INDUSTRY BRIEFS
Gas distribution
Spain's Repsol SA was awarded natural gas distribution rights in Mexico's El Baj!o region. The company offered an average price of $1.73/gigacalorie. Within 5 years, Repsol plans to invest $27 million in developing gas distribution infrastructure in the region to serve 72,384 clients. El Baj!o, northwest of Mexico City, comprises a group of small, rapidly industrializing cities, including Celaya, Le?n, Irapuato, Silao, and Salamanca. Repsol currently distributes natural gas in four other regions in Mexico: Toluca, Monterrey, Nuevo Laredo, and Saltillo.Gas supply
The Wholesale Energy Group of Houston Industries (HI), Houston, signed a 10-year, $100 million gas supply contract with Citizens Utilities Co. unit LGS Natural Gas Co., Harvey, La. Over the life of the contract, HI will supply up to 50 bcf, primarily via its interstate pipeline, to LGS's distribution system in the West Monroe, La., area.Refining
British Petroleum Co. plc and Mobil Corp. will spend 280 million francs in 1999 at their joint venture refineries in France to meet pending European Union fuel specifications. A 100 million franc upgrade of the Lavera fluid catalytic cracking unit will employ the M.W. Kellogg Co./Mobil process; engineering will be performed by Foster Wheeler Corp., Clinton, N.J. The upgrade will boost LPG output to 350,000 metric tons/year from 220,000 tons. At Notre-Dame-de-Gravenchon, a 50 million franc splitter will be installed to recover benzene. Another 30 million francs will be spent on other improvements there, and another 100 million at Lavera.Williams,
Tulsa, completed a $70 million expansion project at its refinery at North Pole, Alas. The expansion included the addition of a crude unit and increased products output by 17,000 b/d to 62,000 b/d. About 14,000 b/d of the new production is jet fuel, and the balance is diesel fuel. The plant, which Williams acquired through its acquisition of Mapco Inc. late last year (OGJ, Dec. 1, 1997, p. 36) also produces gasoline, heating oil, naphtha, and asphalt.
China's Huafu Industrial Co.
signed a $39.7 million contract with Mongolia's Oyuni Undraa Suubba Co. for the joint construction of an oil refinery in Mongolia, that will process oil from the Dzuunbayan area in the southeast of the country. The plant will refine about 10,000 b/d of oil; another 10,000 b/d will be exported to China. The Chinese firm will own 70% of the new refinery. Work on the refinery will begin early next year.
Drilling-production
India's Oil & Natural Gas Corp. (ONGC) let a $1 million contract to Kvaerner AS, Oslo, for detailed engineering and technical procurement assistance in the revamping of BHN, BHF, NA, and SA platforms in Bombay High field, off the west coast of India. The project is part of an effort to slow the field's rapid decline (OGJ, Sept. 14, 1998, p.38). State-owned Mazagon Dock Ltd., Mumbai, is the main contractor for the project. The work will be carried out at Kvaerner's Bangalore office; completion is slated for mid-1999.Frontera Resources Corp.,
Houston, signed a production-sharing agreement with State Oil Co. of the Azerbaijan Republic for the previously awarded onshore Kursangi-Karabag* block (OGJ, June 29, 1998, p. 40).
Shell Offshore Inc.,
Houston, began production from Cinnamon field, 180 miles southwest of New Orleans, on Green Canyon Block 89. The A1 well was drilled from a tripod platform set in 671 ft of water and is producing 1,930 b/d of oil and 1.4 MMcfd of gas. Operator Shell 83% and Burlington Resources Inc. 17% expect A1's peak rates to be more than 3,000 b/d of oil and 2 MMcfd of gas. Cinnamon's production is processed 6 miles west of the field, at the Shell-operated Enchilada field platform on Garden Banks Block 128.
Saga Petroleum AS,
Oslo, boosted its estimate of Varg field reserves following the drilling of the 15/12-A5T2 well in the Norwegian North Sea. Saga said the well confirmed a deeper oil-water contact in the northern part of the field, implying a significant increase in estimated reserves. The company said Varg's proven and probable reserves have been increased by 50% to 50 million bbl of oil.
Burlington Resources Inc.,
Houston, signed an agreement with Amoco Egypt to earn a working interest in exploration and development projects in the Nile River Delta area off Egypt. Burlington's 50% interest includes the 489,000-acre North Sinai block, containing three proved Pliocene gas fields and numerous exploration prospects. In return, Burlington will finance part of Amoco's future commitment to develop the proven gas reserves. Development is slated to start in 1999; first production is expected in 2001.
LNG
Australia began environmental assessment of the Northern Australia Gas Venture, a Timor Sea gas field development project supporting a liquefied natural gas export scheme that is led by a joint venture of Shell Development Australia Ltd. and Woodside Petroleum Ltd. The fields include: Sunrise; Sunset; Troubadour; and Loxton and Evans Shoals. A feasibility study is nearing completion. The proposal includes two offshore platforms and a 500-km pipeline to a planned terminal at Darwin, Australia, where an 8 million metric ton/year export LNG plant will be built. Capital investment could reach $10 billion (Australian).Pipelines
Northern Border Pipeline Co. completed its Chicago project and began accepting gas nominations for the additional 700 MMcfd of gas transportation supplied by the 390-mile, 36 and 30-in. line. The project adds to Northern Border's existing 1,213-mile, 1,675 MMcfd system, which transports about 25% of all Canadian gas imported into the U.S. Northern Border Pipeline is owned by Northern Border Partners LP 70% and units of TransCanada PipeLines Ltd. 30%.Westcoast Energy Inc.,
Vancouver, B.C., will purchase Unocal Corp.'s approximate 9.1% interest in the Alliance Pipeline project. The purchase increases Westcoast's investment in the project to about $500 million (Canadian). The pipeline's interest holders are now: Fort Chicago Energy Partners LP 26%, Westcoast Energy Inc. 23.6%, Enbridge Inc. 21.4%, Coastal Corp. 14.4%, Duke Energy Corp. 9.8%, and Williams 4.8%.
BP Chemicals Ltd.
formed a construction alliance with Murphy Pipelines Ltd. and Penspen Ltd., London, to build a 151-km ethylene pipeline in northeast England from Teesside to Hull. The line will link with a trunk line that brings ethylene from BP's Grangemouth petrochemicals complex near Edinburgh to its Saltend plant. The pipeline is slated for completion by yearend 2000 to supply ethylene feedstock to new plants BP is building at the Hull site (OGJ, Nov. 23, 1998, p. 32).
Wyoming Interstate Co. Ltd.
(WIC), the Rocky Mountain pipeline unit of Coastal Corp., Houston, filed with the Federal Energy Regulatory Commission for approval to build an $80.5 million, 143-mile, 24-in. natural gas pipeline. The Medicine Bow lateral will transport Powder River basin coalbed methane from Glenrock, Wyo., pipeline systems for delivery to WIC's main line, west of Cheyenne, Wyo. The new lateral will have a capacity of 255 MMcfd and is expected to be in service by Jan. 1, 2000.
Companies
Canadian Occidental Petroleum Ltd. (CanOxy), Calgary, sold oil and gas assets in Western Canada and the North Sea for $370 million (Canadian). The sales are part of a $600 million divestiture program announced in 1997. Conoco Inc. paid $210 million for CanOxy's U.K. unit, which produces 35 MMcfd of natural gas in the U.K. North Sea and has proven reserves of 83 bcf. To an undisclosed buyer, the company sold properties in Alberta and British Columbia with production of 6,000 b/d of oil and 125 MMcfd of gas. These properties include proven reserves of 290 bcf of gas and 20 million bbl of oil, and 660,000 acres of exploration lands.Costilla Energy Inc.,
Midland, Tex., renegotiated terms of an acquisition agreement with Pioneer Natural Resources Co. USA Inc., Irving, Tex. (OGJ, Sept. 21, 1998, p. 46). Costilla reduced its purchase price for selected Pioneer oil and gas assets by $166 million to $294 million. Pioneer will retain Costilla's $25 million deposit. Costilla remitted to Pioneer 3 million shares of its common stock, valued at $13 million, and has the option to purchase an additional interest in a Pioneer gas property for $3 million when the deal closes.
Cabot Oil & Gas Corp.,
Houston, plans to acquire 10 natural gas fields covering 34,345 acres in South Louisiana from Oryx Energy Co., Dallas, for about $72 million. The fields contain 68 production wells, concentrated primarily in three fields, with combined production of 14 MMcfed. The purchase is expected to close by yearend.
El Paso Energy Corp.
unit El Paso Energy International Co., Houston, will acquire an equity stake and a convertible loan in East Asia Power Resources Corp. for $70 million. With its three power generation plants in the Philippines, East Asia Power has a generating capacity of 265 MW. East Asia Power also has the option to buy two more power plants with generating capacity of 123 MW. The El Paso deal is scheduled to close during January 1999.
BHP Petroleum Pty. Ltd.
slashed another $78 million (Australian) from its cost base and laid off about 220 employees in an attempt to weather an extended period of low crude oil prices. The cuts are in addition to $95 million in cost cuts for the 1999 fiscal year announced only 4 months ago. The measures are part of the continued internal restructuring of the company, which is now based on global team groupings rather than regional divisions, as was done previously, said BHP.
Samson Cos.,
Tulsa, acquired the Shaw and Ownes units in Carthage field in Panola County, East Texas, from Pennzoil Co. for $15.5 million. The units represent only a small percentage of Pennzoil's interest in the field. Pennzoil said the sale set an industry record for the highest price paid for a property at auction. The acquired properties produce more than 5 MMcfd of gas and 40 b/d of oil and are estimated to have reserves of about 15.5 bcfe.
Exploration
Boral Ltd. unit Boral Energy Resources found oil in the Otway basin in southeastern South Australia. On test, the Killanoola 1 wildcat, in permit PEL27, north of the Katnook gas field, flowed about 40 b/d. A well test earlier this year was thwarted by a very high wax content. The oil find is significant to Boral and joint venture partner Omega Oil NL, as the basin is considered highly gas-prone. Boral and Omega plan to spend $20 million (Australian) on exploration in the area over the next 2 years, which will include two wildcats and up to six appraisal wells.ONGC
began its second deepwater drilling program, this one in the Krishna Godavari basin off central India's Andhra Pradesh state. The most recent well is being drilled in 530 m of water and is targeted to a depth of 2,500 m. ONGC slated initial expenditures of 2 billion rupees ($47 million) for its deepwater program, which includes four basins: Cauvery, Krishna Godavari, Kerala-Konkan, and Bombay offshore. The firm hired Sedco Forex for technical assistance and upgraded its Sagar Vijay rig for deepwater operation. The rig is now capable of drilling in 900 m of water.
Agip SpA
found gas with its Tea well, 25 km off Ravenna, Italy, in the Adriatic Sea. The well was drilled in 40 m of water and flowed on test at a rate of 667,000 cu m/day. Gas was found in the upper Pliocene. Agip is appraising the find.
Nepal
awarded Texana Resources Co., Houston, a 3-year exploration contract, with a 1-year extension option. Texana will shoot seismic surveys and perform geological and geochemical studies at Nepalgunj in the southwest, and at Chitwan in south-central Nepal.
Petrochemicals
Shell Chemicals Ltd. and BASF AG signed a letter of intent to form a 50-50 joint venture (JV) to produce styrene monomer (SM) and propylene oxide (PO) in Singapore. The companies plan to build a new SM/PO plant at Seraya, where Shell already has a JV SM/PO plant, co-owned by Mitsubishi Chemical Corp. The new plant will have capacity to produce 550,000 metric tons/year of SM and 250,000 tons/year of PO and is due on stream at yearend 2001. Shell and BASF are building a similar plant at Moerdijk, the Netherlands, expected on stream in 1999.BP Chemicals Ltd.
and Indian Petrochemicals Corp. Ltd. (IPCL) restarted production at IPCL's Nagothane linear low and high-density polyethylene plant following an expansion based on BP's Innovene technology. The upgrade boosted the plant's production by 40% to 240,000 metric tons/year and broadened its products range.
Arab Petroleum Investments Corp.
(Apicorp) will provide Egyptian Fertilizer Co. with $210 million in financing to be used for the construction of a fertilizer plant at Suez. The plant will produce 1,200 metric tons/day of ammonia and 1,925 tons/day of urea. Production is expected to begin early in 2001. Participating banks include Bank Misr, Misr International Bank, Egyptian British Bank, National Bank of Egypt, Egyptian American Bank, Alexandria Bank, Export Development Bank of Egypt, and Arab International Bank.
Exports-imports
Ukraine state firm Naftogaz signed a contract with Russia's Gazprom to export 55 billion cu m of gas to Ukraine in 1999. Also, Gazprom plans to market 25 billion cu m of gas to Ukrainian traders for a 50% advance payment. Ukraine's projected demand for gas for 1999 is 80 billion cu m. Meanwhile, talks have resumed between Naftogas and Turkmenistan regarding the export of 20 billion cu m of Turkmen gas to Ukraine next year. Turkmenistan halted exports to the country in March.Copyright 1998 Oil & Gas Journal. All Rights Reserved.