INDUSTRY BRIEFS

Pipelines

Chevron Asiatic Ltd. and its partners in the $5.5 billion (Australian), Papua New Guinea-to-Queensland gas pipeline are seeking buyers in Australia's Northern Territory, including the Nabalco alumina refinery on the western Gulf of Carpentaria. If demand is adequate, a 500-km spur may be laid across the gulf. Remaining obstacles to the pipeline include integrating Kutubu and Hides gas reserves in the Papua New Guinea highlands by yearend and securing final sales agreements. The partners are trying to meet a June 30, 1999, financial closure deadline. They need to secure supply agreements for another 23 bcf of gas to make the line viable.

Nova Scotia Power Ltd.,
Halifax, N.S., completed its purchase of 12.5% interest in the Maritimes & Northeast natural gas pipeline for $200 million (Canadian). The $1.7 billion line will carry gas from the Sable Island natural gas project off Nova Scotia to markets in Atlantic Canada and the U.S. Northeast. The pipeline is scheduled to go on stream in November 1999, and will move gas from a processing plant at Goldboro, N.S., to Dracut, Mass.

Companies

Shareholders of Northstar Energy Corp., Calgary, unanimously approved a $1.21 billion (Canadian) merger offer from Devon Energy Corp., Oklahoma City. The offer will involve exchange of 0.235 Devon share for each Northstar share and assumption of $300 million (U.S.) in Northstar debt. Northstar will become the Canadian unit of Devon. The combined companies will have reserves of 1.2 tcf of natural gas and 117 million bbl of oil, with 47% of reserves in Canada.

Santos Ltd.
and its joint venture partners plan to spend $1.5 billion (Australian) on exploration and development in the onshore Cooper/Eromanga basin during the next decade. Most will be spent on the relatively unexplored Nappamerri trough. The group won a 15-year tenure over 17 licenses in the area last year. The area's gas is known to be in tight reservoirs requiring stimulation for production, said Santos. The firm has allocated significant funds for fracture stimulation of existing wells.

Petroleo Brasileiro SA
and Italy's ENI plan to share advanced technologies with one another. Under terms of a technological exchange agreement signed by the companies in September, ENI will exchange with Petrobras its Integrated Well Information System, which details the planning and optimization of drilling. In return, Petrobras will share its deepwater technology knowledge, including information on ultradeepwater floating production systems and offloading technology.

Kerr-McGee Corp.,
Oklahoma City, and Oryx Energy Co., Dallas, announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Completion of the companies' recently announced merger deal is expected by first quarter 1999 (OGJ, Oct. 26, 1998, p. 38).

ARCO British Ltd.
and British-Borneo Oil & Gas Ltd., London, exchanged assets in two U.K. North Sea blocks. ARCO acquired a 9.5% interest in Block 44/21a, which contains Boulton gas field, in exchange for a 16% interest in Block 211/11a plus an undisclosed cash sum. ARCO Managing Director David McManus said the transaction enhances and consolidates the company's position in the Carboniferous region of the southern gas basin. ARCO also acquired a 40% interest in Blocks 47/13b, 47/17, and 47/18 from Stat- oil (U.K.) Ltd. for an undisclosed sum.

Compton Petroleum Corp.,
Calgary, plans to purchase J.M. Huber Canada Ltd. for $99.8 million (Canadian). J.M. Huber is the Calgary-based Canadian unit of J.M. Huber Corp., Edison, N.J. Both companies have oil and gas operations in Alberta. Huber produces 5,500 b/d of oil and has 12 million boe of proven oil and gas reserves. Compton said the acquisition could increase its 1999 production to 10,000 boed.

Gulf Canada Resources Ltd.,
Calgary, plans to cut 90 jobs, about 8% of its work force, with most of the cuts involving Calgary staff. Gulf said the cuts are in response to its sale of about 10% of its Western Canada production and are not related to low oil prices. The company is selling its assets to reduce debt.

Gas supply

BHP Petroleum Pty. Ltd. and PowerGen plc will renegotiate their gas contract for the Liverpool Bay fields in the U.K. sector of the Irish Sea. BHP will now receive £270 million in cash, close to a 35% reduction, from sole purchaser PowerGen as consideration for the reduced base price of the gas sold under the agreement. The gas price is now closer to current market rates in the U.K. BHP's joint venture partners in the Liverpool Bay fields-Lasmo (ULX) Ltd. and Monument Petroleum Ltd.-amended their agreements with PowerGen similarly. BHP's new agreement took effect Oct. 1, and the cash payment is due in January 1999.

BHP Petroleum Pty. Ltd.
cut about $60 million (Australian) from the 15-year gas contract with the North West Shelf participants. The change means lost revenues of $230 million for operator Woodside Petroleum Ltd. The gas is to be used in an iron ore processing plant BHP is constructing at Port Hedland, Western Australia. After reassessing its needs to operate at full capacity of 2-2.5 million metric tons/year, BHP cut its gas needs to 104.5 MMcfd from 123.5 MMcfd. The original contract was valued at about $1.5 billion.

Alternate energy

York Research Corp., New York, began the first phase of a 34,000-kw, $40 million wind power project in Big Spring, Tex. Once complete, the project's 46 turbines will generate 117 million kw-hr/year. Texas Utilities Electric Co. has signed a 15-year deal to purchase all the electricity generated by the project. The final phase of the project is slated for completion in February 1999.

Petrochemicals

Vinyl Chloride (Malaysia) Sdn. Bhd., a joint venture of Malaysian state firm Petronas and Mitsui VCM (M) Sdn. Bhd., let contract to the Malaysian unit of Technip SA, Paris, to design and build a polyvinyl chloride plant at Kertih in the Malaysian state of Terengganu. It is due for completion in July 2000 and will have capacity to produce 150,000 tons/year of PVC. Technip Malaysia will provide the license, basic and detailed engineering, procurement, construction, commissioning, and training.

Gas processing

Saudi Arabian Oil Co. (Saudi Aramco) let an ¥80 billion contract to JGC Corp., Yokohama, for the design and construction of a 1.6 bcfd gas processing plant. The plant is slated for completion in November 2001. The plant is part of Saudi Aramco's $2 billion project to expand production in supergiant Ghawar oil field. Gas processed by the new plant will be used in power generation and petrochemicals production.

Saudi Aramco
let contract for an undisclosed sum to the Italian unit of Technip and its subsidiary TPL Arabia Ltd. to build sulfur-recovery and utilities plants at Hawiyah gas field in Saudi Arabia. Technip said the plant, to be built 280 km south of Dhahran, will comprise three sulfur units with a capacity of 350 tons/day each, with sulfur-loading facilities and related utilities. Mechanical completion is slated for November 2001, and the plant is due on stream in first quarter 2002. Hawiyah is expected to deliver 1.6 bcfd of gas to the Saudi master gas system.

Drilling-production

Qatar General Petroleum Corp. (QGPC) increased production by 30,000 b/d at its Al Shaheen oil field to 150,000 b/d. The increase is the continuation of a plan to increase the country's production to 800,000 b/d by 2000. Denmark's Maersk Oil AS signed a production-sharing agreement with QGPC in June 1992 and operates a production platform in the field. Maersk completed 54 wells in the field, which holds 400 million bbl of proven oil reserves.

Hungary's MOL
started production of oil from a well in Tunisia's Sabria field in the Kebi* area under a 30-year concession. MOL anticipates the well will produce 600 b/d of oil. MOL tested another Tunisian well, Sabria NW1, which flowed 1,200 b/d of oil and 70 cu m/day of gas. Combined, the two sites could hold 20 million boe, said MOL.

Saga Petroleum AS,
Oslo, brought into production Tordis East oil field in the Norwegian North Sea on Dec. 12. Tordis East lies in 200 m of water, 3 km east of Tordis field and 10 km northwest of Gullfaks C platform. It was developed as a subsea satellite of Tordis, which is a subsea satellite of Gullfaks C, where Gullfaks area oil is processed and stored before shipment. The field was developed for 400 million kroner. Saga said the field can break even at an oil price of $6/bbl. Production is 21,400 b/d.

Burlington Resources Oil & Gas Co.,
Houston, acquired from Amoco Corp. a farmout of a 50% interest in the North Sinai concession in the Nile Delta off Egypt. Amoco retained a 50% interest and operatorship in the block and intends to file development plans later this year with Egyptian General Petroleum Corp. for the Tao, Kamose, and Seti Plio gas finds. Amoco and Burlington plan to drill Seti East-1 new pool wildcat to test a deep Miocene prospect in the northern part of the block in the second half of December. The well will be drilled in 720 ft of water by Atwood Eagle semisubmersible rig.

Red Sea Oil Corp.
(RSOC), Vancouver, B.C., drilled a second appraisal well in the En Naga North field on Libyan Block NC177. B3-NC177 flowed 3,300 b/d of high-quality oil from two zones. The lower Gir flowed more than 500 b/d of 44° gravity oil using nitrogen lift, and the Zelten A flowed 2,800 b/d of 48° gravity oil through a 98/64-in. choke. The discovery well, B1-NC177, was drilled earlier this year (OGJ, Sept. 28, 1998, p. 44). RSOC plans to submit a development/production plan for the field to Libya's National Oil Co. in early 1999. Interests in the block are operator RSOC 60% and Lundin Oil AB 40%.

ENI engineering unit
Saipem SpA and Norway's Saga Petroleum AS renewed their $90 million contract for Saipem's fourth-generation semisubmer- sible drilling vessel, Scarabeo 5, until November 2000. The vessel will be used for drilling operations on the Norwegian continental shelf.

Leviathan Gas Pipeline Partners LP
unit Flextrend Development Co. LLC, Houston, purchased a 100% working interest in Sunday Silence field for an undisclosed sum from DeepTech International unit Tatham Offshore Development Inc. Tatham was recently acquired by El Paso Energy Corp. The field is on four blocks in the Ewing Bank area of the Gulf of Mexico in about 1,500 ft of water. Flextrend began drilling a delineation well, the third for Sunday Silence. On test in September 1994, the first delineation well flowed at a sustained production rate of 8,700 b/d of oil and 5.4 MMcfd of gas.

Exploration

A consortium comprising Petrobras, Fort Worth-based Union Pacific Resources, and TDC Engineering signed an oil exploration and production contract for Block SES-107D in the Alagoas basin in Brazil's Sergipe state, 50 km northeast of Aracaju. Interests in the 31,432 sq km block are operator Union Pacific 67.5%, Petrobras 25%, and TDC 7.5%. The consortium will shoot 32 sq km of 3D seismic and drill two exploration wells. As many as 17 more wells are planned to develop a discovery currently producing from a single well. The consortium will invest $10.8 million for production and development work, with the possibility of a further $60 million investment, depending on results.

Argentina's YPF SA
unit Maxus Venezuela Ltd. and state oil company Petroleos de Venezuela SA found oil with their Tropical-1X well in the Quiriquire block in eastern Venezuela. The well was drilled to 4,354 m. On test, it flowed 7,121 b/d of oil and 945,000 cu m/day of gas. The companies conducted a test in a nearby zone, which flowed 450 b/d of oil and 368,000 cu m/day of gas. Quiriquire is jointly owned by operator Maxus Venezuela Ltd. 55% and BP Exploration Venezuela 45%.

Chesapeake Energy Corp.,
Oklahoma City, discovered gas with its State Lease 15421 well in Louisiana's Tuscaloosa trend. Chesapeake owns 98% working interest in the well, which was perforated only in the deepest three of nine indicated pay zones. Based on log results, Chesapeake estimates Morganza field reserves at more than 25 bcfe. The well was completed and is producing 18.1 MMcfed through a 12/64-in. choke with tubing pressure of 14,600 psi.

Courts

A federal grand jury in San Francisco indicted owners and operators of the tanker vessel M/V Command for allegedly discharging bunker fuel oil into the Pacific Ocean off San Francisco and San Mateo counties on Sept. 26 and for failing to report the discharge. Indicted were owner Pearl Shipping Corp., operator Anax International Agencies Inc., captain Dimitrios Georgantas, and former chief engineer Lampros Karaganis. The indictment alleges that a fuel tank rupture allowed water intrusion and that the defendants knowingly emptied the tank at sea, causing an oil slick that killed wildlife and cost $1 million to remediate.

Power

Scottish Power, Glasgow, plans to acquire PacifiCorp., Portland, Ore., for £4.7 billion. Scottish Power is offering 2.23 of its own shares for each PacifiCorp share. Scottish Power shareholders will hold 64% of the newly formed company, which will retain its headquarters in Scotland. After the merger is approved, Scottish Power plans to buy back £500 million in shares.

Pakistan
withdrew all notices of intent to terminate (NITs) related to two power project agreements previously issued to units of Coastal Corp., Houston (OGJ, July 27, 1998, Newsletter). Pakistan issued the NITs earlier this year, alleging business malpractices and violations surrounding two Coastal power projects: a 128-MW, gas-fired plant at Quetta and a 114-MW, residual fuel oil-fired plant at Saba. Operations at Quetta are scheduled to begin in first quarter 1999, and Saba is expected to be completed in second quarter 1999.