INDUSTRY BRIEFS

Spills

Shell Petroleum
Development Nigeria Ltd. reported that about 1,850 bbl of crude oil spilled near its 12-in. Benisede-Isampou delivery lines in the Southern Swamp operational area of southeastern Nigeria. The spill occurred primarily on land and was discovered July 24. The line has been taken out of service, and cleanup is under way. Shell is investigating the cause of the spill.

Safety

U.K. Health and Safety Executive (HSE) published a guidance document declaring the principles against which safety cases for U.K. offshore oil and gas installations are evaluated. For every offshore installation, U.K. operators must provide a safety case to HSE documenting that major accident hazards have been identified and assessed, and that the risks have been reduced. Safety cases must be updated to take account of changing safety knowledge and operating conditions (OGJ, Feb. 14, 1994, p. 25).

Companies

EuroGas Inc., New York, and RWE-DEA AG für Mineraloel & Chemie (RWE-DEA), Hamburg, formed a 50-50 joint venture exploration and development company called RWE-DEA EuroGas E&D (Ukraine). The new firm will explore and develop EuroGas's Ukrainian oil and gas properties. As operator, RWE-DEA will select and recommend exploration properties. The agreement gives each partner the right of first refusal to purchase the other's interest; it also contains a noncompete provision in Ukraine.

Superior Propane Inc.,
Calgary, agreed to acquire IGC Propane Inc., a unit of Petro-Canada Ltd., for $175 million (Canadian). The deal would give Superior about 70% of Canada's propane market, making it North America's third-largest propane distributor. Ottawa's Competition Bureau will examine the proposed sale's impact on competition and the possible switch by consumers to other fuel sources. The National Farmers Union said it will likely oppose the deal, because it may mean price increases for farmers.

Braspetro Oil Services Co.,
a unit of state-owned Petrobras, acquired the Lasmo Oil (Colombia) Ltd. subsidiary of Lasmo plc, London, for $151 million. About 75% of the sale price will be paid in cash, with the remaining 25% deferred until April 1999, guaranteed and deductible against the possible acquisition in Brazil. As part of the deal, Lasmo has an option to evaluate and acquire assets off Brazil. The subsidiary's book value at midyear was about £46 million. Lasmo says the transaction will generate a profit on disposal of about £50 million.

Duke Energy Transport & Trading Co.
signed a letter of intent to purchase Dynegy Inc.'s 150,000 b/d U.S. crude oil supply, transportation, and marketing operations. The deal would involve Dynegy's crude oil pipeline, gathering, and marketing business in Oklahoma, Texas, and Louisiana. Primary assets are Dynegy's on-system gathering company in Oklahoma, its Grand Lake liquids system in Louisiana, and the assets of the Graham gathering system in North Texas.

Triton Energy Ltd., Dallas, laid off 65 employees from its Dallas office as part of a corporate restructuring and cost-reduction plan (OGJ, July 27, 1998, p. 36). The move cuts Triton's Dallas staff by more than one third and its worldwide staff by one fourth.

Gas processing

Imperial Oil Ltd., Toronto, will build a $250 million (Canadian) natural gas processing plant and pipelines in the Caroline area of Alberta, northwest of Calgary. Imperial said it will have partners in the 2.5 bcfd WestAlta straddle gas plant. Completion is scheduled in 2000. The plant would produce about 2.1 bcfd of processed gas for shipment to Canada and the U.S. and about 110,000 b/d of NGL to be fractionated at Fort Saskatchewan, near Edmonton, by an unnamed partner. Some of the product is intended for Imperial's Strathcona refinery, near Edmonton, and some for its Cold Lake, Alta., heavy oil facilities.

Pipelines

TransCanada PipeLines Ltd., Calgary, filed an application with Canada's National Energy Board to reduce its 1999 expansion spending to $405.5 million (Canadian) from $981 million (OGJ, June 22, 1998, p. 35). The company said the changes would lower costs for shippers by increasing marketplace options. The modified plan would increase net incremental firm delivery capacity to the U.S. Midwest and Eastern Canada by 208 MMcfd. Of the total, 108 MMcfd would come from adding 97 miles of pipeline looping and four new compressor units, and 100 MMcfd through transportation service options.

BC Gas Inc.,
Vancouver, B.C., and its Trans Mountain Pipe Line Co. unit are joining a study by Shell Canada Ltd. and BHP Co. Ltd. of the proposed $440 million (Canadian) Corridor pipeline. The 450-km pipeline would connect the Muskeg River Mine on Shell's Lease 13 north of Fort McMurray, Alta., to the Scotford upgrader near Fort Saskatchewan (OGJ, Aug. 11, 1997, p. 32). If approved, BC Gas and Trans Mountain will build, own, and operate the pipeline. Construction would begin in 2000, and shipping in 2002. Shell and BHP have an option to take a 49% equity interest.

Bufete de Infrastructura
Maritima Mexicana SA de CV
let a $4 million contract to a unit of TransCoastal Marine Services Inc., Houston, for pipelaying in Cantarell field using TransCoastal's Vermilion Bay lay barge. The barge was slated to depart Aug. 1, and is under contract for at least 200 days.

Bechtel Enterprises Inc.
and GE Capital Structured Finance Group formed PSG International Ltd. to develop, finance, build, own, and operate major pipeline transportation systems, with an initial focus on the Caspian Sea region. PSG will target long-haul pipelines to transport oil, natural gas, refined products, chemicals, and ore and coal slurries. Principal marketing operations will be in London, with additional offices in strategic international locations. PSG already has formed a consortium with Amoco Inc. to lay a major pipeline to ship gas from Turkmenistan to Turkey and Europe (OGJ, July 6, 1998, p. 39).

Vector Pipeline Ltd. Partnership,
Calgary, applied to NEB to build a $35.4 million (Canadian) 15-mile, 42-in. natural gas pipeline in southwestern Ontario. The 1 bcfd line would extend from the international border on the St. Clair River, near Sarnia, Ont., to Dawn, Ont., in order to interconnect Ontario's gas grid with existing and proposed facilities owned by Northern Border Pipeline Co., Alliance Pipeline Ltd., and Michigan Consolidated Gas Co.

Power

Calpine Corp., San Jose, Calif., acquired Dow Chemical Co.'s 70-MW natural gas-fired power plant at Dow's Pittsburg, Calif., chemical plant for about $13 million. The acquisition includes Dow's gas pipeline system in the Sacramento basin. Calpine has hired a majority of the former Dow power plant employees and will sell as much as 18 MW of power to Dow for use at the chemical plant for up to 15 years. Calpine also plans to build a 500-700 MW gas-fired power plant next to Dow's Pittsburg plant for an estimated $250-350 million. Construction of the new plant is slated to begin in 2000.

Exploration

U.S. Minerals Management Service will hold OCS Lease Sale 170 in the Beaufort Sea on Aug. 5, 1998, in Anchorage. MMS is offering 241 whole and partial blocks totaling about 1 million acres off the central North Slope coast. The area extends from the Colville River east toward the Canning River. Seventy-eight of the blocks are within a 3-6 mile band beyond Alaska's coastal boundary. Alaska will receive 27% of revenues generated from the sale in this band and from any development on those blocks. MMS has attached requirements to protect the Nuiqsut bowhead whale subsistence harvest.

Amoco Canada Petroleum Ltd.,
Calgary, reports that a discovery in the Rocky Mountain foothills, 149 miles northwest of Calgary, is producing gas at a rate of more than 70 MMcfd. The Blackstone field discovery well was drilled to 15,551 ft. A second well in the same Blackstone Swan Hills gas pool is producing at 80 MMcfd. Amoco said the pool has estimated reserves of 1.1 tcf. Partners are operator Amoco 55%, Husky Oil Ltd. 34%, and Anderson Exploration Ltd. 11%. The gas is being processed at Husky's nearby Ram River plant.

Anadarko Petroleum Corp.,
Houston, reported OCS-G 14482 No. 1 exploration well on its Tanzanite prospect on Eugene Island South Addition Block 346 cut 450 ft of hydrocarbon pay. Operator and 100% owner Anadarko said the well, drilled to 14,350 ft TD in 314 ft of water about 75 miles off Louisiana, confirmed an accumulation of hydrocarbons and shows 30% porosity. 3D seismic data indicate a 1,000-acre productive reservoir with estimated reserves of 140 million boe. Three additional pay zones totaling 70 ft of net pay are present in the well bore. Anadarko let contract to Rowan Cos. Inc. to immediately drill a delineation well in the field.

Vastar Resources Inc.,
Houston, found two new major oil-bearing zones on its King prospect on Mississippi Canyon Block 764 in the Gulf of Mexico. The finds are in addition to two shallower oil-bearing zones found previously. The King well, suspended at 17,580 ft MD in February, was reentered, sidetracked, and deepened to 20,796 ft MD. It cut 290 ft of total net pay for all zones. Drilling was suspended until development plans are finalized. Interests are operator Vastar 50%, Shell Deepwater Development Inc. 33.33%, and BP Exploration & Oil Inc. 16.67%. Operatorship of the block will revert to Shell after well completion.

Anadarko Petroleum's
A-7 well discovered new reserves that were fault-separated from the main field reservoir on East Cameron Block 157 in the Gulf of Mexico. On test, the well flowed 40 MMcfd of gas and 1,129 b/d of condensate with 2,235 psi flowing tubing pressure. Operator and 100% interest owner Anadarko said the reserves could not have been recovered with the existing well bores. Seven wells in the field are producing 70 MMcfd of gas and 1,700 b/d of condensate.

Meridian Resource Corp.,
Houston, tested a previously reported discovery made by the Myles Salt No. 32 well in Weeks Island field. The well was directionally drilled under a salt overhang on the north flank of Weeks Island Dome and cut 551 ft of gross pay in the U sand. From perforations at 6,548-6,612 ft near the base of the gross sand interval, the well on test flowed at a rate of 2,282 b/d oil, 659 Mcfd of gas, and 7.2 bw/d through a 28/64-in. choke with 828 psi flowing tubing pressure. The well was scheduled to be placed on production in late July at a rate of about 1,500 b/d of oil. At least two offsets are scheduled. Meridian owns a 71.8% net revenue interest in the wells.

Oilsands

Syncrude Canada Ltd.'s oilsands plant in northern Alberta shut down one of two cokers on July 24, cutting plant capacity in half. The unit, which heats and cracks extracted bitumen to produce naphtha and gas oils, was idled because of clogged feed lines. Repairs could take as long as 30 days. Syncrude will cut shipments of synthetic crude to 120,000 b/d from 240,000 b/d.

Petrochemicals

Institut Français du Pétrole, licensed its Alphabutol process to Sidi Kerir Petrochemicals (Sidpec), Alexandria, Egypt, for use in a 10,000 metric ton/year butene-1 unit to be built as part of an ethylene-polyethylene complex. Sidpec let contract to Samsung Engineering Corp. to build the complex, slated for completion in 2000.

A joint venture of
BASF Corp., Mount Olive, N.J., and Fina Inc., Dallas, let a $600 million turnkey contract to ABB Lummus Global, Bloomfield, N.J., to build a liquids-feed steam cracker at Fina's Port Arthur, Tex., refinery (OGJ, Sept. 29, 1997, Newsletter). The unit will have capacity to produce 1.9 billion lb/year of ethylene and the same amount of propylene. ABB Lummus said it will be the world's largest single-train olefins plant. Construction is set to begin in September, with start-up slated for fourth quarter 2000. Scope of contract includes process technology and license, detailed engineering, procurement, construction, and commissioning services.

Refining

Tema Oil Refinery Ltd., Ghana's state-run refining company, let a $240 million contract to Samsung Engineering Corp. to build a 14,000 b/d gasoline and LPG plant at its 26,600 b/d refinery at Tema, Ghana. Completion is scheduled for 2001.

India approved a project by
Bharat Oman Refinery Ltd.'s (BOR) involving a refinery, crude oil pipeline, single buoy mooring (SBM), and crude oil terminal in Gujarat. BOR is a joint venture of India's Bharat Petroleum Corp. Ltd. and Oman Oil Co. Each will hold a 26% equity stake in the refinery; India's Oil & Natural Gas Corp. may take a 10% stake. BOR says a 4-year delay in the approval process caused total project costs to climb to 74 billion rupees from 54 billion rupees. BOR needs to raise $500 million in external commercial financing.

Drilling-production

BP Exploration Operating Co. Ltd. began oil production from Schiehallion field in the U.K.'s West of Shetland sector on July 29. Production is 30,000 b/d from one well and is expected to peak at 154,000 b/d. BP is developing Schiehallion and nearby Loyal field with a production, storage, and offloading ship linked to 29 subsea wells tied back to four seabed manifolds. BP expects total capital outlays to be £1 billion; it let project contracts early in 1996 (OGJ, Apr. 15, 1996, p. 30). This is the second West of Shetland field development, following BP's Foinaven project, which produced first oil last year (OGJ, Dec. 8, 1997, p. 21).

Agip International BV
and Lukoil Western Siberia Ltd., a unit of Russian oil company Lukoil, formed a new company, Lukoil Agip Siberia Oil (LASoil), to develop the Severe Pokachevskoye field in western Siberia. Lukoil will hold a 60% stake and Agip 40%. Drilling operations will begin late in 1998. Estimated reserves are 130 million bbl, to be produced over 20 years with 124 production wells and 49 water injectors.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.