INDUSTRY BRIEFS

April 24, 2000
The New York Mercantile Exchange will launch on May 4 a Middle Eastern sour crude oil futures contract based on the reported average prices of Oman and Dubai crude oils. The contract unit will be 1,000 bbl, and it will be the exchange's first cash-settled energy contract. Delivery points will be normal export-quality Dubai oil delivered FOB at the Fateh terminal in Dubai and Omani oil delivered FOB at the Mina al Fahal terminal in Oman.

Futures

The New York Mercantile Exchange
will launch on May 4 a Middle Eastern sour crude oil futures contract based on the reported average prices of Oman and Dubai crude oils. The contract unit will be 1,000 bbl, and it will be the exchange's first cash-settled energy contract. Delivery points will be normal export-quality Dubai oil delivered FOB at the Fateh terminal in Dubai and Omani oil delivered FOB at the Mina al Fahal terminal in Oman.

Power

Enron North America Corp.,
Houston, and Peoples Energy Corp., Chicago, will jointly develop at least 800 Mw of new natural gas-fired power generation in the Chicago area to serve that growing market. Through a joint venture, Calumet Power LLC, the firms first will build, own, and operate a 245-Mw, simple-cycle, peaking-power plant in the Chicago area; an in-service date of summer 2001 is planned. Last October, the two firms formed an alliance to pursue common energy activities in the Chicago area (OGJ, Oct. 11, 1999, p. 46).

Duke Energy International
(DEI), a unit of Duke Energy Corp., Charlotte, NC, acquired development rights for the 43-Mw, natural gas-fired EastCoast power project at Bairnsdale, Victoria, from Westcoast Energy Australia and TXU Corp. for an undisclosed sum. Duke Energy Australia Trading & Marketing will market power from the plant, which is expected to start up in 2001. The marketing arm also will schedule gas supplies to the plant through DEI's 500-mile eastern gas pipeline-slated for completion in September-which is being laid from the Bass Strait to Sydney.

General Electric Co.
(GE), under a $3.7 billion multiyear agreement, will supply natural gas turbines to Florida Power & Light Co. (FPL). Under terms of the agreement, GE unit GE Power Systems will supply 66 of its 7FA natural gas turbines, as well as parts, repairs, and on-site services. The turbines will support FPL's current expansion program by boosting the generation capacity of its power production unit, FPL Energy. GE is to deliver the turbines starting this year through 2004 and will provide support services until 2011.

Gas supply

A group led by BHP Petroleum Pty. Ltd.
signed an agreement with Pakistan and Sui Southern Gas Co. Ltd. to supply 70 MMcfd of natural gas over a 21-month period from an extended well test in Zamzama field 200 km northeast of Karachi. Production will come from the field's Nos. 1 and 2 wells via a small processing facility and a 10-km spur pipeline linked to the main Sui-Karachi gas trunkline. An on-stream date of early 2001 is planned. The decision to establish early production via the extended well test is based on the high productivity of the two wells during earlier tests and the field's proximity to existing infrastructure, says BHP.

Pipelines

Natural Gas Pipeline Co. of America
(NGPL), a unit of Kinder Morgan Inc., launched a program called HubAmerica that will facilitate natural gas supplies from Chicago and other Midwest regions to markets served by NGPL and other interconnecting pipelines. As part of the program, NGPL signed a reciprocal, long-term gas capacity lease agreement with Duke Energy's Texas Eastern Transmission Corp. under which the two companies will lease capacity on each others' systems. HubAmerica will offer firm and interruptible transportation services, parking and loaning transactions, and other storage and balancing services.

Exploration

Costa Rica
granted Mallon Resources Corp., Denver, an oil and natural gas exploration concession for 2.3 million acres in six contiguous onshore blocks in the northeast quadrant of that country. Within the next 4 months, Mallon must complete an environmental assessment of its proposed operations. The concession acreage covers 60% of the entire San Carlos and Limon North basins, where Mallon has access to government seismic data. "Our first drilling will likely be on a large structure that has 1,500 ft of relief," said Mallon Chairman George O. Mallon Jr.

Premier Oil PLC,
London, made another natural gas discovery, with its Iguana 1 well, on Natuna Sea Block A off Indonesia. The well, which was drilled to 7,550 ft, flowed 25 MMscfd on test and cut gas columns in four separate Arang sands. The discovery is close to Premier's Pelikan, Gajah Puteri, Bison, and Naga discoveries (OGJ, Mar. 27, 2000, p. 42). Options for sale of the Iguana gas include transport to Singapore via a pipeline that is under construction, or to the Malaysian Duyong platform 35 km west of the find. The Trident 17 jack up has been moved to Natuna Sea Block 1 to the north of the West Natuna gas development area to drill the Ande Ande Lumut prospect.

Petrolex Energy Corp.,
a 64.73%-owned unit of Coplex Resources NL, Hobart, Tasmania, signed an agreement with International Technical Solutions (ITS), Houston, for reactivation of Rubiales oil field in Colombia (OGJ, Mar. 8, 1999, p. 86). ITS will receive a 9% participating interest in the field from Petrolex and will pay Petrolex $275,000 for each 1% to obtain another 11% interest under a deferred payment program. Petrolex will retain operatorship of and an 80% interest in the field. Rubiales production is expected to exceed 2,500 b/d of oil. Petrolex must raise at least $2 million in new financing for the project.

Anadarko Petroleum Corp.,
Houston, drilled a $7 million delineation well on the Marco Polo prospect 160 miles south of Houma, La., on Green Canyon Block 608 in the Gulf of Mexico. The No. 1 well was drilled to 13,225 ft TD in 4,300 ft of water and cut 320 ft of pay in two major intervals above salt; formation tests recovered 30° gravity oil. The well will be drilled an additional 3,500 ft to other zones above salt, and a sidetrack well will follow to further evaluate the discovery. Anadarko owns 100% working interest in Marco Polo.

Forest Oil Corp.,
Denver, made a natural gas discovery on South Pelto Block 6 off Louisiana. The No. 2 well was drilled to 14,642 ft true vertical depth and cut 47 ft of net pay in the Big B channel sand. On test, the well flowed 15.2 MMcfd of gas and 460 b/d of condensate through an 18/64-in. choke at 8,850 psi flowing tubing pressure. A caisson was set, and initial production is anticipated in July. Forest owns a 65% working interest in the well, while Walter Oil & Gas, Houston, owns the remainder.

Ramco Oil & Gas Ltd.,
a unit of Ramco Energy PLC, Aberdeen, and its partners Island Petroleum Developments Ltd. and Sunningdale Oils (Ireland) Ltd. were granted a 1-year licensing option for Block 13/7, the northern half of Block 13/12, and the northeastern quarter of Block 13/11 in Donegal basin off northwestern Ireland. Water depth in the area is about 430 ft. Interests in the licensing option are Ramco, 70%; Island, 20%; and Sunningdale, 10%. After the licensing option's expiration, it may be converted to allow appraisal or development.

Partners in the Gorgon gas fields
off Western Australia-Chevron Corp., Ex- xonMobil Corp., Texaco Inc., and Royal Dutch/Shell-made another natural gas discovery with their Maenad 1A wildcat drilled to the west of the main Gorgon fields. The partners believe the find to be comparable in size to three other recent finds by the group in this area-Geryon, Orthus, and Urania, which have respective net gas pay zones of 113 m, 53 m, and 54.5 m. If Maenad is found to have a comparable reservoir pay section, the reserves in the West Gorgon area could rise to 3 tcf.

Drilling-production

A jack up
owned and operated by state-owned National Drilling Co. for Abu Dhabi Marine Operating Co. collapsed Apr. 15 and sank in Umm Shaif oil field, about 130 km northwest of Abu Dhabi City, according to local reports. Agence France-Presse reported that the bodies of two workers-one Indian and one Pakistani-had been recovered. Of the other workers, 56 were safely evacuated, 8 were injured and later hospitalized, and 2 remain missing. The cause of the rig's collapse is under investigation.

Spanish oil firm Cepsa
signed an agreement in principle with National Iranian Oil Co. aimed at improving recovery rates from the 20-year-old Cehshmeh Khosh oil field in Iran. The firms will soon hold final negotiations on technical and financial issues, according to local reports. Cepsa is to inject 3.4 million cu m/day of natural gas into the field to boost production to 80,000 b/d of oil from the current 9,000 b/d. Cepsa is reportedly seeking additional contracts from a slate of more than 40 other proposed NIOC projects.

Samedan Mediterranean Sea,
a unit of Noble Affiliates Inc., Ardmore, Okla., confirmed what it is calling a "significant" natural gas discovery 15 miles off Israel's southern coast. The Mari B-2 well, drilled in 665 ft of water, cut 600 ft of hydrocarbon-bearing sands and is capable of producing 100 MMcfd of natural gas, Samedan says. The well follows the Mari B-1 discovery 1 mile to the east (OGJ, Mar. 20, 2000, p. 32). Samedan estimates that gas reserves in the Mari-B structure will exceed 1 tcf. Partners in the well are operator Samedan (40%), Avner Oil Exploration LP (21.39%), Delek Drilling LP (23.61%), and R&B Falcon Corp. unit RB Mediterranean Ltd. (15%).

Amerada Hess Corp.
acquired the Gassi El Agreb redevelopment project-covering El Gassi, El Agreb, and Zotti fields-from Sonatrach for $55 million. The firms will form a joint operating company, Sonahess-to be held 51% by Sonatrach and 49% by Amerada Hess-which will operate and rehabilitate the fields. The firms also signed two production-sharing agreements worth a combined $635 million. The first, worth $500 million, includes acquisition of 1,000 km of 3D seismic and 250 km of 2D seismic; drilling of about 36 wells; construction of units related to water and gas flooding; and provision of a 75-km gas pipeline. The second covers a program to shoot 900 km of seismic and drill four exploration wells on Block 401C in the Rhourde Erroumi region.

Smit Transport & Heavy Lift
is scheduled in September to load out and float off the steel hull for the Snorre B semisubmersible production platform, which is to be installed next year in Snorre field in the Norwegian North Sea. Onshore fabrication of the hull's 15,000-tonne ring-pontoon configuration began in May 1999 at Dragados Offshore's Cadiz yard. Hookup of the topsides and hull is to be completed by yearend at Aker Stord, Norway. Tow-out to location is expected in May 2001.

Premier Oil Exploration Ltd.
signed a letter of intent with Brovig Production Services Ltd. for the development of Chestnut field on UK Continental Shelf Block 22/2a. The block's partners expect a two-phase development: the first will be a production test of a newly drilled horizontal producer with subsea completion, and the second will call for the drilling of a water injection well to enhance production. Subject to regulatory approvals, first oil is expected in the fourth quarter. Block 22/2a partners are operator Premier (30%), Bow Valley Energy Ltd. (17.75%), Roc Oil UK Ltd. (17.75%), British-Borneo Oil & Gas PLC (12.5%), Norsk Hydro ASA (12%), and TotalFinaElf SA (10%).

Oil supply

Ultramar Diamond Shamrock Corp.
signed a 7-year agreement with Algerian state oil firm Sonatrach to supply Ultramar's 160,000 b/d St. Romuald, Que., refinery with an additional 35,000 b/d of light, low-sulfur crude oil beginning no later than mid-2001. The refinery, located on the Saint Lawrence River northeast of Montreal, is currently supplied by ship with North African and North Sea crude oils. "The addition of this low-sulfur crude to our slate of crude runsellipsewill allow us to meet the Canadian federal government's proposed new standards for cleaner gasoline about a year ahead of schedule," said Ultramar.

Companies

Unocal Corp.,
El Segundo, Calif., offered $221.2 million (Can.) for the 52% of Northrock Resources Ltd., Calgary, that it does not already own. The offer is worth $10.10/share vs. a recent Northrock market close of $9.85/share. Northrock produces about 26,000 boe/d, which includes 130 MMcfd of natural gas. Unocal said it does not know whether Northrock would be merged with its Canadian unit, Unocal Canada Ltd., if the bid is successful. Northrock said it is hiring a financial advisor to assess the takeover offer.

Technip SA,
Paris, will acquire 29.7% interest in Coflexip Stena Offshore (CSO) for 657 million euros from Stena International, making it CSO's largest shareholder. Through an alliance of Technip and CSO, the firms will now "pursue significant joint opportunities in offshore contracting." Technip stated that it will not increase its stake or "take control" of CSO for a 12-month initial period.

Coho Energy Inc.,
Dallas, emerged from Chapter 11 bankruptcy with liabilities of $425 million (OGJ, Sept. 6, 1999, p. 31). The company completed a reorganization plan, which includes new ownership and senior management, and a $250 million bank facility. Under the plan, institutional bondholders Appaloosa Management LP, Oaktree Capital Management LLC, and PPM America converted their debt into about 90% of the equity of the reorganized company and provided the majority of the $72 million of subordinated notes.

Refining

Institut Français du Pétrole
signed a licensing agreement with Nagajurna Oil Corp. Ltd. for installation of a 955,000 tonne/year diesel hydrotreating unit at the Pennar refinery complex site at Cuddalore, India. The unit-which will process a blend of straight-run gas oil, FCC light cycle oil, and visbreaker gas oil-will enable substantial improvement in the cetane number and a simultaneous reduction in sulfur content to below 55 ppm. All units of the idle Mobil Corp. refinery at Woerth, Germany, are being moved to the Pennar site (OGJ, May 24, 1999, p. 46).