Industry Briefs

Energy marketing

Encore Energy Solutions Ltd., a joint venture (JV) of Engage Energy Canada LP and Epcor Utilities Inc., both of Alberta, was formed as a natural gas/electricity marketing alliance in response to commercial and industrial client demands and continued electricity deregulation efforts in Canada. Engage Energy is a JV of Coastal Corp., Houston, and Westcoast Energy Inc., Vancouver, B.C. Epcor Utilities owns Edmonton Power.

Government

U.S. Minerals Management Service reported that it brought 170 cases for alleged violations of its Outer Continental Shelf regulations from Aug. 18, 1990, to Dec. 31, 1997, and assessed 102 penalties totaling nearly $1.4 million in fines. MMS posted specific data on its web page.

Gas processing

Syntroleum Corp., Tulsa, and Kerr-McGee Corp. agreed to a nonexclusive license arrangement that gives Kerr-McGee rights outside North America to use the Syntroleum process for converting natural gas into transportable synthetic crude oil and transportation fuels. Syntroleum also acquired certain hydrocarbon processing technology and related patents from Kerr-McGee as part of the transaction that it says has potential for enhancing production of transportation fuels. Other licensees to the Syntroleum process include Texaco Inc., ARCO, Marathon Oil Co., and YPF.

Koch Midstream Processing Co.,
a subsidiary of Koch Industries Inc., Wichita, acquired the remaining 50% interest in 11 gas processing plants located in western Oklahoma from Oneok Products Co., a unit of Tulsa-based Oneok Inc., for an undisclosed amount. Koch Midstream Processing acquired its 50% ownership in the plants in November 1997 after it purchased the Delhi Group from USX Corp. The plants have gross gas inlet capacity of 475 MMcfd and gross natural gas liquids production capacity of 31,000 b/d.

Petrochemicals

BASF AG will construct a $2.76 billion integrated petrochemical complex in China's Nanjing province. BASF signed a letter of intent with Chinese partners Yangzi Petrochemical Corp. and China Eastern United Petrochemical (Group) Co. Ltd. in March 1996 for the project and a feasibility study. The key element will be an ethylene cracker to feed donwstream units, and the plant should be on stream in 2003.

Egyptian Fertilizer Co.,
Cairo, let a 450 million deutschemark contract to Kruppe Uhde Gmbh, Dortmund, to construct a turnkey fertilizer complex at the Red Sea terminus of the Suez Canal. The plant will go on stream in mid-2000. The complex comprises a 1,200 metric ton/day ammonia plant, a 1,925 ton/day urea plant, and all auxiliary units and offsites.

Engro Asahi Polymer & Chemicals Ltd.
let contract to Engro Pakistan Terminal Ltd. to build vinyl chloride monomer storage facilities for an Engro Asahi polyvinyl chloride (PVC) complex under construction in the eastern zone of Port Qasim, near Karachi. Delivery of the first storage tanks is expected in third quarter 1999, a few months ahead of the planned start-up of the PVC plant.

Drilling-production

A 6-month construction delay and $250 million (Australian) in cost overruns forced a rescheduling of the Laminaria/Corallina fields development in the Timor Sea off Australia. Operator Woodside Petroleum Ltd. 50% and partners BHP Petroleum Pty. Ltd. and Shell Australia Ltd., 25% each, delayed start of development to September 1999 from the previously scheduled first quarter 1999. The field requires a floating production storage and offloading facility and subsea wells.

Coastal Corp.
affiliate Coastal Oil & Gas Corp. completed six development wells on West Cameron Block 498 in the Gulf of Mexico, off Louisiana. The block is 110 miles southeast of Galveston, Tex., in about 160 ft of water. Operator Coastal 68.7% said the block is producing 52 MMcfd of gas and 7,800 b/d of oil from six wells. A seventh well, which was drilled, and an eighth well, which is being sidetracked and drilled horizontally, should be completed this month. The wells encountered 236-723 net ft of pay in multiple reservoirs of lower Pleistocene Lentic to basal Nebraskan sands. Other interests are Noble Affiliates Inc. 8.2% and IMC Global Inc. 23.1%.

Chevron USA Inc.
let a 5-year contract to Transocean Offshore Inc., Houston, for a new Discoverer Enterprise class ultradeepwater drillship. The contract also has three 1-year options. The drillship will cost about $300 million to construct, including capitalized interest and other non-hardware costs. The contract will generate $374 million in revenues. Operations in the Gulf of Mexico are planned in 2000. Transocean has an option with Astillero y Talleres del Noroeste SA, Ferrol, Spain, for the construction of the unit's hull and major marine systems.

MMS
plans a Feb. 24 public meeting in Casper, Wyo., to discuss developing and implementing a royalty-in-kind pilot program for crude oil produced from federal leases in the state. The feasibility and effectiveness of potential pilot programs will be discussed.

Chevron Overseas Petroleum Inc.
started an extended test of the Moran 1X well near Lake Kutubu in Papua New Guinea. The well is expected to produce at an average rate of 10,000 b/d while Chevron evaluates the Moran reservoir. Discovered in 1996, Moran is currently estimated to hold 50-100 million bbl of oil. Chevron has interests in nearby Kutubu field, which has produced 220 million bbl of oil, and Gobe field, which is expected to produce 100 million bbl of oil. Gobe production is planned to start up early this year. Chevron-operated production from the three fields will peak at a rate of 122,000 b/d in 1999.

Exploration

Algeria's Sonatrach and Petro-Canada Inc., Calgary, found natural gas and condensate with the Timellouline Sud-1 (TMLS-1) discovery well on the 2 million acre Tinrhert block in Algeria. The well encountered 262 ft of gas/condensate pay in five Siluro-Devonian zones. Six drill stem tests showed combined stabilized rates of 117 MMcfd of gas and 5,280 b/d of condensate. Petro-Canada shares profit with operator Sonatrach from the block's oil production and is negotiating a production-sharing contract for exploitation of natural gas with Sonatrach.

Medusa Oil & Gas,
a unit of Aberdeen-based Ramco Energy plc, and partner Moravske Naftove Doly AS, the former Czech state oil company, completed testing of the Krumvir 2 well in the Czech Republic. Operator Medusa 48% said the well was drilled to 3,600 m TD and cut a 30.2 m gross section of gas and oil-bearing sand. The well tested the oil leg and produced 30° gravity low-sulfur oil at a rate of 750 b/d through a 14/16-in. choke with flowing tubing pressure of 3,400 psi. Krumvir 2 is 30 km southeast of Brno and 100 km northeast of Vienna. Moravske holds a 52% share.

Elf Aquitaine SA
disclosed an oil strike on Haute Mer block off the Congo. The Bilondo Marine-1 wildcat was drilled 16 km southwest of Elf's N'kossa field in 546 m of water. The operator said the find is the first in Congo's Tertiary formation and confirms the area's potential. The well flowed a combined 8,520 b/d from two pay zones. License partners are operator Elf 51%, Chevron Overseas (Congo) Ltd. 30%, state firm Hydro Congo 15%, and Energy Africa Ltd., Cape Town, 4%.

Total
reported a fourth discovery on Block 2/92 off Angola. The Mutumba-1 new-pool wildcat flowed a combined 5,200 b/d of light crude on test. Total has undertaken a 3D seismic survey of the discovery and plans appraisal drilling. The Mutumba find follows the Veleiro, Espadarte, and Congro South finds on the same block, which are earmarked for joint development. License partners are operator Total 40%, state firm Sonangol 25%, Daewoo Corp. 18.75%, Korean Petroleum Development Co. 6.25%, and Energy Africa Ltd.

The Trinidad and Tobago government,
Trinidad Shell Exploration & Production BV, and Agip SpA signed a production-sharing contract for oil and gas exploration on Block 25(a), a 1,388 sq km area 80 km east of Trinidad in water depths up to 1,300 m. Operator Shell 60% and partner Agip 40% committed to 3D seismic and three exploration wells in the first 4 years. In addition to significant signature and technical assistance/equipment bonuses, the companies will provide annual contributions for petroleum-related training, research, and development. At least seven scholarships of $20,000 will be awarded annually to Trinidadian students for study associated with the petroleum industry.

Pipelines

Transcontinental Gas Pipe Line Corp. (Transco) let a $17 million pipeline construction contract to TransCoastal Marine Services Inc., Houston. Transcoastal will lay 15 miles of 30-in. pipe from Mobile Area Block 822 to the Alabama coast. The assignment is part of Transco's Mobile Bay development project (OGJ, Aug. 19, 1997, p. 34), which includes expansion of an existing 30-in., 123-mile lateral and extension of a line to an area near the Outer Continental Shelf. Work will be completed later this year.

Triton Energy Ltd.,
Dallas, sold its 9.6% stake in the Colombian pipeline company Oleoducto Central SA (Ocensa) to a private institutional buyer for $100 million. Triton will book a $50 million after-tax gain, or $1.36/share, from the sale in its first quarter earnings. Triton retains the right to transport crude from Cusiana oil field, where it holds a 12% stake, through the 495-mile Ocensa pipeline. Proceeds from the sale, cash flow from the Colombian Cusiana and Cupiaga oil fields, and new credit agreements will be used to prepay a $125 million syndicated revolving credit facility.

Lubes

Exxon Co. USA will increase its production of waxes and paraffinic lube base stocks by converting existing naphthenic manufacturing equipment at the Baytown, Tex., refinery to wax and paraffinic lube basestock service. The company's naphthenic business lines will be sold to Calumet Lubricants and Ergon Inc. Exxon will also begin operating a newly constructed paraffinic lube hydrotreater for improved base stock sulfur and saturates at its Baton Rouge, La., refinery this month. Work continues on a new raffinate hydroconversion (RHC) project at the Baytown refinery to produce higher-quality basestocks for next-generation auto engine oils. The RHC project will be completed in 1999.

Engen Ltd.,
Cape Town, signed a memorandum of understanding with the U.K.'s Esso Petroleum Co. Ltd. for supply of lubricants to South Africa. Engen aims to market Esso marine lubricants in key ports of southern Africa to Esso's international customers and Engen's local customers. Engen said its staff will be trained at Esso's U.K. research center to ensure they have the technical knowledge to support Esso products.

Companies

Noble Affiliates Inc. unit Samedan Oil Corp. will purchase oil and gas properties from New England Energy Inc., Westborough, Mass., for $50 million. The purchase consists of 7.5-50% interests in 33 Gulf of Mexico leases off Texas and Louisiana and 3.2-50% interests in four onshore oil and gas fields in Texas and Wyoming. The properties were already operated by Samedan in a long-standing joint venture with New England Energy. The company estimates net proved reserves of the properties at 1 million bbl of oil/condensate and 50.2 bcf of gas.

Texaco Inc.
formed a new unit, Texaco Pipeline International (TPI), which will be responsible for identifying worldwide pipeline transportation opportunities. Based in Houston, TPI will assume immediate responsibility for Texaco's interest in Canada-based Gibson Holding Ltd. Petroleum. In the near term, it will also seek to identify appropriate opportunities in the Caspian region, Poland, and Russia.

SOCO International plc,
London, made a £9 million ($15 million) takeover bid for Territorial Resources Inc., Houston, to strengthen its position in Mongolia. Territorial holds a 15% stake in Block XX in the Gobi desert and was recently awarded an interest in Block XI in the same area. SOCO said the move "...precedes the beginning of a drilling program on Block XX, an area of high prospectivity and close proximity to the export route to China." Territorial has a 5% shareholding in SOCO's Mongolian unit and an interest in Block B8/38 off Thailand.

Chevron Corp.
will extend its technical services agreement with Kuwait Oil Co. (KOC) for another 31/2 years. Under the agreement, Chevron will provide technical services for the development and transportation of crude oil from Kuwait's supergiant Burgan field as well as for any other activities and fields mutually agreed upon by the partners. Chevron currently has about 30 engineers and geoscientists working in Kuwait.

Belco Oil & Gas Corp.,
New York, signed a definitive purchase agreement to acquire properties in its Permian basin core area in West Texas from EnerVest Texoma Acquisition LP for $37.5 million. The properties consist of 10.8 million boe of estimated proved reserves. The reserves associated with these properties have a reserve-to-production ratio in excess of 15 years and an oil/gas mix of 83%/17%. The transaction is expected to close by the end of the month. Belco will operate and hold a 95% interest in nine Permian basin oil and gas fields after the closing.

Terminals

Phillips Petroleum Co., Bartlesville, Okla., signed a letter of intent with Citgo Petroleum Corp. to purchase a 30% equity interest in a Citgo petroleum products terminal located near Atlanta. A loading bay will be added to the Citgo truck rack to accommodate additional volumes of gasoline and diesel fuel. Citgo will continue as operator. Phillips currently owns and operates a terminal in Atlanta, which will be offered for sale later this year. Financial terms were not disclosed.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.