INDUSTRY BRIEFS

Exports-Imports

Mexico's Comisión Federal de Electrícidad (CFE) signed a 10-year contract worth about $1 billion to buy up to 300 MMcfd of natural gas from San Diego's Sempra Energy International for the Presidente Juarez power plant at Rosarito, Baja California. Sempra will provide gas transportation in the U.S. and lay a 23-mile, 30-in. pipeline from the U.S.-Mexican border to the plant. Deliveries will begin in December 1999. CFE is increasing plant capacity to 1,240 MW from 680 MW. The transportation part of the contract will support development of a gas distribution system in Tijuana, which Mexico will put out for bid to private firms (OGJ, Aug. 10, 1998, p. 28).

Exploration

Total disclosed results of a new-pool wildcat in the Jusepin permit area in eastern Venezuela. Cotoperi-1 confirmed a second structure on the block 10 km from Jusepin field. Jusepin currently produces about 35,000 b/d from three wells. Cotoperi-1 flowed 7,650 b/d of 34° gravity crude oil on test. Total plans further assessment of the Cotoperi find. Jusepin permit interests are operator Total 55% and Amoco Corp. 45%.

Black Sea Energy Ltd.,
Calgary, will spend as much as $7.5 million on a farm-out in the Ucayali basin in east-central Peru. The company will acquire an interest of as much as 25% in a block from Pangaea Energy International, a private Canadian company that has an 88% interest in the block. Murphy Oil Corp., El Dorado, Ark., holds the remaining 12%.

Shell U.K. Exploration & Production,
operating joint venture of Shell U.K. Ltd. and Esso Exploration & Production U.K. Ltd., disclosed an oil strike on U.K. North Sea Block 21/12. Shell/Esso said the 21/12-3 new-pool wildcat was drilled in 279 ft of water to a total measured depth of 9,669 ft. The well flowed 8,200 b/d of 33° gravity oil on test. Interests in the well are: Shell and Esso 31.3% each, Burlington Resources Inc. 26%, and Seafield Resources plc 11.4%.

EEX Corp.,
Houston, disclosed a gas find on West Cameron Block 204 in the Gulf of Mexico. On test, the West Cameron Block 204 No. 1 discovery well flowed at a maximum rate of 30 MMcfd of gas and 86 b/d of condensate through a 40/64-in. choke at 3,415 psi. The well logged about 60 ft of net pay in Cib. carst. sand at about 10,000 ft. Operator EEX holds a 60% interest in the well; Brazilian state firm Petrobras holds 40%. Production is expected to begin early in the fourth quarter.

Petrochemicals

Esso (Thailand) Public Co. Ltd. let contract to Foster Wheeler Energy Ltd., Reading, U.K., for engineering, procurement, and construction work on an aromatics plant to be built at Sriracha, Thailand. The plant, to be built next to Esso's Sriracha refinery, is due for completion in 1999. It will recover paraxylene from reformate, with capacity for 350,000 metric tons/year of high-purity paraxylene. Foster Wheeler said the plant will resemble the entire back end of another Far East aromatics plant, thus providing Esso cost savings and schedule advantages.

M.W. Kellogg Technology Co.,
Engelhard Corp., and United Catalysts Inc. (UCI) formed an alliance to market and provide technical services for the catalyst used in the Kellogg Advanced Ammonia Process (KAAP). Engelhard, Iselin, N.J., remains exclusive manufacturer of the KAAP catalyst, while Louisville's UCI will be exclusive marketer worldwide. UCI will provide technical services for all KAAP catalysts, including those in existing plants. Kellogg will continue in its role as process licenser.

Pipelines

Australian Gas Light Co. (AGL) and Western Australian utility Western Power will build a $72 million (Australian), 530-km gas pipeline from the main Dampier-Bunbury trunk line to supply mining projects and townships in Western Australia's Murchison region, including Meeka- tharra, Cue, and Mount Magnet. The gas will be used to generate power, replacing existing diesel-fueled power supplies.

East Australian Pipeline Ltd.
and Transmission Pipelines Australia commissioned the $50 million (Australian), 151-km InterConnect natural gas pipeline from Wagga Wagga, N.S.W., to Barnawatha, Vict. The line links South Australia's Cooper basin fields with Victoria's Bass Strait fields via the Moomba-Sydney pipeline and Victorian distribution network. It provides the first competition between the two supply sources. AGL is supplying the first gas to Victorian gas retailer Energy 21 and is negotiating a second contract to provide standby supplies to help the state's three gas retailers meet peak loads.

Alliance Pipeline Project,
Calgary, received a favorable environmental review from the U.S. Federal Energy Regulatory Commission. FERC said the natural gas pipeline from Western Canada to Chicago would have limited adverse environmental effects and would be environmentally acceptable, with the adoption of mitigation measures. Alliance expects to receive final approval in mid-September for the 1.3 bcfd, $3.7 billion (Canadian) natural gas line.

Courts

Longhorn Partners Pipeline filed a lawsuit in an El Paso state district court against Navajo Refining Co., its parent Holly Corp., and an Austin law firm. The suit alleges that the three conspired to monopolize the West Texas gasoline market and maintain "artificially high" prices. It accuses Navajo of funding an attempt to block Longhorn's plan to ship gasoline in an idle crude line (OGJ, Aug. 31, 1998, p. 15). Longhorn says Navajo hired George, Donaldson & Ford LLP to orchestrate litigation, ostensibly on behalf of area ranchers and to protect the environment. Longhorn is seeking damages of as much as $1 billion.

Mobil Oil Corp.
agreed to settle for $11.5 million a lawsuit filed against it by the Texas General Land Office. The suit charged that Mobil underpaid royalties from oil production on state lands. The move follows similar settlements by Chevron U.S.A. Inc. and ARCO. The Texas GLO has sued nine major oil companies in all.

Companies

Barrington Petroleum Corp., Calgary, is searching for a "white knight" to help it fight off a $385 million (Canadian) unsolicited takeover bid by Sunoma Energy Corp. (OGJ, Aug. 31, 1998, p. 30). Barrington said it has received interest from Canadian, U.S., and European producers.

R&B Falcon Corp.
and Cliffs Drilling Co. signed a definitive merger agreement, following an earlier letter of intent (OGJ, Aug. 24, 1998, p. 34). Terms of the agreement stand as initially outlined.

NOVA Corp.,
Calgary, is selling its 26% interest in Dynegy Inc. (formerly NGC Corp.), Houston. NOVA said it is divesting its stake in the energy service company, worth about $463 million, in order to focus on its core petrochemicals business. Chevron Corp. and BG plc each own 26% of Dynegy common stock and has right of first refusal to acquire NOVA's shares. Chevron has said it is interested in increasing its holding in Dynegy.

U.S. Federal Trade Commission
said Exxon Corp. agreed to sell its motor oil viscosity-improver business to Chevron Chemical Co., thus enabling Exxon to enter into a joint venture with Royal Dutch/Shell. FTC said that, without the divestiture, Infineum, an international Exxon-Shell venture in fuel and lubricants additives, would have hurt competition in the viscosity-modifier trade.

Ultramar Diamond Shamrock Corp.
(UDS), San Antonio, and Koch Industries Inc., Wichita, formed a joint venture of their NGL and petrochemicals operations at Mont Belvieu, Tex. The new Houston-based firm, called Diamond-Koch, owns: UDS's majority interest in propylene splitters and related distribution pipelines and terminals at Mont Belvieu; UDS's Mont Belvieu hydrocarbon storage operation; Koch Hydrocarbon Co.'s majority interest in the Mont Belvieu I NGL fractionator; and certain UDS and Koch Pipeline Co. supply systems in the area.

Refining

U.S. Environmental Protection Agency said Coastal Corp., Houston, agreed to a $1.2 million settlement to resolve claims that its subsidiaries and affiliates violated air pollution laws at power plants serving a Coastal refinery at West Deptford Township, N.J. The Coastal firms will pay a $300,000 penalty and install a $900,000 scrubber.

Shell Canada Products Ltd.
completed the sale of its idled Balzac refinery to Ventech Process Equipment Inc., Houston. The refinery was shut down in 1992. Ventech will begin dismantling the plant and moving it to an undisclosed location. This process is expected to be finished in second half 1999. The idle refinery's staff of four will remain on site to manage Shell's demolition and reclamation commitments.

Environment

EPA issued tougher emission standards for nonroad diesel engines. The standards, to phase in during 1999-2008, will reduce ground-level ozone and particulates two-thirds from current standards. EPA said NOx emissions will be cut by 1 million tons/year by 2010-equal to removing 35 million passenger cars from the road-at a cost of about $600/ton.

Drilling-production

Shell Deepwater Development Inc. signed a 5-year contract with RBF Exploration Co., a unit of Houston's R&B Falcon Corp., for a new-generation ultradeepwater moored semisubmersible, the RBS-6. Delivery is slated for November 1999. The design was developed by R&B Falcon and Ishikawajima-Heavy Industries Co. Ltd., Tokyo. The semi will have a variable deck load of 6,000 metric tons and can operate in a moored configuration in up to 8,000 ft of water. Shell will use the rig in the Gulf of Mexico during the contract period, but it is suitable for use in the North Sea and West of Shetland areas. The contract will provide revenues of $345 million vs. an expected construction cost of $255 million.

An appraisal well
drilled by Italian firm ENI confirmed that Monte Alpi field, on southern Italy's Grumento Nova concession, extends west into the Volturino concession. Monte Alpi was previously proven to lie mainly in Grumento Nova in the southern Apennines (see map, OGJ, Nov. 4, 1996, p. 38). On test, appraisal well Alli 1 flowed at a maximum rate of 7,717 b/d of 35° gravity oil through a 1/2-in. choke, restricted by flaring constraints. Flow was from a 1,450-m horizontal section of the well, at a depth of 2,600 m. ENI is operator of the well and has a 45% stake in it; Enterprise Oil Italiana SpA has a 55% interest.

U.S. Minerals Management Service
accepted proposals to take royalty oil in kind from selected federal leases in Wyoming. MMS estimated that the pilot project will increase its royalty revenues by nearly 95¢/bbl above what producers had been paying in value for the oil.

The Saipem 7000
heavy-lift vessel moved on location at the Thebaud wellhead jacket near Sable Island off Nova Scotia to add the cellar deck to the installed jacket as part of the Sable Offshore Energy Project (SOEP). The Thebaud process and North Triumph jackets will be brought by barge from the Gulf of Mexico for installation in September and October. Saipem 7000 will return to the area in mid-1999 for final installation work. Meanwhile, Santa Fe International Corp., Dallas, took delivery of Galaxy II, a Keppel Fels Mod VI-design, Universe Class heavy-duty jack up. SOEP will use Galaxy II, slated to arrive at Halifax in October, to drill Thebaud and North Triumph production wells.

Petroleum Geo-Services ASA,
Lysaker, Norway, completed construction and the onshore commissioning phase of the Ramform Banff floating production, storage, and offloading (FPSO) vessel. The vessel will sail to Conoco (U.K.) Ltd.'s Banff field to begin mooring and connection to subsea wellheads (OGJ, Mar. 10, 1997, p. 39). The FPSO has a production capacity of 95,000 b/d. It was built in only 19 months (see related story, p. 39).

BG Exploration & Production Ltd.
announced test results of an appraisal well drilled on the West Delta Deep Marine concession in the Nile Delta off Egypt. Scarab-2 flowed more than 30 MMcfd of gas. In June, the Scarab-1 and nearby Saffron-1 discovery wells flowed 30 MMcfd and 90 MMcfd, respectively, on test. BG said these discoveries will be developed to supply the growing domestic gas market in Egypt's Upper Nile area. In April, BG signed a deal with Egyptian General Petroleum Corp. to develop a gas grid along the Nile Valley (OGJ, Apr. 27, 1998, p. 28).

Gas processing

Tejas Natural Gas Liquids LLC and Marathon Oil Co. will jointly build a $30 million cryogenic gas processing plant near Centerville, La. The 300 MMcfd Neptune gas processing plant is scheduled for start-up in first quarter 2000. The plant will primarily serve the Nautilus Pipeline and Manta Ray Offshore systems, which are owned by affiliates of Tejas, Marathon, and Leviathan Gas Pipeline Partners LP. It is being built to handle growing gas production from the deepwater Gulf of Mexico. Tejas is a unit of Shell Oil Co.

Terminals

India approved Indian Oil Corp.'s (IOC) proposal to form a joint venture with Petronas of Malaysia to build a 600,000 metric ton/year LPG import terminal at Haldia in West Bengal state. The project is estimated to cost 2 billion rupees. Approval had been delayed because a similar proposal was submitted by a joint venture of Indo-Burmah Petroleum Co. (IBP) and Caltex Petroleum Corp., but IBP has since exited the JV (OGJ, July 27, 1998, p. 46).

TransMontaigne Terminaling Inc.
(TTI) and TransMontaigne Transportation Services Inc., units of Denver's Transmontaigne Inc., will expand refined products storage capacity along the Chicago-area Norco Pipeline System by 480,000 bbl. Four 120,000-bbl internal floating-roof storage tanks are being built-two at East Chicago, Ind., and two at Schererville, Ind. Completion is slated for early 1999. TTI is also building a refined products truck terminal and 175,000-bbl storage facility near Peoria, Ill. Expected to begin operating in January 1999, it will be supplied by a 4.5-mile, 8-in. spur being laid from the Norco system.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.