BJ Services Co., Houston, completed an $80 million (Canadian) takeover of Fracmaster Ltd., Calgary (OGJ, June 7, 1999, p. 34). BJ Services will merge its acquisition with its Canadian unit Nowsco Well Services Ltd. under the new name of Nowsco-Fracmaster. Some layoffs are expected but they have not been quantified.

Shareholders of Dominion Resources Inc., Richmond, Va., and Consolidated Natural Gas Co. (CNG), Pittsburgh, approved the union of the two firms. The shareholders` decision follows CNG`s board`s acceptance of a revised offer from Dominion, which warded off an unsolicited bid from Columbia Energy Group, Herndon, Va. (OGJ, May 24, 1999, p. 46). Regulatory approvals are pending. The new firm will retain the Dominion name. It will have about 4 million retail customers in five states and will own about 20,000 MW of geneartion capacity and more than 3 tcf of natural gas reserves.

PP&L Global Inc. acquired an additional 29.2% interest in Chile`s Empresas Emel SA from Las Espigas SA, Gavilla SA, and entities related to the Las Espigas Group for $95 million. The purchase gives PP&L Global, a unit of PP&L Resources Inc., Allentown, Pa., a 66.7% interest in and full operational control of the Chilean power distribution company.

Leviathan Gas Pipeline Partners LP acquired KN Energy Inc.`s interests in two Gulf of Mexico pipeline systems and related laterals for about $51 million. The transaction involves the High Island Offshore System and the United Texas Offshore System. In a separate transaction, KN Energy sold certain other laterals to Stingray Pipeline Co. for $5 million; Stingray is jointly owned by KN Energy and Leviathan.

AES Corp., Tucson, plans to acquire New Energy Ventures from its joint owners, UniSource Energy Corp. (50%) and New Energy Holdings LLC (50%) for $90 million in cash, debt, and AES common stock. New Energy Ventures will retain its identity as a separate company within the AES structure.

Power

Eastern Power & Electricity Co., Kansas City, Mo., let contract to Black & Veatch to assist in the engineering, procurement, and construction of a 350-MW natural gas fired, combined-cycle power plant to be built at Bang Bo in Thailand`s Samut Prakarn province. Electricity Generating Authority of Thailand will purchase power from the plant, which is slated to begin commercial operations Jan. 31, 2002.

Cordova Energy Co., a unit of MidAmerican Energy Holdings Co., Des Moines, Iowa, let a $200 million contract to Stone & Webster Inc. for engineering, procurement, and construction services for a 500-MW gas-fired, combined-cycle power plant at Cordova, Ill. Power from the plant, expected to come on-line in June 2001, will be used to meet summer peak demand in the Midwest U.S.

Exploration

Tecpetrol de Venezuela SA announced an oil discovery on the 790,000-acre Colon Block in western Venezuela`s Maracaibo basin. La Palma 1X was drilled to a depth of 10,180 ft and cut oil in the Mirador formation at 8,764-8,916 ft. On test, the well flowed 5,000 b/d of 28? gravity oil through 27/8-in. tubing on a submersible pump. Colon Block interest holders include: operator Tecpetrol; CMS Oil & Gas Co., a unit of CMS Energy Corp., Dearborn, Mich.; and Coparex Latina de Petroleos SA.

Cogeneration

Alabama Electric Cooperative (AEC), Andalusia, Ala., signed a power purchase agreement with Reliant Energy Wholesale Group, Houston, for 60 MW of capacity from Sabine cogeneration plant, which is under construction near Orange, Tex. Sabine, owned jointly by Reliant Energy and Air Liquide America Corp., is slated for completion in October. AEC`s power sales, to begin on Jan. 1, 2000, and last for 3 years, have an estimated value of $40 million over the life of the agreement.

Catalysts

UOP LLC, Des Plaines, Ill., formed a partnership with Sintef, Trondheim, Norway, that will improve its combinatorial synthesis capabilities, said UOP. UOP says that the union will combine its research and manufacturing expertise with Sintef`s background in combinatorial chemistry, thus speeding the creation of catalysts and adsorbents.