Industry Briefs

Feb. 7, 2000
Brazil's Rio Polimeros SA let contract to ABB Lummus Global, Bloomfield, NJ, and Italy's Snamprogetti SPA for construction of a grassroots olefins complex at Duque de Caixas, Rio de Janeiro.

Petrochemicals

Brazil's Rio Polimeros SA
let contract to ABB Lummus Global, Bloomfield, NJ, and Italy's Snamprogetti SPA for construction of a grassroots olefins complex at Duque de Caixas, Rio de Janeiro. The complex, expected to cost $650 million, will consist of a 500,000 tonne/year ethylene unit and a 540,000 tonne/year polyethylene unit. The plant is expected to reach commercial operation at the end of 2003. ABB is to provide the ethylene plant; Snam will supply the polyethylene unit.

Oriental Union Chemical Corp.
plans to build a 40,000 tonne/year ethyl carbonate (EC) plant in Taiwan incorporating technology transferred from Toagosei Chemical Industry Co. Ltd. and Asahi Chemical Industry Co. Ltd., both of Japan. Slated to come on line in second quarter 2001, the plant will become the world's largest EC producer, Oriental Union said. Among the primary customers of the new plant will be a joint venture of Taiwan's Chi Mei Corp. and Asahi to produce polycarbonate (PC). The JV will initially turn out 50,000 tonnes/year of PC, requiring the purchase of 10,000 tonnes/year of EC from Oriental Union.

Saudi Chevron Petrochemical LLP,
a 50-50 JV of Chevron Chemical Co. and Saudi Industrial Venture Capital Group, began production from its $650 million petrochemical plant at Al-Jubail. The plant uses Chevron's Aromax process to convert naphtha feed into 480,000 tons/year of benzene and 220,000 tons/year of cyclohexane for sale to styrene manufacturers in Saudi Arabia and in Europe and Asia.

Financing

Singapore Syngas Pte. Ltd.,
a 50-50 JV of Texaco Inc. and Messer Griesheim GMBH, closed on $175 million in project financing for a planned gasification plant being built on Jurong Island, Singapore (OGJ, May 18, 1999, p. 44). The plant, now three-fourths complete, is expected to reach commercial operation by mid-2000. The plant will process 550 tonnes/day of high-sulfur refinery fuel oil from Singapore Refining Co. and produce 900 tonnes/day of carbon monoxide, which will be sold under long-term contract to a new Celanese Corp. acetic acid plant, also on the island. The plant also will supply back to the refinery 25 MMscfd of high-purity hydrogen. Germany's Dresdner Bank is lead underwriter of the project's limited-recourse financing.

Pipelines

Tennessee Gas Pipeline Co.,
a unit of El Paso Energy Corp., Houston, plans to lay an interconnect from its proposed natural gas storage field in Tioga County, NY, to its mainline at compressor station 319 in Bradford County, Pa. The proposed expansion project, dubbed Stagecoach, will entail laying a 23.7-mile, 30-in. lateral with the capacity of 500,000 deka- therms/day of gas; and increasing Tennessee Gas's 300 Line to 90,000 deka- therms/day of firm transportation from station 319 to its interconnect with New Jersey Natural in Passaic County, NJ, through the addition of 3.9 miles of 30-in. loop line and a new compressor and replacement of 6.5 miles of 24-in. pipe. Total cost of the expansion project is estimated at $86.5 million. Service on the lateral will start Aug. 1, 2001; work on the 300 Line is slated to start Nov. 1, 2001.

Chevron Canada Resources Ltd.
and partners received all required federal and territorial approvals for the construction of a pipeline and facilities that will bring on line natural gas from the K-29 well just northwest of Fort Liard, NWT (OGJ, May 17, 1999, p. 38). Construction of the $21 million project will include laying 37 km of 14-in. line and prefabrication of the well's dehydration facilities and interconnecting pipeline. K-29 is expected to come on stream at about 75 MMcfd of raw gas by May 2000.

Canada's National Energy Board
approved construction of the Shiha pipeline project, a proposed 24-km, 12-in. natural gas pipeline from Fort Liard to the proposed Maxhamish gas plant in northeastern British Columbia. Paramount Resources Ltd. and Berkley Petroleum Ltd.-both of Calgary and majority owners of Shiha Energy Transmission Ltd., the application entity-applied to NEB to build and operate a gas gathering system, a gas battery, and a gas pipeline system from the Fort Liard area (OGJ, Aug. 30, 1999, Newsletter). Approval for the gathering system and gas battery, called the Liard gathering project, is still being processed. The gathering project consists of 15 km of 6-8-in. wet gas flow lines and a central gas battery where the gas would be dehydrated. An Apr. 1, 2000, in-service date is envisioned.

Retail marketing

Tesoro West Coast Co.,
a unit of Tesoro Petroleum Corp., San Antonio, signed a lease agreement with Wal-Mart Stores Inc. under which Tesoro will build and operate retail stores at Wal-Mart locations in 11 states. Tesoro is planning to build 30-40 such stores during the first year of its agreement.

Companies

ONEOK Inc.,
Tulsa, signed a definitive agreement to purchase the US Midcontinent natural gas gathering systems, processing facilities, and transmission pipelines from Dynegy Inc., Houston, for $307.7 million. Assets consist of eight gas processing plants, interests in two other plants, and 7,000 miles of gas gathering and intrastate pipeline transmission systems in Oklahoma, Kansas, and the Texas panhandle. Throughput on the 375 MMcfd capacity system is currently 240 MMcfd of gas, while gas liquids production averages 25,000 b/d. The divestment is in concert with Dynegy's focus on gas processing in the Permian and Forth Worth basins as well as the Gulf Coast, it said.

Dynegy
and Illinova Corp., Decatur, Ill., completed their merger; the new company will operate under the name Dynegy Inc. and will be based in Houston (OGJ, June 21, 1999, p. 24).

The Nigerian government
and Royal Dutch/Shell agreed to divest their respective 40% holdings in National Oil & Chemical Marketing PLC (Nolchem). As a result, Shell will dispose of its shares in a sale to strategic investors or to the Nigerian public, it said. The divestment, said Shell, "does not signal a reduction of [its] interests in other businesses in Nigeria," as it plans to remain a key player in Nigeria Liquefied Natural Gas and Shell Nigeria Gas Ltd.

Newfield Exploration Co.,
Houston, signed an agreement to outsource its oil and gas accounting functions to Novistar Inc., Houston. Under its initial 3-year contract, Newfield will transition to Oracle Energy Upstream software, which is in the process of becoming "web-enabled" later this year, said Scott W. DeVries, vice-president of corporate development for Novistar. That will allow clients such as Newfield access to its accounting functions via a web-browser instead of the dedicated lines now used and simultaneously open a wider range of e-commerce services, DeVries said.

Energy Partners Ltd.,
New Orleans, will acquire for $86 million Houston-based Ocean Energy Inc.'s 100% working interest in East Bay field, which covers about 31,000 acres and nine blocks in the Terrebonne trough area of the Gulf of Mexico. East Bay is about 89 miles southeast of New Orleans, is in less than 85 ft of water, and has 25 platforms and 346 active wells. The acquisition is seen as a major step in privately held Energy Partners' plan to become a major player in the shallow-water gulf, providing a five-fold jump in Energy Partners' daily production and a four-fold increase in proved reserves. Energy Partners' typical business strategy is to form alliances with property owners while taking operatorship.

Calpine Corp.,
San Jose, Calif., will acquire 100% ownership in Hermiston Power Partnership (HPP) from TransCanada PipeLines Ltd., Calgary, and its equal partner in the venture, Idacorp unit Ida-West Energy Co., for an undisclosed purchase price. Also included in the deal will be the partners' equal interests in the 536-Mw Hermiston power plant to be built near Hermiston, Ore. The sale is in concert with TransCanada's intentions to part with certain noncore assets to repay $3 billion in debt (OGJ, Dec. 20, 1999, p. 32).

A unit of AES Corp.,
Arlington, Va., will acquire 59% of the outstanding preferred shares of Electropaulo SA-a power company that serves Brazil's greater Sao Paulo area-from BNDES Participacoes SA for $1.087 billion to be paid in four yearly installments. The acquisition will increase AES's preferred stock holdings in the power company to 66.3%. The shares to be acquired represent 35.5% of the Electropaulo's total capital. (AES also holds a 13.8% interest in Electropaulo through its interest in Light Servicos de Electricidade SA, which owns 77.8% of Electropaulo common stock.) In addition, AES unit NewEnergy Inc. will acquire retail energy supplier NEChoice LLC from Citizens Energy Corp. for about $4 million-a move that will expand AES's customer base into the US New England market.

MCN Energy Group Inc.,
Detroit, will sell its Appalachian natural gas exploration and production assets and related pipeline system to two buyers for about a combined $180 million. Consol Energy Inc., Pittsburgh, will pay MCN $104.5 million for coalbed methane assets holding 276 bcf of proved reserves. Consol will also acquire MCN unit MCNIC CSG Pipeline Co., which holds a 50% interest in Cardinal States Gathering Co., for $64.5 million. Equitable Resources Inc., Pittsburgh, will acquire other MCN assets in the Appalachian area holding 22 bcf of proved reserves for about $10 million. MCN said that both Consol and Equitable Resources made "logical purchasers" of these assets, as they have previously owned and operated these properties.

Dominion Resources Inc.,
Richmond, Va., and Consolidated Natural Gas Co., Pittsburgh, completed their merger; the newly formed company will retain the Dominion name and be based in Richmond (OGJ, July 12, 1999, p. 35).

Oilsands

Suncor Energy Inc.,
Calgary, plans to invest $750 million (Can.) to expand further its northern Alberta oilsands development, increasing production to as much as 450,000 b/d by 2008. Suncor also intends to spend $100 million over 5 years on renewable energy projects and will split its stock two-for-one to make it more accessible to small investors. The newest expansion would add 35,000 b/d of bitumen output by 2004 to Suncor's open-pit mining operations near Fort McMurray. The in situ operation, about 25 miles from Suncor's current mining operation, will use steam-assisted gravity drainage recovery methods.

Drilling-production

Chevron Corp.
and its partners plan to spend $75 million on delineation and development drilling on their concession off the Democratic Republic of Congo (formerly Zaire) over the next 3 years. The proposed program, slated to begin this quarter, will increase production on acreage now under lease by the partnership. Production from the acreage in 1999 averaged 17,700 b/d, which concession operator Chevron expects to boost to more than 20,000 b/d this year and to more than 21,000 b/d in 2002. Chevron also is reducing costs through a restructuring program that will consolidate its operations management in Muanda and move data systems and operating decision-making closer to the field, it said. Chevron holds a 50% interest in the concession; other partners are Teikoku Oil Co., 32.28%; and Unocal Congo, 17.72%.

Pride International Inc.,
Houston, completed recovery of a riser and blowout preventer, which were dropped in about 5,400 ft of water off Angola from its ultradeepwater drillship Pride Africa (OGJ, Nov. 22, 1999, p. 40). Pride will install a new top drive on the vessel while in South Africa and will take on board the repaired equipment. Recovery operations for the equipment were praised by Pride as "a major accomplishment in deep water," as the operations involved excavating 80 ft of mud and silt with remotely operated vehicles.

Noble Drilling Corp.,
Houston, formed a JV with Lime Rock Partners, Westport, Conn., to acquire the North Sea-class Ocean Scotian jack up for $32.7 million. The rig, to be renamed Noble Julie Robertson, will be available for service in mid-2000. Noble, which owns 50% of the JV, will manage the upgrade, marketing, and operation of the rig. Upgrading will focus on compliance with new operating rules for North Sea jack ups.

Exports-imports

Italy's Edison SPA
inked a 20-year natural gas contract with Russia's Promogas to import 2 billion cu m (bcm)/year of gas from Russia. Promogas-owned equally by Gazprom and ENI's Snam-will deliver supplies at the Austrian-Italian border, reaching Edison through Snam's pipeline system. Supplies will begin with 1 bcm in 2000, rising to 1.5 bcm in 2001, and finally to 2 bcm in 2002. Edison anticipates serving 13% of Italy's gas market by 2007, at which time demand in the country will reach 85-87 bcm/year, according to Edison. The supplies will primarily feed thermoelectric power plants in northern Italy and Edison's 130,000-140,000 customers. Edison recently received Ministry of Environment approval for the construction of a 4 bcm/year LNG regasifaction terminal off Italy's northern Adriatic coast.

Exploration

Remington Oil & Gas Corp.,
Dallas, and Magnum Hunter Resources Inc., Irving, Tex., made a natural gas discovery on East Cameron 364 Block in the shallow-water shelf area of the Gulf of Mexico. The discovery well, drilled to 7,052 ft TD, gauged "significant shows" of gas in three intervals at 6,500-7,000 ft. About 40 ft of gas pay were logged. The well is 5,000 ft west of a well drilled by Texaco Inc., which apparently penetrated the same interval, Magnum Hunter said. Operator Remington holds 75% interest in the well and block, with Magnum Hunter holding the remainder. The partners plan to install a new production platform in late 2000.