Milder weather in the U.S. for the first half of January led crude and product prices to relax from December's madness.
North Sea prices were declining last week from peaks set around Jan. 1. North Sea Brent blend for February delivery slipped to $19.80/bbl Jan. 17 from $20.30/bbl a week earlier as European product prices fell as weather related U.S. demand waned.
U.K. traders were uncertain about the market's direction but said there appeared more likelihood of further declines than a return to the higher early January levels.
API figures that showed larger than expected crude and product stocks also had a depressing effect on the market.
WTI crude futures for February delivery closed Jan. 17 at $22.10/bbl, down 80 on the week.
Heating oil futures closed the same day at 60.52/gal, the lowest since 60.31/gal Nov. 28. The spot price of propane at Mont Belvieu, Tex., fell to 46/gal, the lowest since Dec. 18.
Saudi Aramco's drilling program in the Central Province southeast of Riyadh has produced a third light oil discovery, triggering speculation the area could contain major reserves.
The al-Raghib-1 well tested 3,650 b/d of crude and condensate and 10 MMcfd of gas from 8,023-8,138 ft. Saudi Aramco says the find is commercial and will delineate it.
The company also plans further seismic to gauge the well's relationship to two earlier discoveries, al-Hawtah-1, 60 miles south, and Dilam-1, 17 miles northwest.
Al-Hawtah tested 8,000 b/d of light crude, and Dilam produced 4,300 b/d of light crude.
A Texas operator has pressed medium radius horizontal drilling technology a step further beyond previous limits.
Oryx Energy Co. drilled 2 Stroman-Harris in LaSalle County, Tex., to 11,046 ft measured depth. Horizontal displacement of 4,164 ft surpassed the previous record, set at a North Dakota well, by more than 600 ft.
Including the new well, which qualifies for a 1,574 b/d allowable, Oryx's 15 horizontal wells in Pearsall field averaged 7,200 b/d and 4.3 MMcfd in the week ended Jan. 4.
Oryx hopes to have seven rigs drilling horizontally full time in the field by April.
A federal task force has recommended that Congress allow export of as much as 25,000 b/d of California crude 20 gravity or lower, benefitting the U.S. trade deficit.
U.S. law does not allow domestic crude exports, but California independent producers complained oversupply has suppressed prices and persuaded Congress to ask for a government study in a trade bill provision last year. The Commerce Department led task force recommended exports of 15,000 b/d the first year, 20,000 b/d the second, and 25,000 b/d the third, followed by a government review.
The Interior Department has asked Exxon Corp. to pay $20.4 million for continuing government studies of environmental harm in Prince William Sound.
The studies will enable Interior to determine damages Exxon owes the government for harm to fisheries, wildlife, and the environment caused by the Exxon Valdez tanker oil spill last year. Exxon did not immediately agree to the assessment.
It said Interior has not provided an accounting of $15 million Exxon paid for initial studies last year, which Exxon said were "poorly designed." Interior said it will sue if Exxon does not pay the additional funds.
The U.S. Supreme Court has agreed to decide whether states can sue energy producers in federal courts for alleged price fixing. Kansas and Missouri raised the issue when they tried to sue a gas pipeline and five Wyoming gas producers on behalf of their consumers.
Federal antitrust law allows only direct purchasers of products to file antitrust suits in federal court. Targeting Kansas Power & Light Co., the states argued for the right to sue because regulatory agencies allow utilities to pass most of higher natural gas and electricity costs through to consumers.
The 10th Circuit Court of Appeals, Denver, ruled against the two states, which appealed to the Supreme Court, which may hear arguments in April. The Supreme Court also accepted Lujan vs. National Wildlife Federation, a case that questions the standing of environmental groups to challenge in court federal decisions to open public lands for development.
Supreme Court Justice Byron White has continued a stay of a court ruling that vacated the Federal Energy Regulatory Commission's Order 451 so producers could file appeal documents.
Meanwhile, the Justice Department agreed to appeal the case to the Supreme Court on behalf of FERC.
Last September a New Orleans federal appeals court struck down the plan--which was designed to encourage producers and pipelines to renegotiate old gas contracts--saying FERC exceeded its authority (OGJ, Sept. 25, 1989, p. 35).
Total/CFP can expect a free hand to boost Algeria's oil production (OGJ, Jan 8, Newsletter).
Pierre Vaillaud, Total/CFP's general manager, said the joint venture with Algeria's state company Sonatrach has much in common with one being set up in the Soviet Union to revitalize the Romashkino fields (OGJ, Dec. 18, 1989, p. 21). The difference, says Vaillaud, is that Soviet operators have already run through a vast range of measures to boost production.
Terms of the Soviet deal are still under discussion, but Vaillaud is banking on getting rights to the oil produced.
Dow Chemical Co. plans a major petrochemical expansion at Tarragona, Spain. The program, due for completion by 1992, includes hiking ethylene capacity to 450,000 tons/year from 340,000 tons/year, adding a 150,000 tons/year linear low density polyethylene plant, and boosting capacity for low density polyethylene by 45,000 tons/year to 250,000 tons/year.
Dow will raise high density polyethylene capacity by 40,000 tons/year to 90,000 tons/year and expand capacity of an existing linear polyethylene facility by 20,000 tons/year to 60,000 tons/year.
Dow is also reviewing the possibility of installing the company's first ethylene-acrylic acid copolymer unit and capacity to manufacture some engineering polymers at Tarragona.
Products will go to Spain, southern Europe, and North Africa.
Labor is expected to reject a Jan. 17 offer Amoco Oil Co. made covering unionized U.S. refining/petrochemical workers.
The offer, made at Whiting, Ind., was a 2 year contract with a 3.5%/year wage hike. Amoco agreed to hike company contribution to family hospital/medical insurance by as much as $40/month the first year and $35/month the second year.
A union spokesman said the offer doesn't cover some of its safety/environmental and dependent child care concerns._ Amoco's first offer, rejected for similar reasons, called for a 3%/year wage increase in a 2 year contract and further company premium contributions of as much as $30/month each year (OGJ, Jan. 15, p. 14).
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