INDUSTRY BRIEFS

Alternate fuels

Sasol Ltd.'s Sasol Synthetic Fuels (Pty.) Ltd. commissioned the first Sasol Advanced Synthol (SAS) reactor with a 10.7-m diameter. Sasol uses the SAS process to produce liquid fuels from coal at Secunda, South Africa. The company is replacing Synthol reactors under a 1.01 billion rand program to bring production costs down towards refining cost levels (OGJ, Mar, 167, 1997, p. 23). The original 16 Synthol reactors will be replaced with eight of the new-design reactors; of these, four will be 10.7 m in diameter, and four 8 m. One of the 8-m reactors was commissioned in June 1995 to prove the new technology. The remaining six will be commissioned by February 1999.

Refining

Kyokuto Petroleum Inc. let contract to M.W. Kellogg Technology Co., Houston, to supply its MagnaCat catalyst separation technology for the residuum fluid cat cracking (RFCC) unit at its Chiba, Japan, refinery. Kellogg will supply a 20 ton/day module for start-up in mid-1999 at the RFCC unit, which it also designed. The technology uses permanent roller magnets to preferentially remove the oldest, most metals-laden deactivated catalyst from FCC units.

Exports-Imports

Santa Fe Energy Resources Inc., Houston, and Gulf Canada Resources Ltd., Calgary, signed a memorandum of understanding with Indonesian state firms Pertamina and PGN and Singapore utility Singapore Power to supply natural gas from Sumatra's Jabung block to Singapore. Plans call for a 420-km pipeline to export gas to Singapore via Indonesia's Batam Island. Gas sales could begin by 2001 at 150 MMcfd, increasing to more than 300 MMcfd. The final agreement, to be signed Mar. 31, 1999, would allow development of at least 2 tcf of gas reserves in Jabung block's North Geragai and Makmur fields-currently producing oil-and in Northeast Betara and North Betara gas fields. More wells are planned in 1998-99.

LNG

Snam SpA, the natural gas unit of Italian state oil company ENI, signed an agreement with Italian utility Edison Gas to transport liquefied natural gas from Abu Dhabi to Italy. Edison will buy the gas from Abu Dhabi Gas Liquefaction Co. Ltd. (Adgas). Snam will supply, via its LNG carriers, about 10 cargoes totaling about 400 million cu m of gas, from October 1998 through June 1999. It will be shipped from Adgas's Das Island, Abu Dhabi, LNG complex to Snam's Panigaglia terminal at La Spezia, Italy, for storage, regasification, and distribution through Snam's Italian network to Edison's power plants.

Qatar Liquefied Natural Gas Co.
(Qatargas) signed an agreement for its first LNG sale into the U.S., with Duke Energy Corp., Charlotte, N.C. The deal, pegged to U.S. gas futures prices, calls for supply of 57,000 metric tons of Qatari LNG, to be loaded in December. Qatargas is negotiating more U.S. LNG supply deals with Duke and two other, undisclosed, U.S. firms.

Exploration

Two South Korean firms agreed to participate in an exploration block off Viet Nam. State-owned Korea Petroleum Development Corp. (Pedco) and SK Corp. signed a joint venture agreement with Vietnamese state oil company Petrovietnam covering Block 15-1 off Vung Tau, Viet Nam. Interests are operator Conoco Inc. 23.25%, Pedco 14.25%, SK 9%, France's Geopetrol 3.5%, and Petrovietnam 50% (OGJ, Jan. 18, 1998, p. 31).

Red Sea Oil Corp.
(RSOC), Vancouver, B.C., found oil and gas in a separate structure near its En Naga North discovery on Libyan Block NC177. After reentering the J1-85 well, 3 km southeast of the B1-NC177 (En Naga North discovery) well, RSOC gauged a flow rate of 2,203 b/d of 44° gravity oil and 1.785 MMcfd of gas through a 44/64-in. choke over a gross interval of more than 90 ft in lower Gir. A seismic survey continues on the block, another appraisal well at En Naga North is slated there, and further exploratory drilling is planned for early 1999. Operator RSOC holds a 60% interest in the block; Lundin Oil AB, also of Vancouver and 61% interest owner in RSOC, holds 40%.

Drilling-production

Petroleo Brasileiro SA, Brazil's state oil company, and Baker Oil Tools, Houston, completed what Baker claims is the first deepwater Level 5 multilateral from a floating rig, in the Campos basin off Brazil. The Voador No. 8-VD 6HP-RJS/7HPA-RJS well, a new injector in Voador field, was completed as a Level 5 multilateral because of the need for hydraulic isolation at the junction between the main bore and each lateral; it also allowed elimination of one of two wellheads and some seabed pipelines. The well had a TVD of 9,200 ft and horizontal distance of 1,950 ft.

ARCO and Texaco Inc. agreed with Chinese state-owned China National Offshore Oil Corp. (Cnooc) to develop Qinhuangdao (QHD) 32-6 oil field in Bohai Bay off northern China. Discovered by Cnooc in 1995, the field lies in 20 m of water 20 km offshore. Start-up is slated for mid-2001, with production to peak at 60,000 b/d. Original oil in place is estimated at 1 billion bbl. Cnooc will be operator with 51% interest; ARCO and Texaco each will hold 24.5%.

Lundin Malaysia Ltd.,
a unit of Stockholm's Lundin Oil AB, completed a big development well in Bunga Kekwa field off Malaysia. The BK-A5 well, drilled to 7,834 ft TVD from the BK-A platform, targeted the crest of the structure and confirmed the continuity of reservoir horizons updip of BK-A1 and BK-A4 wells. A dual-string production completion in BK-A5 allows production from four oil-bearing intervals. The well is producing more than 9,000 b/d of oil, essentially doubling output from the field.

Hurricane Hydrocarbons Ltd.,
Calgary, received exploration and production licenses for Qyzylkiya and Aryskum fields in south-central Kazakhstan's South Turgai basin. Issuance of the licenses is part of a commitment made by Kazakhstan when Hurricane bought the Yuzhneftegaz state oil company in 1996. The two fields, along with Maybulak field, are known collectively as the QAM fields. They have proved and probable reserves of 90.5 million bbl. A license for Maybulak was issued late in 1997 to Hurricane, which plans to lay a pipeline and develop infrastructure for Qyzylkiya in 1999.

Gulf Canada
will start up production from two new discoveries off Sumatra, in the Kakap production-sharing agreement area, in fourth quarter 1998. The KRA find is scheduled to produce at a rate of 5,000 b/d by November, and Jangkar field will produce at an initial rate of 6,000 b/d by December.

Companies

KN Energy International Inc., a unit of Lakewood, Colo.-based KN Energy Inc., purchased an undisclosed interest in Integrated Gas Services of Mexico LLC (Igasamex), a Mexico City company that develops natural gas opportunities in Mexico. Igasamex's main focus is helping Mexican industry convert to natural gas from other fuels-such as diesel, propane, or fuel oil-through development of supply and transportation projects. Last year, another KN unit was awarded a concession to build, own, and operate a natural gas distribution system in Hermosillo, Sonora state.

Petroz NL,
Brisbane, acquired Apache Corp.'s 39% interest in the Bentu and Korinci-Baru production-sharing contracts in Sumatra. The acquisition is the company's first in Indonesia and entails exploration and production interests. Petroz will make an initial $2 million payment to Apache, followed by two additional payments totaling up to $10.3 million, after gas sales contracts have been signed and approved by Indonesian state oil firm Pertamina and when production begins.

Quaker State Corp.
shareholders approved the merger of the company with the motor oil, refined products, and fast lube operations of Pennzoil Co. The combination, expected to close in the fourth quarter following an Internal Revenue Service ruling, is expected to save the combined firms $90-125 million/year (OGJ, Apr. 20, 1998, Newsletter).

Petrochemicals

Amoco Canada Petroleum Ltd., Calgary, delayed construction of a $250 million (Canadian) linear alpha olefins (LAO) plant at Joffre, Alta., for about 1 year. Amoco plans to do additional design work on the plant and introduce new technology. Construction was originally set to begin this summer. Amoco will buy its feedstock from Nova Chemicals, Calgary, and Nova will take Amoco's LAO.

Coastal Corp.
unit P?trochimie Coastal du Canada will temporarily suspend operations, beginning early in October, at its Montreal East, Que., paraxylene plant because of the bleak current and near-term outlook for paraxylene. Sixteen of 88 employees will be retained after suspension.

Private Saudi firm
Saudi National Manufacturing Co. plans to build a $266 million, 400,000 metric ton/year propylene and derivatives plant at Jubail, Saudi Arabia. The Saudi company is negotiating with Japanese and European firms to build the complex, according to local press reports.

Pipelines

EOTT Energy Partners LP, Houston, agreed to buy crude oil gathering and transportation assets from affiliates of Koch Industries Inc., Wichita. Included are about 3,900 miles of crude oil pipeline and contracts for about 220,000 b/d of crude oil production in 11 central and western U.S. states. EOTT will pay $184 million in cash and issue 2 million common units and 2 million subordinated units to Koch. Enron Corp., parent of the EOTT partnership's general partner, will provide loans for the cash portion of the acquisition.

ARCO Pipe Line Co.
and Pacific Pipeline System Inc., a unit of Anschutz Corp., agreed to form a joint venture, Pacific Pipeline System LLC, to combine their California pipeline systems into a common carrier line to carry light and heavy crude oil from San Joaquin Valley and Outer Continental Shelf producers to Los Angeles area refineries. The Pacific Pipeline, a 20-in. line from Kern County to Long Beach/El Segundo, is under construction and slated for start-up in fourth quarter 1998. The JV will include it and ARCO's Line 63 system, a 14-in. line from Kern County to Carson. Combined capacity will be 235,000 b/d. The California Public Utilities Commission still must approve the JV.

U.S. Federal Energy

Regulatory Commission (FERC) approved construction and operation of the U.S. portion of the Alliance natural gas pipeline from western Canada to Chicago. The $3.7 billion (Canadian) project will transport gas and gas liquids from British Columbia to the Chicago area. Construction of the 1,864-mile line is scheduled to begin in 1999.

FERC
said it needs more time to look at several petitions against the Maritimes & Northeast pipeline, which would move gas from the Sable Island area off Nova Scotia to New England markets. One of the petitions was filed by the group No New Corridors, which objects to a 33-mile section across undeveloped land in central Maine. It says the line should use existing utility corridors. Alliance expects to have a final vote from the U.S. Environmental Protection Agency in October, with a construction start on the 600-mile line in late fall or early winter.

Dakota Gasification Co.,
Bismarck, N.D., is reexamining investment options regarding its plans to lay a 330-km carbon dioxide pipeline and supply CO2 from its Great Plains coal gasification plant at Beulah, N.D., to Calgary-based PanCanadian Petroleum Ltd.'s Weyburn, Sask., oil field. PanCanadian is evaluating a miscible CO2 flood there as part of a $1 billion (Canadian) development project (OGJ, Apr. 20, 1998, p. 49). PanCanadian says the review may delay start of injection at Weyburn, currently slated to begin Dec. 1, 1999.

El Paso Energy International,
Houston, and a Tanzanian company plan to lay a 1,000-km, 60,000 b/d refined products pipeline in Tanzania linking Dar es Salaam and Mwanza, a town along northern Lake Victoria, according to several wire service reports. El Paso and local partner Africommerce International would form a joint venture to implement the $400 million project. Currently, refined products coming in at Dar es Salaam move via rail or road to the Lake Victoria region of Tanzania, Burundi, Rwanda, Uganda, and eastern Congo.

Oilsands

PanCanadian Petroleum set up a new company to handle about two thirds of its heavy oil production. Van Horne Oil & Gas Ltd. will produce about 20,000 b/d of heavy oil from the Lloydminster region on the Alberta-Saskatchewan border. It will manage another 4,000-5,000 b/d that is shut in due to low oil prices. PanCanadian said it is committed to heavy oil and added that the new firm is not being set up as vehicle to back out of heavy oil.

Gas storage

Wild Goose Storage Inc. (WGSI), a unit of Alberta Energy Co. Ltd., started injection of cushion gas at a rate of 12 MMcfd at its Butte County, Calif., gas storage site. Commercial start-up is set for Apr. 1, 1999. WGSI laid a 4-mile pipeline to Pacific Gas & Electric Co.'s northern California system and will continue related construction through next spring. It is taking nominations for firm storage capacity services for the 1999-2000 season and has some unsubscribed firm capacity remaining from last year's open season.

Terminals

Williams Cos., Tulsa, signed a letter of intent to purchase a refined products terminal at Doraville, Ga., from Phillips Petroleum Co., expanding Williams's presence in the U.S. Southeast to 10 terminals. The Doraville terminal supplies gasoline and diesel to the Atlanta market and has a two-spot loading rack and 200,000 bbl of storage capacity. Gulf Coast refineries deliver products to the Doraville terminal via the Colonial and Plantation pipelines. Phillips disclosed plans to sell the terminal earlier this year, after the company bought a 30% stake in Citgo Petroleum Corp.'s Atlanta terminal.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.