INDUSTRY BRIEFS

Correction

The inset maps for the Campos and Espirito Santo basins were transposed on the map of Brazil's exploration acreage offering (OGJ, Jan. 25, 1999, p. 39).

Environment

BP Australia agreed to plant 300 hectares of trees in Western Australia in a pilot scheme designed to offset some of the CO2 emissions it produces at its oil refinery at Kwinana, south of Perth. The program is the first of its kind in Australia. Although it is estimated that BP would have to plant 50,000 hectares of trees to offset the emissions from its refinery, BP is making a start by spending $500,000 (Australian) on the pilot project. Under the Kyoto protocol, Australia is permitted to increase its CO2 emissions in 2008-12 by up to 8% from 1990 levels.

U.S. Environmental Protection Agency
reopened comments on a proposed rule that limits hazardous air pollutants from existing and new natural gas transmission and storage facilities. Industry groups had complained the proposed rule did not adequately characterize existing emissions and controls.

Marketing

Shell U.K. Ltd. plans to introduce low-sulfur diesel fuel to 80% of its service stations throughout the U.K. by the end of March and to convert the remainder as soon as possible. Shell Pura diesel has a sulfur content at least 90% lower than standard grades and will be sold at the same price. Shell says the fuel meets European Union standards that will take effect in 2005 (OGJ, July 13, 1998, p. 35). Shell claims it will be the first U.K. fuel retailer to offer this type of diesel across an extensive national network of service stations.

Gas processing

Norway's Statoil AS launched an internal inquiry after a gas flare pipeline broke off its foundation on Jan. 16 at the Karst gas treatment terminal north of Stavanger. The incident occurred after a power outage required large quantities of gas from the process plant to be flared. Statoil said X-ray analysis showed the pipeline had not been weakened, and that it could simply be lifted back onto the concrete supports. The operator intends to reinforce the supports before continuing with investigating the cause and modifying the system accordingly.

Lubes

Chevron Chemical Co. LLC began production from its $215 million lubricants additives plant at the Jurong Island chemical complex in Singapore. The plant, built on a 22-hectare site, is the largest in the Asia-Pacific region, said Chevron, and will produce 26 individual additive components from over 40 different feedstocks and blend them to produce more than 150 finished additive package blends.

Oilsands

Japan Canada Oil Sands Ltd. began operation of a $150 million (Canadian) pilot oilsands plant in the Fort McMurray region of northern Alberta. The Hangingstone facility will produce 2,000 b/d of heavy oil in the first of three phases, with a target of 10,000 b/d by 2002. The project will use steam extraction technology for bitumen recovery and will test different well patterns and various reserves levels.

Gulf Canada Resources Ltd.
applied to the Alberta Energy and Utilities Board to suspend natural gas production in the area near its planned $1 billion (Canadian) Surmont oilsands project in Alberta. The company wants producers to suspend gas production until it is more economic to produce the gas instead of the remaining oil. Shutting in the wells would enable Gulf to maintain reservoir pressure needed to pump bitumen at the project, the company said, while continuing gas production reduces economic viability of the planned oilsands project. Area gas producers oppose Gulf's bid, saying their production would not be detrimental to its project. About 180 bcf has been produced in the area to date, and remaining reserves are estimated at 100 bcf. AEUB set a hearing date for Apr. 20.

Pipelines

Gasoducto Cruz del Sur SA, a joint venture of BG plc and Pan American Energy LLC, let contract to Intec Engineering Inc., Houston, for engineering work on the Uruguay-to-Brazil natural gas pipeline project. Under terms of the contract, Intec will provide the front-end engineering and design for the 850-km, 24-in trunk line.

Exploration

Shell Exploration China Ltd. and Benton Oil & Gas Co., Carpinteria, Calif., began drilling a wildcat targeted to 14,850 ft on the Qingshui Block in the Liaohe basin, Liaoning province. Shell signed a production-sharing agreement in 1996 with China National Petroleum Corp. for the deep rights on the 139,000-acre block. In 1997, Benton acquired 50% of Shell's interest in the block, which is surrounded by large, shallow oil reservoirs with more than 4 billion bbl of original oil in place. Drilling is expected to take 4 months, and the companies will enter into a 15-year production term, if drilling is successful.

Petro-Canada,
Calgary, reported a significant natural gas discovery in the Benjamin Creek area of the Alberta foothills, about 90 km northwest of Calgary. On test, the Benjamin Creek 16-28-28-7 W5M well flowed 35 MMcfd of gas from net pay of 147 m. The well was drilled to 3,800 m TD in the Turner Valley formation. The discovery will be tied into an existing pipeline and gas plant in the area. Initial production is expected to be 20-25 MMcfd of gas. Partners in the well are Petro-Canada 74% and EBOC Energy Ltd., Calgary, 26%. Petro-Canada said it plans an aggressive 8-10-well drilling program in the area this year. The company has drilled 18 consecutive successful wells on its lands in the Wildcat Hills/Benjamin Creek area in the past 3 years, including a major gas find in March 1998.

Petróleo Brasileiro SA Bolivia
made a major natural gas discovery on the San Alberto block in the Gran Chaco province of southern Bolivia. The block's partners include operator Petrobras 35%, Empresa Petrolera Andina 50%, and Total 15%. The well cut about 200 m of gross pay in the Huamanpampa formation at about 4,000 m. The potential flow rate was estimated at 35 MMcfd of gas and more than 600 b/d of condensate. The well was drilled to 5,200 m TD in the Santa Rosa formation, where the operator gauged a flow rate of about 21 MMcfd of gas.

The U.S. Bureau of Land Management
(BLM) plans a May lease sale offering tracts in the northeast quadrant of the National Petroleum Reserve-Alaska (OGJ, Aug. 24, 1998, p. 26). BLM will issue a final notice at least 30 days before the sale.

Oil Search Ltd.
discovered gas with its Kimu 1 wildcat, drilled on the PPL193 permit in the foreland region of Papua New Guinea. Kimu 1, the first of a two-well program in the permit, is the first to test commercial flow rates in Alene sandstone in the region. A drill stem test at 1,620-1,642 m yielded a flow rate of 7.79 MMcfd of gas through a 1/2-in. choke with flowing pressure of 1,205 psi. Updip potential remains at this location. Wildcat Koko 1 will follow, to test a large structure 28 km west on the leading edge of the Komewu fault that bounds the southern margin of the Omati trough, which is viewed as an active petroleum system.

Spills

Port Authority of Milford Haven plans to appeal a ?4 million fine imposed as a result of the Sea Empress oil spill of February 1996 (OGJ, Jan. 25, 1999, p. 46). The authority pleaded guilty to causing pollution, but reportedly said the court did not consider fully Milford Haven's status as a "trust port," established by statute. The authority's directors claim the fine would hit not only the authority but also the local economy.

Drilling-production

LL&E Algeria Ltd., a unit of Burlington Resources Inc., Houston, and Talisman Energy Inc. unit Talisman (Algeria) BV tested the MLN-5 appraisal well on the Menzel Lejmat Block 405 in Algeria's Berkine basin. On test, the well flowed 6,820 b/d of 44° gravity oil and 6.77 MMcfd of gas from Devonian upper Stunian F1. Under a production-sharing agreement with state firm Sonatrach, LL&E holds a 65% working interest in the project, and Talisman 35%.

Mobil Oil Corp.,
partner in the proposed $40 billion East Natuna gas fields project in the South China Sea off Indonesia, says plans call for using a new technology-an integrated LNG floating barge system-to reduce the cost of processing high carbon dioxide-content natural gas produced from the East Natuna fields. East Natuna project partners are Exxon Corp. unit and operator Esso Natuna Inc. 50%, Mobil 26%, and Indonesia's Pertamina 24%.

Enterprise Oil plc,
London, disclosed test results of a sidetrack to the Cerro Falcone-1 well on the Volturino concession in southern Italy. The concession is owned by operator and state petroleum firm ENI 45% and by Enterprise 55%. On test, the well flowed 5,435 b/d of 31° gravity oil through a 3/4-in. choke. The flow was restricted by flaring constraints, and the well is expected to produce more than 8,000 b/d of oil when put on production. The original Cerro Falcone-1 well flowed 597 b/d of oil on test in 1992. This year, ENI plans a long-term production test on the Cerro Falcone-2 appraisal well and to drill another appraisal well, Cerro Falcone-3. The company is also planning further production testing on Cerro Falcone-1 and two more appraisal wells on the Volturino concession.

Alternate energy

U.K. electricity supplier Eastern Group plc, Ipswich, plans to build three small wind power projects in North Devon. Eastern teamed up with Farm Energy, Barnstaple, to build three small projects to supply 3,500 homes. The first will be a single turbine with capacity to generate 660 kw of electric power. The two others are expected to be three-turbine schemes, each with capacity to produce 2.25 MW of power. The three installations are expected to cost a total of £3.9 million. Eastern and Farm Energy plan to apply to build two more small wind turbine clusters in North Devon shortly.

Toups Technology Licensing Inc.
let a $500,000 contract to Dixie Arc Inc., Birmingham, Ala., for construction of a commercial AquaFuel production unit. The AquaFuel process involves electric discharge on carbon rods in water, which results in decomposing the rods and creating a plasma of ionized hydrogen, oxygen, and carbon that is cooled and collected as a fuel. The process is described as a reliable, clean-burning alternative to fossil fuels, returning 7-13% of the oxygen to the air. The unit will be the first to be built for AquaFuel-Dominicana, a joint venture of Toups and a group of private electric power producers in the Dominican Republic.

Petrochemicals

Bayer AG let contract to Jacobs Engineering Group Inc., Pasadena, Calif., for the design, procurement, and construction management of a $50 million synthetic rubber plant revamp at Port Jerome, France. The polymerization system is scheduled for start-up in August 1999. Bayer expects to increase capacity to 120,000 metric tons/year from 85,000 tons.

Companies

Canadian Occidental Petroleum Ltd., Calgary, acquired Shell Corp.'s working interest in Eugene Island Block 18 field for $30 million (U.S.). The purchase gives CanOxy about 90% working interest in the field's reserves. The field, in about 8 ft of water 10 miles off St. Mary Parish, La., now produces about 22 MMcfd of gas and 400 b/d of oil. Cumulative production is estimated at 66 million bbl of oil and 450 bcf of gas since 1954.

Shell U.K. Ltd.
divested its 50% interests in North Valiant gas field and in the Block 15/25a in the U.K. North Sea to Conoco (U.K.) Ltd. Conoco was operator and 50% interest holder in the two blocks prior to the divestment. In return, Conoco will provide gas supplier Shell Gas Direct with a quantity of gas of equivalent value. Shell said this is the first time Shell U.K. has divested an upstream asset in exchange for a downstream gas supply.

Conoco Inc. and Exxon Corp.
exchanged their respective interests in 59 deepwater blocks in the Gulf of Mexico. Conoco acquired a 50% interest in 29 of Exxon's blocks, and Exxon acquired a 50% interest in 30 of Conoco's blocks. Conoco, the sole lessee of its blocks, plans to retain a 50% interest in the 30.

Gas supply

Eastern Group became the first British company to secure a gas supply license in Germany. The company set up a trading and retail office in Frankfurt and secured the license from the Energy Ministry of Hessen, the regional energy authority. Eastern said the license will bolster its ambitions to be a major player in Europe's deregulating energy market. The company has electricity and gas ventures in numerous European countries, and was the first British company to trade on the Nordic electric power market, the Nord Pool.

Sui Northern Gas Pipeline Ltd.
(Sngpl) cut off gas supply to all fertilizer units in Pakistan's Punjab province, including those of Pak-Arab Fertilizers Co. No reason for the cutoff was disclosed, but industry sources told OGJ that the pipeline's available supply was 850 MMcfd vs. demand pegged at 1 bcfd. Supply will be restored Feb. 16. Sngpl was supplying 54 MMcfd of gas to the Pak-Arab Fertilizers plant, which was producing 2,550 metric tons/day of fertilizer-1,200 tons of calcium ammonium nitrate, 1,000 tons of nitrogen phosphate, and 350 tons of urea. An acute shortage of fertilizers is feared for winter crops due to the fertilizer units' closure. Gas supplies to the Pak-American plants at Daudkhel, Mianwali, and Haripur Hazara had already been disconnected. Similarly, gas supply to 850 industrial units has also been stopped, from December 1998 through February 1999.

Exports-imports

Russia signed an agreement to supply Slovakia with up to 43.9 million bbl/year of crude oil during 2000-14. Under terms of the agreement, the deliveries will be conducted under contracts between new companies to be established within the two respective countries. Also, Russian oil may be re-exported to third countries.