Table of Contents

• Long-Term Prospects Very Bright For Deep Waters Off West Africa
  So far only one deepwater field is in production off West Africa. It is Mobil's Topacio subsea field off Equatorial Guinea, which is tied back to the FPSO shown in the photograph, lying in the shallower Zafiro field. Photo courtesy of Mobil. As a hydrocarbon province, West Africa, with 220 fields in production already, bears itself well in comparison with other areas of the world. But it is the immense promise of the giant deepwater fields that is setting hard-pressed oil executives'
• Offshore Service Companies Prepare Development Concepts For W. Africa's Deepwater Finds
  With offshore operators recently chalking up a string of major oil and gas finds in deep water off West Africa, engineering contractors have been preparing development concepts in anticipation of big projects ahead. Delegates attending the Deep Offshore Technology (DOT) conference in New Orleans last November heard how service companies plan to cope with flow enhancement and flow line and riser design problems in West African field developments and how the region is a contender for the first
• Monocolumn Wellhead Platform Designed For Satellite Production In Deep Water
  Monocolumn wellhead platform. Bouygues Offshore, in association with TPG (Technip Geoproduction) and IFP (Institut Fran?ais du P?trole), used the deepwater environment off West Africa to develop the monocolumn wellhead platform (MWP) for use as a satellite production system. Designed for use with a more important production unit, such as a floating production vessel or floating production, storage, and offloading system, the MWP can be an alternative to the mini-TLP (tension leg platform)
• IPE trade hits new high as prices recover
  Daily trading volumes on London's International Petroleum Exchange (IPE) have hit a new high, just ahead of a surprise boost in crude oil prices. IPE said 105,270 lots of Brent crude oil futures contracts changed hands Jan. 6, equivalent to more than 105 million bbl of oil and surpassing the previous record set on July 16, 1998, of l03,038 lots. The high trading volume is seen as a result of market oversupply and market uncertainty. The IPE said 1998 was a "tremendous" year, and it expects
• EIA forecasts increases in crude oil price
  The U.S. Energy Information Administration has predicted world oil prices, as indicated by the price of U.S. oil imports, will climb from $9.25/bbl last December to about $13 by yearend 1999. EIA's latest short-term energy outlook predicts the world oil price would exceed $14/bbl by yearend 2000-still below the 1997 average of $18.60. EIA said world oil supply is expected to increase only 600,000 b/d in 1999 and another 1.1 million b/d in 2000.
• U.S. crude oil prices lowest since 1930s depression
  U.S. crude prices at yearend 1998, when adjusted for inflation, were at their lowest levels since the Great Depression of the 1930s, the American Petroleum Institute said. API said December 1998 wellhead prices averaged less than $8/bbl, a 47% plunge from December 1997. For the whole year, wellhead prices dropped 37% in 1998. Paul G. Wakim, API director of statistics, called 1998 "one of the toughest years for the U.S. oil and natural gas industry."
• Power deregulation spawns flurry of merger activity
  Petroleum isn't the only industry undergoing a series of merger announcements (see Watching the World, this page). Electric power producers and distributors also have announced plans to join forces in rapid succession in recent months. And other industry participants have formed strategic alliances that will enable them to better compete in a deregulated market.
• How merger frenzy restricts business
  The recent mergers among petroleum companies are likely to be good for the companies involved but bad for those they do business with. For most companies serving the petroleum industry, the formation of BP Amoco plc, Exxon Mobil, and smaller combines increases competitive pressures in an already cutthroat market. Simon Williams, line underwriter for offshore energy at Hiscox plc, London, said mergers and acquisitions are the biggest concern facing energy insurers right now.
• Watching Government: Gas/electric 2000
  Next year, the U.S. Congress finally will pass legislation reforming retail electricity marketing, predicts Washington International Energy Group (WIEG). That was one of the Washington, D.C., energy consulting firm's predictions in its annual outlook. "We expect to see more activity (on electricity reform) in Washington," the firm said. "Comprehensive federal legislation is not likely to pass in 1999, but, by the turn of the century, we expect to see an elaborate Christmas tree-like
• W. Canada E&D stats show low oil price effects
  The effects of low oil prices on Western Canada's upstream oil industry continues to show up in sagging yearend statistics for activity in 1998. Sales of drilling rights in Alberta, British Columbia, and Saskatchewan totaled about $748 million (Canadian) in 1998 compared with $1.302 billion in 1997. Crown land sales in Alberta totaled $596.9 million compared with $1.151 billion in 1997. The decline in land sales is expected to continue this year, unless there is a significant improvement in
• North American gas supply outlook unclear
  North American gas demand faces a bright future, but determining the mix of supply sources that will meet that demand remains a big question for the region's natural gas industry. A wide array of such scenarios were put forth at a Ziff Energy Group seminar in Calgary late last year.
• INDUSTRY BRIEFS
  Gulf Canada Resources Ltd. and Talisman Energy Inc., both of Calgary, reported a significant natural gas discovery in southern Sumatra. On test, the Suban 2 well flowed at a cumulative rate of 43 MMcfd from two gas-bearing zones. The upper zone flowed 28 MMcfd of gas and 219 b/d of condensate through a 48/64-in. choke with 2,660 psi flowing tubing pressure. The deeper interval flowed 15 MMcfd of gas and 146 b/d of condensate through a 32/64-in. choke with 3,140 psi flowing tubing pressure. The

• Help for U.S. producers
  U.S. oil and gas producers will surely welcome whatever help might emerge from the federal government in this period of market crisis. And producers elsewhere will surely watch developments with more than casual interest. American Petroleum Institute reports wellhead crude prices in the U.S., adjusted for inflation, to be at their lowest level in 50 years. Fortunately for producers, natural gas prices aren't that low. A recent turn toward cold weather in the U.S. has helped.

• Reorganization impacts upstream technology
  Industry reorganization has negatively affected upstream research-and-development (R&D) activities and human-resource availability. Currently, there are no visible solutions to these problems and it may be some time before the industry comes up with viable solutions. A series of studies has recently been conducted on behalf of the U.K. Health & Safety Executive (HSE) concerning organizational and technical trends in the upstream oil industry. These were initiated to assist deliberations on the
• U.N.: Iraqi oil production capacity falling
  A report by United Nations inspectors has shown that Iraqi oil production capacity continues to decline, at a rate of 4-8%/year, with a significant number of wells shut in recently because of a lack of water removal facilities. In a letter to the president of the U.N. Security Council, U.N. Sec. Gen. Kofi Annan said the experts estimated that about 20% of Iraq's wells shut in because of water production are irreparably damaged.

• Level 6 multilateral succeeds in heavy oil field trial
  During September 1998, the world's first TAML Level 6 multilateral was completed in the shallow-sand environment of the Belridge field, near Bakersfield, Calif. The completion system, with the trademark name FORMation Junction, provides an hydraulically sealed, multilateral casing junction that allows two lateral sections to be drilled from a single main bore. For the project, Baker Oil Tools worked with Shell Oil Co. and the field's operator, AERA Energy LLC.
• California refiners anticipate broad effects of possible state MTBE ban
  California refiners are attempting to prepare for the unknown, with a possible ban on the gasoline additive MTBE pending in the state legislature. California's gasoline producers would need significant time and capital to modify their plants to produce gasoline that meets the state's stringent specifications without using MTBE. Shown here is Ultramar Diamond Shamrock Corp.'s Wilmington, Calif., refinery. Photo courtesy Ultramar Diamond Shamrock. Refiners' use of methyl tertiary
• Pemex unveils bids for refinery revamps
  Mexico's state-owned petroleum company Petroleos Mexicanos has disclosed the receipt of proposals from companies and consortia competing to win contracts to revamp three of its refineries.

• New equations help rapidly determine alkylate octane numbers
  Both research and motor octane numbers of all isoparaffins in alkylates produced in refineries can be predicted, some for the first time, using mathematical models developed in the present investigation. Employing a gas chromatographic unit for analysis, the octane numbers of the alkylates can now be predicted with improved accuracy in about 30-40 min. Rapid determination of the RON and the MON of alkylates (C 5 -C 16 isoparaffins) is useful in optimizing the operation of refinery alkylation

• Shell plans big outlays for terminal
  Shell Petroleum Development Co. plans to spend $500 million over the next 5 years to expand its Bonny export terminal in Nigeria's Rivers state. Shell said the expanded terminal could be the world's largest when it comes on stream. The redesign and expansion of the terminal would double current capacity of 7.2 million bbl. The new terminal is being designed in Canada, and contracts are expected to be signed this year for construction work to begin by 2000. Most of the 23 tanks in the
• Asian woes to squeeze petrochemicals in '99
  World Butadiene Demand [151,812 bytes] World EPBX Demand [64,456 bytes] The outlook of both the petrochemical and petrochemical feedstock industries has been altered by the Asian economic crisis, at least through the medium term.
• Global butadiene demand expected to slow through 2003
  World Butadiene Demand [151,812 bytes] The growth in worldwide demand for butadiene is expected to slow through 2003. Demand for butadiene will increase at an average rate of 3.4%/year during 1997-2003, according to the latest study by Chemical Market Associates Inc. (CMAI), Houston. This rate is 36% lower than the average rate of 5.5%/year in 1993-97 (OGJ, Feb. 2, 1998, p. 32). Regions of the world with the fastest growing demand for butadiene are Southeast Asia, Indian subcontinent, the
• Iran seeks foreign petrochemical investors
  Iran's National Petrochemical Co. (NPC) intends to offer investment opportunities to foreign companies in existing and planned petrochemical plants. NPC appointed Kleinwort Benson Ltd., London, as financial adviser in its bid to attract international finance and expertise. NPC also slated a seminar in Tehran Feb. 27-28 to present details to potential investors, including cost estimates.

• Analyst sees threats to Bolivian gas boom
  Bolivia's upstream natural gas industry is poised on the threshold of a new and potentially bounteous era, but could lose its market lead to competitors. This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which notes that construction of a pipeline to transport Bolivian gas to Brazil is almost complete, with first deliveries slated for Apr. 1.
• Russians join in Exxon's Sakhalin search
  An Exxon Corp. unit has reached agreement in principle with Russian oil companies to participate in two of its exploration blocks off Sakhalin Island in Russia's Far East. The accord involves Exxon Neftegas Ltd., Rosneft, and Rosneft-Sakhalinmorneftegas and covers Sakhalin III blocks Ayashskiy and East Odoptinskiy. Exxon Neftegas was awarded a 100% interest in the two blocks after the 1993 Sakhalin III tender. They are in water depths up to about 330 ft and together cover about 2.2 million
• Large potential reserves remain for secondary recovery in Ohio
  As part of the U.S. Department of Energy's (DOE) Tertiary Oil Recovery Information System (TORIS) project, the Ohio Department of Natural Resources, Division of Geological Survey and the Division of Oil and Gas conducted an evaluation in 1995 of the oil remaining in about 80% of the reservoirs in the Appalachian basin portion of Ohio. This study indicated that these reservoirs contained approximately 5.7 billion bbl of original oil in place (OOIP) and that only about 369 million bbl of oil

OGJ Newsletter

• OGJ Newsletter
  U.S. Industry Scoreboard 1/18[44,177 bytes] Mergers continue to mount, with four new combines in the works. Santa Fe Energy Resources and Snyder Oil signed a definitive merger agreement. The deal will give Snyder shareholders 2.05 shares of Santa Fe common stock for each Snyder share. The new firm, Santa Fe Snyder Corp., will have a market capitalization of more than $1 billion. It will be based in Houston and owned 60% by former Santa Fe shareholders.