INDUSTRY BRIEFS

June 20, 1994
A FEDERAL JURY in Anchorage found Exxon Corp. and former Exxon Valdez tanker Capt. Joseph Hazelwood acted recklessly in the 1989 oil spill off Alaska. That opened the door for more than 10,000 plaintiffs to pursue $15 billion in potential punitive damages related to the spill. The trial's next phase, to begin next month, will assess the amount of punitive damages. Exxon contends no punitive damages should be awarded because it has spent more than $3 billion in cleanup and settlement

COURTS

A FEDERAL JURY in Anchorage found Exxon Corp. and former Exxon Valdez tanker Capt. Joseph Hazelwood acted recklessly in the 1989 oil spill off Alaska. That opened the door for more than 10,000 plaintiffs to pursue $15 billion in potential punitive damages related to the spill. The trial's next phase, to begin next month, will assess the amount of punitive damages. Exxon contends no punitive damages should be awarded because it has spent more than $3 billion in cleanup and settlement costs.

A STATE COURT in Alaska ruled against Mapco Alaska Petroleum Inc. in its suit against the state regarding retroactive price changes under Mapco's 1978 royalty oil purchase agreement. The court found Mapco liable for as much as $98 million in state claims for retroactive price changes plus interest. Mapco, which can raise additional defenses at a scheduled 1995 trial, is considering its options.

LNG

CABOT LNG CORP. and Granite State Gas Transmission Inc. agreed to study the feasibility of developing a liquefied natural gas storage site in southern Maine to serve U.S. Northeast utilities. Construction costs are pegged at $50-100 million, with LNG storage capacities tentatively planned at 2-4 bcf. The facility could start up in 1997.

REFINING

CONOCO INC plans to expand crude processing capacity by 40,000 b/d and install a new 34,000 CCR reformer unit at its 165,000 b/d Lake Charles, La., refinery. They are the biggest elements of a previously disclosed, $250 million project at the refinery (OGJ, June 13, p. 46).

COASTAL REFINING & MARKETING INC. has a limited production run of ETBE under way at its Corpus Christi, Tex., refinery. Coastal produces MTBE and ETBE for ARCO Chemical Co. under a processing agreement. ETBE demonstration runs totaling 250,000 bbl were completed in late 1992 and marketed in summer 1993. ARCO will produce ETBE continuously if ether producers can obtain tax treatment equal to that for direct ethanol blending. Further ETBE production will depend on the tax issue and supply of ethanol.

CYPRUS PETROLEUM REFINERY LTD. plans to debottleneck crude distillation and hydrotreater units at its 18,000 b/d Larnaca, Cyprus, refinery. The company also intends to build a 150,960 bbl. capacity floating roof tank on the site. Engineering contractors were asked to complete prequalification by mid-June to make the tender list.

PETROCHEMICALS

EUROPEAN COMMISSION approved plans by a joint venture of Exxon Chemical and Shell to expand a 200,000 metric ton/year low density polyethylene (LDPE) plant at Notre Dame de Gravenchon, France. The venture, Cie. Industrielle des Polyethylenes de Normandie, will use advanced technology giving it greater flexibility to produce linear LDPE. EC approval was needed for an exemption to stiff competition rules set up by the European Union, which recently rejected demands by the Gulf Cooperation Council to lift 13-15% tariffs on imports of GCC petrochemicals.

UNION CARBIDE CORP. let contract of undisclosed value to Fluor Daniel for construction services for a 300 million lb/year butanol plant at Taft, La. It is scheduled to start up in late 1995. Fluor Daniel currently is providing construction services for expansion of Carbide's Star polyethylene plant at Taft.

COMPANIES

ENTERPRISE OIL PLC hiked its offer to acquire Lasmo plc to 1.65/share ($2.48/share) from 1.50/share ($2.25/share) (OGJ, May 9, P. 31), valuing Lasmo's ordinary share capital at 1.59 billion ($2.39 billion). Lasmo urged shareholders to reject the offer, saying it represented second class paper and no cash.

CODA ENERGY INC., Dallas, agreed to form a joint venture with institutional funds manager State Street Research Energy Inc. (SSRE) to acquire oil and gas properties. SSRE has arranged for commitment of $55 million to the program. Along with capital contributions from Coda and other participants and bank financing, as much as $200 million in acquisition funds could be available to the venture.

CAIRN ENERGY USA INC., Dallas, signed a letter of intent to acquire all of Smith Offshore Exploration Co. II's oil and gas assets in exchange for 4.5 million shares of Cairn common stock, subject to revaluation, to be issued to Smith II or Aeneas Group Inc., Smith II's sole shareholder. Aeneas is owned by Harvard College. Assets involved are 25 blocks in Gulf of Mexico federal waters, including four developed blocks with minor production and 21 undeveloped blocks.

IMPERIAL OIL LTD. plans to cut its resources division work force by the end of June as part of an effort to trim operating costs to about $5 (Canadian)/bbl from about $6.50/bbl. The division employs 1,900 people with a support staff of about 400.

PENNZOIL CANADA INC. accepted about 22.9 million common shares, or about 94% diluted, of Co-enereo Resources Ltd. and about $49.6 million (Canadian) principal of Co-enerco debentures, or about 99%, under a $310 million tender offer (OGJ, June 13, p. 47).

SAFETY

MARAVEN SA let contract to Chevron Corp. to conduct a process safety management review of oil and gas producing facilities in Venezuela's Lake Maracaibo. Included are onsite inspections at 39 Maraven facilities, ranging from offshore drilling rigs to natural gas compression plants. The review is to begin this month and take about 2-1/2 months.

LUBRICANTS

SUN CO.INC. entered into a 50-50 lubricants blending/packaging/marketing venture in Mexico with Aceites y Parafinas Industriales de CV (API), Guadalajara. API, which manufactures and distributes rubber process oils, recently became a distributor for Sunoco motor oils and other lubricants.

GAS PROCESSING

PANCANADIAN GAS PRODUCTS LTD. and Alberta Energy Co. Ltd., both of Calgary, plan to build an 800 MMcfd natural gas liquids straddle plant near Empress, Alta. NGL recovery will emphasize propane and heavier hydrocarbons as well as ethane. PanCanadian and AEC will supply plant baseload volumes, with remaining capacity available to process third party gas. Construction is to begin late this year.

WILLIAMS FIELD SERVICE GROUP started construction of a 30 MMcfd, Ortloff process cryogenic turboexpander gas processing plant in Southwest Hemphill County, about 13 miles south of Canadian, Tex.

Start-up is slated for Oct. 1 .1 The Hobart Ranch plant will process Texas Panhandle production transported on Williams Natural Gas' pipeline. Expansion is being considered because the plant is almost fully subscribed with long term dedicated volumes.

MOBIL NATURAL GAS INC. (MNGI) will assume management responsibility for Mobil Corp.'s gas processing unit, which manages Mobil's interest in 27 gas processing plants and more than 2,600 miles of operated gathering systems. Plans are under way to develop several of the plants into marketing hubs. With the combination, processing customers now have expanded access to MNGI's risk management services, and MNG] has expanded term sales and transportation/exchange departments.

GPM GAS CORP., Houston, began expanding its recently opened Zia gas processing plant in Lea County, N.M. (OGJ, Mar. 7, p. 54), to 40 MMcfd from 29 MMcfd. GPM is installing high pressure separation equipment to move gas into the plant without inlet compression, installing a new expander wheel, and modifying a residue compressor to increase compression to 1,500 hp from 1,000 hp. The project is to be finished this summer.

EXPLORATION

AMOCO TRINIDAD OIL CO.'S 13 South East Galeota (SEG) wildcat logged 700 ft of net pay at 8,800-10,300 ft about 40 miles southeast of Galeota Point, Trinidad. It was drilled to 10,650 ft in 240 ft of water. Amoco pegs the discovery's reserves at 1 tcf. It is the first of three wells planned to confirm reserves to feed a proposed liquefied natural gas export project in Trinidad. Amoco's 3 East Mayaro wildcat is to spud this month at a site 45 miles east of Galeota Point.

LPG

MITSUI & CO. plans to join Vietnam Oil & Gas Corp., British Petroleum Co. plc and TransCanada PipeLines Ltd. in a feasibility study for a $400 million liquefied petroleum gas export project in Viet Nam. A joint venture may be set up by yearend to take natural gas from offshore Bach Ho oil field via a new 130 km pipeline to a gas processing plant to be built southeast of Ho Chi Minh City. The venture is to start up in late 1996 and export 260,000 metric tons/year.

DRILLING-PRODUCTION

MALAYSIA'S RENONG BHD. will form a 50-50 venture with Uzbekistan's state owned oil company to develop 20 million bbl Karaktay oil field and seek exploration rights in southern Uzbekistan. Renong unit Probadi Sdn. Bhd. will provide enhanced production technology and financing assistance to Uzmal JV, while Uzbekneftegaz unit Unzneftegazdobchaya will provide infrastructure, facilities, and local expertise. Produced crude will be sold to Uzbekistan's Ferghana refinery.

MAXUS VENEZUELA (CI) LTD. agreed to assign BP Exploracion de Venezuela SA a 45% interest in the Quiriquire Unit in eastern Venezuela, part of that country's program to reactivate marginal fields. Maxus remains operator with a 50% interest, and Venezuelan firm Otepi Consultores holds 5%. The Maxus group is committed to a 3 year, $36 million program that includes a 3D seismic survey, drilling of two wildcats, and study of a workover program OGJ, Nov. 15, 1993, p. 33).

NOBLE DRILLING CORP. and Chiles Offshore Corp. signed a definitive merger agreement involving an exchange of stock that is to become effective before Sept. 30. After the merger, addition of Chiles' 13 jack ups will boost Noble's drilling fleet to 44 mobile offshore units, including 32 jack ups.

SAGA PETROLEUM AS reported first oil from Tordis field on Norwegian North Sea Block 34/7. Tordis was developed with five subsea producers and two water injectors tied back via manifold to the Gullfaks C platform. Production is to reach 75,000 b/d. Field reserves were estimated at 113 million bbl of oil in 1990, but Saga said predrilling results implied a significant upgrading of reserves.

PHILLIPS PETROLEUM CO. U.K. LTD. claimed a drilling footage world record, besting a previous record announced recently by Marathon Oil Co. (OGJ, June 6, P. 41). Santa Fe Drilling Co. (North Sea) Ltd. drilled 8,263 ft in 24 hr in the North Sea Judy field 30/7a-P8 development well using the Galaxy I jack up. This is the fifth time Phillips has broken the record for footage in the North Sea-the second time for a world mark in Judy field, drilling 7,255 ft in 24 hr last March.

NGL

TRIDENT NGL INC., The Woodlands, Tex., will shut down its 82,000 b/d Mont Belvieu, Tex., natural gas liquids fractionator until the first week of July to complete construction of a 20,000 b/d expansion. During downtime, repairs will be completed to equipment damaged by a minor fire June 10.

PIPELINES

U.S. FEDERAL ENERGY REGULATORY COMMISSION granted a final certificate to TransColorado Gas Transmission Co., Lakewood, Colo., to construct and operate a 292 mile interstate gas pipeline from producing areas in the Piceance, Uinta, and Green River basins of Northwest Colorado to interconnections with El Paso Natural Gas Co. and Transwestern Pipeline Co. systems at the Blanco, N.M., hub.

CMS GAS TRANSMISSION & STORAGE CO. and Michigan Consolidated Gas Go. agreed to jointly own a proposed $170 million intrastate gas pipeline and related gas treating plants in northern Michigan's Crawford, Otsego, Kalkaska, and Alpena counties to serve the state's growing Antrim shale gas production (OGJ, May 30, p. 97). Included are a 25 mile pipeline from Chester to Goose Creek and as many as four gas treating plants to remove CO2 from Antrim gas. Construction could begin late this year. Under the agreement, CMS will withdraw its application for a competing pipeline proposal.

GOVERNMENT

PERU hired Houston law firm Andrews & Kurth LLP to represent Petroleos del Peru in the state owned petroleum company's privatization. Essentially all of Petroperu's assets, including exploration and production licenses, four refineries, a 1,100 km oil pipeline, terminals, gas plants, and other facilities, will be sold this year.

COGENERATION

COLUMBIA GAS TRANSMISSION CORP., Charleston, W.Va., is supplying 5.5 MMcfd to a new 46,500 kw, gas fired cogeneration plant in Vineland, N.J. The plant went on line June 1, providing steam to the adjacent Progresso Foods plant and electricity to Vineland's electric utility. Columbia Gas System unit TriStar Ventures Corp. and an Atlantic Generation Inc. unit are partners in Vineland Cogeneration Ltd., which owns and operates the plant.

Copyright 1994 Oil & Gas Journal. All Rights Reserved.