OGJ NEWSLETTER

There's some good news from the otherwise dismal U.S. oil scene.

The Baker Hughes rig count climbed to 689 the week ended July 19, a 22 unit jump from the prior week, which had seen a 19 unit increase.

That's the highest tally since 716 the week ended Jan. 17 but still down 17% from a year ago.

And second quarter wasn't too bad for some companies reporting financial results.

Enron Oil & Gas saw net income spurt 100% from a year ago to $14.6 million. At the end of the quarter Enron had more than 215 MMcfd of tight sands gas sales, and it plans to drill at least 250 net tight sands gas wells this year. It expects the federal tax credit for tight sands gas combined with a Texas severance tax exemption on tight sands gas revenues to generate an after tax income contribution of more than $45 million in 1992.

Diamond Shamrock second quarter 1992 earnings rose to $23.5 million from $17.7 million a year ago, and Unocal's second quarter earnings jumped to $66 million from only $5 million same time last year. Diamond Shamrock cites relatively strong margins and higher sales volumes.

Chairman Richard Stegemeier said Unocal's improved results reflect increased refining and marketing earnings and lower dry hole costs.

Apache's second quarter profits rose to $24 million from $6.6 million in second quarter 1991. Results reflect an $18.5 million after tax gain from sale of its interest in Natural Gas Clearinghouse.

However, Amoco reported a net loss of $478 million for second quarter related to after tax charges totaling $805 million, mainly for losses on asset dispositions and costs of restructuring and workforce reductions. Second quarter 1991 earnings were $238 million.

KCS Energy's production of natural gas under an above-market price contract has increased 180% since January to 78 MMcfd.

The Houston company's share of production from Bob West field in Starr and Zapata counties, Tex., is under contract to Tennessee Gas Pipeline with a July price of $6.69/Mcf plus reimbursement of severance taxes. The contract, which requires Tennessee Gas to take or pay for 85% of deliverability, runs through January 1999. The contract was upheld in court last month (OGJ, June 29, p. 47).

Venezuela's Pdvsa has cut its 1992 budget by about $1 billion. That breaks out to cuts of $530 million, to $4.5 billion, in capital spending and $485 million, to $4.3 billion, in operating outlays.

Still, Pdvsa expects to maintain crude productive capacity at 2.8 million b/d and total liquids production at 2.5 million b/d this year.

The cash crunch is spurring Pdvsa to offer more sweeteners to international oil companies to invest in upstream operations in Venezuela as private sector involvement there continues to inch forward (OGJ, July 6, p. 43). Pdvsa and its units are reportedly considering an investment package that would include the right to explore for and develop light and medium crude reservoirs in part of the Delta Amacuro territory in eastern Venezuela.

Previous upstream foreign investment in Venezuela has been limited to Orinoco heavy crudes, marginal inactive fields, and offshore LNG.

BP will lead a feasibility study of integrated development of four North Sea oil and gas fields and their satellites. The l.4 million ($2.69 million) study, known as the Eastern Trough Area Project (ETAP), involves total reserves of 650 million bbl of oil equivalent owned by BP and eight other companies. The study will consider developing BP operated Marnock, Mungo, and Machar fields and Shell Expro's Heron field, together with satellites such as BP's Monan and Shell's Skua. It will consider a wide range of options, including a single processing/export platform with multiple subsea tiebacks, and small unmanned partial processing platforms. BP, as owner of the Forties pipeline system, would be keen to compete for ETAP transport business, but a new pipeline also will he considered. As major shareholder in the fields, BP will operate ETAP on behalf of Shell, Agip, Hamilton Bros., Murphy/Odeco, Lasmo, Fina, and Monument Energy.

Conoco Norway predicts use of shuttle tankers to transport oil from Heidrun field in the Norwegian North Sea could save more than $100 million during field life. By feeding oil directly into tankers via a continuously loading, revolving turret facility linked to a standby tanker, it could avoid permanent moorings for tankers. In all, three or four tankers would be needed. Conoco is eyeing either a 1.5 million bbl floating storage/offloading unit or a 650 ft concrete loading spar. It also is evaluating available direct shuttle loading systems, including one developed by field partner Statoil, so it can make a recommendation to the Norwegian oil ministry by Sept. 1.

Oman has okayed its first offshore project, approving International Petroleum Bukha Ltd.'s plan to bring Bukha field into full scale development.

The $60 million project includes completing two of three wells and bringing production to shore via a 35 km, 16 in. pipeline to be processed at the Khor Khwair plant in Ras al Khaimah after modifications are complete.

Initial production is estimated at 4,400 b/d of condensate, 1,100 b/d of LPG, and 40 MMcfd of residue gas.

IPC is negotiating to sell excess gas to local power plants, which, if successful, will enable the company to boost condensate production.

Petromin Shell is studying a proposal to upgrade the gas oil unit at Jubail, Saudi Arabia, to comply with stiffer environmental specs for refined products. It is considering lowering sulfur content to 0.05% from 0.3%, OPEC News Agency reports. The refinery has debottlenecked its design capacity of 250,000 h/d, peaking at 295,000 b/d last December, and exceeded design capacity in 1991 by 24%.

Algeria's new Prime Minister Belaid Addessalam has appointed Hacen Mefti, a Sonatrach senior executive, as his energy minister, replacing Nordine Ait Laoussine (OGJ, July 20, Newsletter).

Mitsubishi Petrochemical Co. plans to slash production of low density polyethylene by a much as 40% in August-September in response to a market slump. Plans are to cut polypropylene production 20% and step up its ethylene production cut to 20% from 10%. Kyodo News Service reports Mitsubishi hopes to reduce its product inventory to less than a 1 month supply by the end of September from the current 1.6 month supply and increase prices by more than 15 yen/kg ($120/ton).

Pemex plans construction of a 350,000 metric ton/year polymer and chemical grade polypropylene plant at the Morelos petrochemical complex in Coatzacoalcos, Veracruz, to be complete in mid-1993.

Pakistan continues to pursue expansion of petroleum ventures with war-torn Afghanistan.

Karachi wants a proposed joint ministerial commission to study short and long term agreements. The new Mujahadeen government in Kabul has asked for Pakistani help in oil and gas exploration and marketing its crude oil and gas exports, of which the former U.S.S.R. had been the sole buyer. Afghan hydrocarbon exports halted after the fall of the Soviet-installed government this year. Karachi also seeks to halt smuggling of gasoline and diesel into Afghanistan, creating spot shortages in Pakistan.

Shell Australia has outlined an ambitious expansion proposal for the huge Northwest Shelf gas project calling for a further outlay of $6-9 billion (Australian). It hinges on NWS joint venturers led by Woodside Petroleum boosting proved gas reserves in the region and fulfillment of a predicted boom in LNG demand the next 20 years. Woodside group has begun a $300 million exploration program to prove more gas reserves and discover more oil in the region. Bernard Wheelahan, Shell Australia executive director of upstream oil and gas, said the proposed expansion would involve jumping LNG output from the currently planned 1995 target of 7 million tons/year to about 12 million tons/year from five trains, plus adding four LNG carriers to the NWS fleet, a second pipeline to shore, a third production platform, and another loading jetty on Burrup Peninsula.

Indonesia and Malaysia have agreed to supply Taiwan with an additional 3 million metric tons/year of LNG (see related story, p. 52).

Indonesia, currently exporting 1.5 million tons/year to Taiwan, will jump that by 750,000 tons/year. Malaysia will provide 2.5 million tons/year.

Delivery terms and timetables aren't disclosed. State owned Chinese Petroleum Corp. has earmarked $760 million to expand its natural gas storage and distribution system to meet Taiwan's rapidly growing demand for LNG imports, expected to reach 4.3 million tons/year in 1995.