INDUSTRY BRIEFS

Gas distribution

Sharjah Power & Water Authority, Sharjah, U.A.E., started work on a $70 million gas distribution network. To be completed in 2 years, the first phase will cost $40 million and will supply 25,000 consumers.

Gas marketing

City of Richmond, Va., let contract to NGC Corp., Houston, for management of its natural gas supply, transportation, and storage. Under terms of the full-service contract, NGC will manage more than 200 MMcfd of firm transportation capacity and 3.6 bcf of firm storage for the city. NGC says it will become the largest seller of natural gas to the city.

KeySpan Energy Corp.,
Brooklyn, and Enron Capital & Trade Resources Corp. (ECT), a unit of Enron Corp., Houston, formed an alliance to market gas-supply management services to gas distribution companies in the Northeast U.S. The alliance aims to improve local distribution companies' efficiency by integrating their gas transportation, supply, and storage assets into ECT's national gas trading operation. It was formed in response to deregulation of energy markets in the region.

Concern MoldovaGaz JSC,
the Moldovan gas transmission and distribution company, let contract to Redeco Energy Inc., Calgary, for supply of natural gas to be produced under a concession covering all of Moldova. The contract provides for an annually fixed price based on the current market price less a 5% discount. The contract will be valid for the rest of the concession agreement, operated by Redeco's 50% partner Costilla Energy Inc., Midland, Tex.

LNG

Qatar Liquefied Gas Co. (QatarGas) completed construction of its third LNG production unit 6 months ahead of schedule. The 2 million metric ton/year unit brings total capacity at the North field site to 6 million tons/year (OGJ, Apr. 27, 1998, p. 33). The company's second unit will be shut down June 12 for a 1-week maintenance turnaround. QatarGas is a venture of Qatar General Petroleum Corp. 65%, Total 10%, Mobil Corp. 10%, and Mitsui & Co. Ltd. and Marubeni Corp. 7.5% each.

Pipelines

Duke Energy Transport & Trading Co., Oklahoma City, purchased the assets and related marketing business of Mesa Pipe Line Co., Houston. The assets include 325 miles of pipeline in three Texas gathering systems near Midland, Snyder, and Centerville, plus associated trucking operations. These systems transport about 23,000 b/d of oil. Duke Energy Transport now owns and operates 2,300 miles of crude oil and NGL pipelines and transports 106,000 b/d of liquids.

Destin Pipeline Co. LLC,
a joint venture of Amoco Corp., Sonat Inc., and Tejas Energy LLC, will add two extensions to its $460 million gas pipeline and processing system in the eastern Gulf of Mexico. The system, under construction since December, is scheduled to start up in July. Construction of the extensions will begin in September. A 13-mile, 24-in. extension will transport production from fields on Main Pass Blocks 279 and 281 to Destin's 36-in. main line at a platform hub on Main Pass Block 260. A 32-mile, 24-in. leg will extend from there to Viosca Knoll Block 900, where it will interconnect with Gemini project production facilities.

Indian Oil Corp.
(IOC), New Delhi, and Gas Authority of India Ltd. (GAIL) formed a joint venture to lay an LPG pipeline from Jamnagar in Gujarat to Loni, near New Delhi. Under the terms of the agreement, GAIL will provide capital to construct the 1,246-km pipeline. IOC will finance LPG storage and handling facilities. The pipeline will have a capacity of 1.7 million metric tons/year when it goes on stream in April 2001 but will later be expanded to 2.5 million tons/year.

Exploration

Elf Exploration U.K. plc and Phillips Petroleum Co. U.K. Ltd. agreed to jointly evaluate prospective areas in disputed waters between the Faroe Islands and the U.K. The so-called White Zone has been under discussion between the U.K. and Denmark governments since the 1970s, when fishing rights were disputed. Offshore operators hope the governments can at last agree on boundaries so exploration licensing can take place. Elf says the agreement covers 65,000 sq km of the disputed area and follows a similar agreement the companies made during Ireland's Rockall Trough licensing round (OGJ, June 16, 1997, p. 32).

BHP Petroleum Pty. Ltd.
disclosed test results from a sixth well drilled on Algeria's Block 402a in the Berkine basin (OGJ, Mar. 21, 1998, p. 61). BHP said the SFNE-1 new-pool wildcat was drilled to 3,240 m TMD and found hydrocarbons in two pay zones in the same Triassic reservoir. On test, the lower zone flowed 2,870 b/d of 39° gravity oil during 24 hr through a 32/63-in. choke with wellhead pressure of 1,240 psi. The upper zone flowed 4,650 b/d of 42° gravity oil during 96 hr through a 40/64-in. choke with wellhead pressure of 1,890 psi.

Angolan state oil firm
Sonangol awarded operatorship of Block 24 to Esso Exploration & Production Angola (Block 24) Ltd., a unit of Exxon Corp. Block 24 is the second Angola block awarded to an Exxon affiliate as operator. The block covers more than 1.1 million acres in water depths of 1,600-5,900 ft and is 210 miles south of Luanda. Block interest holders are Esso 50%, Sonangol 20%, Petronas Carigali Overseas Sdn. Bhd. 15%, and a unit of Ocean Energy Inc. 15%.

Drilling-production

U.S. Minerals Management Service waived royalties on the first 87.5 million bbl of oil from Amoco Oil Co.'s Mississippi Canyon Block 84 field in 5,400 ft of water in the Gulf of Mexico. It was the second waiver MMS made under the 1995 Deepwater Royalty Relief Act. The first was in June 1997 for Tatham Offshore Inc.'s Ewing Bank Block 958 field.

Texaco Inc.
began commercial production of natural gas from its Barite South project 130 miles south of Lake Charles, La., in the Gulf of Mexico. Barite South, in 446 ft of water on East Cameron Block 381, is producing more than 50 MMcfd from the first well. Production is expected to peak at 140 MMcfd by yearend. Interest holders are operator Texaco 60%, Noble Affiliates Inc. unit Samedan Oil Corp. 25%, and Hunt Petroleum Corp. unit Aviara Energy Corp. 15%. Produced gas is sent 13 miles north via a 16-in. pipeline to Texaco's Sea Robin gas processing plant. From there, it flows to the Henry Hub in Erath, La.

Union Texas Venezuela Ltd.
assumed operatorship of the Boqueron area in eastern Venezuela. Union Texas and its partner, Preussag Energie GmbH of Germany, bid successfully for the Boqueron operating service contract during Venezuela's third marginal fields bidding round (OGJ, June 16, 1997, p. 27). Last month, ARCO agreed to acquire Union Texas Venezuela's parent company, Union Texas Petroleum Holdings (OGJ, May 11, 1998, p. 36).

Amerada Hess Corp.
successfully lifted the 1,320 ft compliant tower that prematurely submerged during installation (OGJ, May 25, 1998, p. 28). The tower is being inspected, and indications are that it did not suffer any damage. Following inspection, Amerada will install the tower on the 351-ft base section, already in place.

Equity Oil Ltd.,
Salt Lake City, reported that its Otto Lohse 1-22 well on Merlin Prospect, Glenn County, Calif., on test flowed 6.2 MMcfd of gas from a 46 ft interval at 5,414-5,460 ft through a 24/64-in. choke with flowing drillpipe pressure of 1,500 psi. The well cut 66 ft of net pay in three separate benches and was drilled to 5,600 ft TD. Operator Equity Oil plans to bring the well on production by mid-June. Interest holders are: Equity Oil 50%; Hallador Petroleum Ltd., Denver, 30%; and Sharon Energy Ltd., Englewood, Colo., 20%.

Equitable Resources Energy Co.
(EREC), Houston, a unit of Equitable Resources Inc., completed workover of West Cameron Block 197 Well 2 S/T, in West Cameron Block 198 field. Operator and 100% owner EREC said the well's gross production is 10.8 MMcfd of gas and 45 b/d of oil with flowing tubing pressure of 1,510 psi. The well cut 75 ft of net gas pay at 11,566-11,660 ft in 55 ft of water and was sidetracked and drilled to 11,715 ft TD. The well has increased production from West Cameron Blocks 180 and 198 fields by 20% to 28.7 MMcfd of gas and 2,006 b/d of oil.

Refining

Valero Energy Corp., San Antonio, signed a letter of intent to acquire Mobil Oil Corp.'s 155,000 b/d refinery at Paulsboro, N.J., for $228 million plus $108 million for inventories and working capital. Valero will supply Mobil with fuels and lubricant basestocks. Mobil will continue to supply lubricant crude feedstocks to the plant. Mobil will keep its fuels distribution system, including the Paulsboro terminal and truck rack. The Paulsboro lubricant blending plant, the Paulsboro technical center, and Mobil's retail units in the Northeastern U.S. will be unaffected by the deal. This transaction gives Valero five U.S. refineries with total capacity of more than 700,000 b/d.

India
approved increased foreign equity investments for construction of one refinery and a tripling of capacity at another. Construction will go ahead at Essar Oil Ltd.'s Vadinar refinery following approval to increase Chenderia Group of Switzerland's equity position to 25%. The refinery will produce LPG, naphtha, gasoline, kerosine/jet fuel, diesel, fuel oil, asphalt, and sulfur. India also approved further expansion of Mangalore Refinery & Petrochemicals Ltd.'s refinery to 180,000 b/d from 60,000 b/d.

Companies

Canadian Forest Oil Canada Ltd., Calgary, will acquire Unocal Canada Ltd.'s assets in the Canadian arctic and off Canada's west coast. The properties include: a 35% interest in a recent P-66 natural gas discovery near Fort Liard, N.W.T.; more than 225,000 net acres in the Northwest Territories; and a 6% interest in the Adlartok Beaufort Sea discovery. Canadian Forest also will acquire 110,000 acres off the west coast near the Queen Charlotte Islands.

United States Exploration Inc.
(USE), Denver, acquired all of Union Pacific Resources Co.'s interests in 336 producing oil and gas wells in 34 fields in the Wattenberg area of northeastern Colorado for $41 million in cash. The companies also entered into an exploration agreement giving USE the right to explore and develop 400,000 acres in the same area. The properties are producing 5.5 MMcfd of gas and 640 b/d of oil net. Proved reserves are about 140 bcfe net to USE.

Amoco Corp.
and Snyder Oil Corp., Denver, traded interests in properties in Wyoming's Green River basin. Amoco acquired the Jonah field portion of Snyder's interests in the Deep Green River Basin Project in exchange for 75% of Amoco's interest in the Wind River basin's Beaver Creek unit and two associated gas plants. Amoco and Snyder wells recently drilled in Jonah field are producing more than 10 MMcfd of gas. The trade resolves litigation concerning Amoco's prior agreement to sell the Beaver Creek assets to Howell Petroleum Corp. Howell and Amoco terminated the agreement, with Howell agreeing to purchase Amoco's interests in other outside-operated properties in Utah and Wyoming.

Pride International Inc.,
Houston, will acquire a 60% interest in a new Bolivian firm, Cia. Boliviana de Perforacion SAM (CBP), formed as a result of the privatization of Bolivian state oil firm Yacimientos Petroliferos Fiscales Bolivianos, which will hold the remaining 40%. CBP will be capitalized with a contribution of 13 land drilling and workover rigs, oil field service trucks, and other related assets by YPFB and $17 million in cash by Pride.

Octel Corp.,
Ellesmere Port, U.K. , a specialty chemical company, began trading on the New York Stock Exchange last week following its spin-off from Great Lakes Chemical Corp. Octel produces petroleum additives, including tetra ethyl lead. The company distributed 14.7 million shares to Great Lake shareholders, with one Octel share for every four Great Lakes shares. Octel also paid a $350 million dividend to Great Lakes.

Western Mining Corp. Ltd.
plans to sell its 62.7% interest in the Goldfields Gas Transmission pipeline, Western Mining's lateral gas pipelines and receiving stations in Western Australia, and four 40-MW gas-fired generators at Kambalda, Kalgoorlies, Leinster, and Mount Keith. The company hopes to raise $500 million (Australian) from the sale. The pipeline crosses from the North West Shelf gas fields, through the Pilbara region, and south to Kalgoorlie and Kambalda.

Oil India Ltd.
(OIL) plans to produce 3.2 million metric tons of crude oil in fiscal year 1998-99. Oil production reached 3.094 million tons in fiscal 1997-98. Gas sales are expected to reach 1.15 billion cu m compared with 1.24 billion cu m in 1997. OIL posted a 29.3% net earnings increase to $81.3 million in 1997-98, compared with $63.3 million for the prior fiscal year. The firm also plans exploration drilling in the Ganga Valley in Uttar Pradesh.

National-Oilwell Inc.,
Houston, agreed to purchase 100% of Phoenix Energy Products Inc.'s common stock for $115 million in cash plus the assumption of $35 million in debt. Houston-based Phoenix manufactures and sells drilling and completion expendable products and solids control equipment as well as certain downhole equipment. Phoenix also manufactures a line of drill bits. Also, National-Oilwell will acquire all outstanding capital stock of Specialty Tools Ltd., an Aberdeen firm that designs and engineers downhole tools.

Coalbed methane

Hallwood Energy Partners LP (HEP) and Hallwood Consolidated Resources Corp. (HCRC), both of Denver, will pay $34.5 million for a volumetric production payment in 34 coalbed methane wells in La Plata County, Colo., to an affiliate of Enron Corp. HEP and HCRC will share equally in the acquisition. Hallwood Petroleum Inc., an affiliate of HEP and HCRC, has managed and operated the 34 wells since July 1996. Hallwood Petroleum has increased production to 26 MMcfd from 14 MMcfd through workovers and improvement of gas gathering facilities.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.