INDUSTRY BRIEFS

Tankers

Sunoco Inc., Philadelphia, formerly Sun Co. Inc., plans to charter two new very large crude carriers to carry crude oil to its refineries in Philadelphia and Marcus Hook, Pa. The 2 million bbl capacity vessels will be built by Swedish tanker firm Concordia Maritime at Hyundai Heavy Industries Co. Ltd.'s South Korea shipyard. After completion in 2001, the vessels will be chartered to Sunoco for 3 years. Sunoco expects to save on lightering costs and overall efficiency of the new tankers.

Futures

The New York Mercantile Exchange (Nymex) board of directors approved the addition of Nigerian crude oil Qua Iboe to the foreign crude available for delivery under terms of its light, sweet crude oil futures contract. In contrast to the other foreign crude grades deliverable against the contract, Qua Iboe will carry no differential. The Nymex board also lowered the premium paid for delivery of Nigerian Bonny light crude oil to 15¢/bbl from 25¢/bbl, pending the Commodity Futures Trading Commission's approval. The change is expected to be implemented in April 1999.

LNG

Osaka Gas Co. Ltd. signed a 25-year contract to buy 700,000 metric tons/year of liquefied natural gas from Oman Liquefied Natural Gas Co. beginning in November 2000. Osaka Gas began construction of a 137,000 cu m LNG tanker that will ship the gas from Oman LNG's 6.6 million ton/year Qalhat LNG plant, now 46% complete, near Sur, in southern Oman beginning in 2000 (OGJ, Oct. 6, 1997, p. 38). Oman LNG owners include Oman 51% and Royal Dutch/Shell 30%. Oman LNG has another 25-year supply contract with Korea Gas Corp. for 4.1 million tons/year starting in April 2000.

India's Petronet LNG Ltd.
plans to offer a stake in its Kerala, India, LNG receiving terminal to Qatar's Ras Laffan LNG Co. (Rasgas). Other shareholders in the project include National Thermal Power Corp. and Mobil LNG & Power Inc. Petronet chose Rasgas to supply as much as 7.5 million metric tons/year of LNG for 20 years, beginning in 2002 (OGJ, Sept. 21, 1998, p. 46).

Petrochemicals

Formosa Plastics Group (FPG) plans to increase investments in the petrochemical complex under construction at Mailiao, Taiwan, by 36%, to a total of $12.5 billion. An FPG official said that the increased investment will cover the cost of a cogeneration unit, additional petrochemical units, and expansion of several units already planned. The original plan involved 39 plants on the 2,596-hectare site. The complex is slated for completion by yearend 2000.

Exploration

Vanco Gabon Group entered into a production-sharing contract for two exploration blocks in deep water off Gabon. The blocks, 6,000-sq km Astrid Marin and 6,600-sq km Anton Marin, are in 1,000-3,000 m of water, 80 km off southern Gabon in the northern part of the lower Congo oil basin. A 3D seismic program will be shot in 1999, followed by the drilling of exploration wells in 2000. Vanco Gabon Group includes Total 28%; Unocal Corp. 25%; Kerr-McGee Corp. 14%; Vanco Energy Co., Houston, 22%; and R&B Falcon Corp. unit Reading & Bates Development Co., Houston, 11%.

Harken Energy Corp.,
Irving, Tex., plans to enter into an exploration and production contract with MKJ Xploration Inc., Metairie, La., for about 1.4 million acres in the North and South Limon Back Arc basin in and off Costa Rica (see map, OGJ, July 13, 1998, p. 84). The contract area comprises Blocks 2, 3, 4, and 12. Harken and MKJ will create a new company, Harken Costa Rica, owned 80% by Harken and 20% by MKJ. Following environmental impact studies and Costa Rican approval of the project, Harken will pay MKJ $4.2 million for concession rights and fulfill $8 million in initial work obligations.

Canadian Occidental Petroleum Ltd.
signed a memorandum of understanding (MOU) with Yemen to purchase interests in four large exploration blocks in the northeastern part of the country. CanOxy is operator of the four contiguous blocks-11, 12, 36, and 54-which cover 12 million acres. This MOU follows CanOxy's acquisition of Kerr-McGee Yemen Ltd.'s two exploration blocks in Yemen (OGJ, Apr. 20, 1998, p. 44).

Companies

Texaco Inc. unit Texaco Natural Gas (TNG), Houston, will reorganize, cutting about 100 employees by yearend and saving $20 million/year. The reduction is separate from the cut of 1,000 employees announced earlier this month, but the $20 million in savings was included in the $200 million associated with the earlier cut (OGJ, Nov. 16, 1998, Newsletter). The latest cut is part of a plan to refocus TNG's businesses, improve efficiency, and consolidate gas and liquids field activities under one operations unit, said Texaco. After the cuts, TNG will have just under 500 employees.

Big Bear Explorations Ltd.,

Calgary, launched a $299 million (Canadian) unsolicited takeover bid for Blue Range Resource Corp., also of Calgary. Larger than Big Bear, Blue Range put a "poison pill" shareholder rights plan in place and hired advisors to get an improved return for investors. If merged, Big Bear and Blue Range would have combined production of about 14,300 boed, mainly natural gas.

Western Gas Resources Inc.,
Denver, divested certain East Texas upstream assets in two deals for a total of $55.8 million. Dynegy Inc., Houston, acquired Western Gas's ownership interest in the Edgewood gas gathering system and related facilities. Vintage Petroleum Inc., Tulsa, acquired Western Gas's 50% joint venture interest in the Redman Smackover joint venture, plus its ownership in some production assets dedicated to Edgewood.

Cogeneration

Four Michigan companies plan to build a $240 million gas-fired cogeneration power plant near Detroit. Partners in the project include Ford Motor Co., Rouge Steel Co., CMS Energy Corp., and Detroit Edison unit DTE Energy Services. The 550-MW plant, which will run on natural gas and blast-furnace waste gas, is slated for start-up in 2000.

Refining

Hurricane Hydrocarbons Ltd., Calgary, reached an agreement with the Chimkent refinery in Kazakhstan to immediately resume processing of 62,000 b/d of Hurricane's crude oil and shipping of refined products to Hurricane's customers, under an existing processing arrangement. Due to a scheduled refinery shutdown and a continuing dispute, the refinery has not processed Hurricane crude since Oct. 15. The refinery agreed to pay Hurricane outstanding receivables of $15.2 million by yearend.

Pemex Refinacion Co.
let contract to Dresser-Rand Co., Corning, N.Y., to supply fluid catalytic cracking (FCC) equipment for installation at Pemex's Cadereyta refinery in Mexico. Dresser-Rand will supply a hot gas expander, a generator, and related equipment. The FCC process equipment, scheduled for delivery in June 1999, will be used to recover waste energy.

Pipelines

Chevron Corp. plans to reverse flow in a portion of its common carrier products pipeline system that transports gasoline and other fuels from Boise, Ida., northward to markets served by terminals in Boise and Pasco, Wash. The reversal will allow up to 20,000 b/d of fuels to flow to Boise from Pasco and Salt Lake City. Completion of the $11 million project is slated for first half 2000.

Williams
completed and placed in service its 15,000-hp Compressor Station 83 at Citronelle, Ala., marking the completion of the company's Mobile Bay expansion and extension project. With the addition to the existing 123-mile, 30-in. Mobile Bay pipeline, Williams will transport 350 MMcfd of added natural gas to the Transco main line from the offshore East Main Pass Block 261 area.

U.S. Federal Energy Regulatory Commission
scheduled a Dec. 8 conference at its Washington, D.C., offices to receive comments and discuss pipeline capacity auctions, as contemplated under a rule proposed in July. The conference will explore how auctions could be held and how they would affect pipeline operations.

Snam SpA,
the natural gas unit of Italian state oil company ENI, acquired from BG plc a 5% share and partial transportation rights in Interconnector UK Ltd., builder and operator of the 20 billion cu m/year, 235-km Interconnector subsea gas pipeline in the North Sea (OGJ, Oct. 12, 1998, p. 41). The transportation rights, equal to a 2.5% share of the pipeline's total capacity, will enable Snam to transport 500 million cu m/year beginning October 2000. Other Interconnector UK partners are British Petroleum Co. plc, Conoco Inc., Elf Aquitaine, Gazprom, Amerada Hess Ltd., Distrigaz, National Power International Ltd., and Ruhrgas AG.

Indonesian authorities
annulled a contract awarded to Trihastra, a company controlled by children of former Indinesian President Suharto, for the construction of a 320-km products pipeline network linking Pertamina refineries in western and central Java to major cities on the island. The contract was cancelled because it was assigned without an open bid process. It is one of many contracts associated with the Suharto family now being identified and retendered under a reform drive led by new President B.J. Habibie.

China
began transporting natural gas through a 293-km pipeline from Shaanxi-Gansu-Ningxia gas fields to the Ningxia Hui autonomous region capital of Yinchuan. The $56.62 million pipeline will transport 40-60 MMcfd initially, with the capability to increase deliveries to 100 MMcfd.

Power

Electricity Generating Authority of Thailand (EGAT) received ¥69 billion from the Export-Import bank of Japan to finance two gas-fired power plant projects. EGAT will dedicate ¥54 billion to its Ratchaburi plant, 120 km southwest of Bangkok (OGJ, Nov. 16, 1998, p. 27). The remainder will go toward a 300-MW unit to be built at Krabi power station in southern Thailand.

Columbia Electric Corp.,
Herndon, Va., and Wescoast Power Inc., Vancouver, B.C., plan to enter into an equal partnership to develop a 500-MW natural gas-fired electric power generation plant on a 25-acre site next to PECO Energy Co.'s Eddystone generation station at Philadelphia. The $300 million Liberty electric power plant will consume about 80 MMcfd of gas. The plant is slated for completion by the end of second quarter 2001.

A joint venture
of MCN Energy Group Inc. unit Mcnic Power, Detroit, and Cobisa Corp., Houston, finalized a deal to build, own, and operate a $60 million, 140-MW gas-fired peaking power plant at Albuquerque. Slated for completion in May 2000, the Cobisa-Person power project will be built on the site of a decommissioned power plant. The project is backed by a long-term power purchase agreement with Public Service Co. of New Mexico.

Retail marketing

OMV AG purchased BP Oil Ltd.'s Hungarian retail network for an undisclosed sum. OMV said the chain comprises 28 service stations. This will take OMV's share of the Hungarian retail market to 11%, increasing its total number of outlets in the country to 107. The sites will be rebranded during the next 6 months. The deal follows OMV's recent purchase of BP's retail stations in the Czech Republic and Slovakia.

Drilling-production

Salym Petroleum Development NV (SPD), a 50-50 joint venture of Shell Salym Development BV and Evikhon, was granted three production licenses-for West Salym, Vadelyp, and Upper Salym fields-by Western Siberia's Khanty Mansiysk autonomous okrug and Russia's Ministry of Natural Resources. SPD intends to begin pilot development in Upper Salym field, which has produced 700 b/d on test since January 1995 (OGJ, Apr. 1, 1996, Newsletter). The added production is expected to come on stream in 2001.

Conoco Indonesia Inc.
conducted four drill stem tests of its Belanak 5 appraisal well on the north flank of Belanak field on Block B in the Natuna Sea off Indonesia. The well, drilled to 10,720 ft TD, flowed at a combined rate of 8,000 b/d of oil and 7.5 MMcfd of gas from two zones at 8,355-8,466 ft and 8,024-34 ft. Belanak partners include operator Conoco Indonesia 40%, Indonesia Petroleum Ltd. 35%, and Texaco Inc. 25%. This is the second successful test this year for Conoco Indonesia on Block B (OGJ, Sept. 14, 1998, p. 38).

Azerbaijan's parliament
ratified an $800 million, 25-year production- sharing agreement (PSA) with Commonwealth Oil & Gas Co. Ltd. and Union Texas Petroleum Holdings Inc. (now part of ARCO) for development the Southwest Gobustan block, about 50 km southwest of Baku (OGJ, June 8, 1998, p. 40). Operator Commonwealth 40%, Union Texas 40%, and Socar 20% expect a 3-year exploitation period, including drilling seven new wells and rehabilitating seven existing ones, at a cost of $15-20 million.

BG Exploration & Production Ltd.
received U.K. Department of Trade and Industry approval for its Easington Catchment Area (ECA) project, involving Neptune and Mercury gas fields, with combined reserves of 370 bcf. An unmanned platform will handle Neptune production, while Mercury production will use a subsea satellite. Combined output will be piped from Neptune to a riser tower platform, to be in BP Exploration Operating Co. Ltd.-operated Cleeton field, where BP and AMEC plc, London, will modify existing facilities. BG let a £24 million contract to Brown & Root Ltd., Ardesier, Scotland, for engineering, procurement, fabrication, installation, and commissioning of the Neptune platform and riser tower, and a £23 million contract to ETPM U.K. Ltd., London, for pipelines and subsea facilities. Installation will start in March 1999, and first gas is expected in fourth quarter 1999.