INDUSTRY BRIEFS

Refining

Mobil Oil Australia spent $14 million (Australian) to repair and upgrade a 1,246 ft section of pipe at its Port Stanvac oil refinery near Adelaide after a small section of corroded pipe burst in August. The leaking oil caught fire, shutting down the plant. Mobil estimates another $10 million was lost in revenue during the 2-month shutdown. Investigations into the cause of the blaze pinpointed corrosion caused by sulfur dissolved in crude oil.

Japan's Marubeni Corp.
plans to modernize the Atyrau refinery in Kazakhstan. The upgrade will cost $350-400 million. It will include construction of a hydrorefining unit for gasoline and diesel, as well as other equipment. The upgrading is expected to increase the plant's capacity by 59% in the short term, with an 85% increase expected in the future.

Tankers

The consortium operating and developing the Terra Nova oil field project in the Grand Banks off Newfoundland ordered a third shuttle tanker to transport oil from the field. The 890-ft, 850,000-bbl vessel is being built for Newfoundland's Penney Ugland II Inc. by Samsung Heavy Industries Co., Seoul. The vessel is due for delivery in August 2000 and will be chartered for a minimum of 10 years to Petro-Canada Ltd. and its Terra Nova partners.

Drilling-production

Mobil Oil Indonesia completed a $600 million, three-well development program in the Pase-A field in northern Sumatra, Indonesia. The project will add reserves to feed an expansion under way at the Arun LNG complex, which currently exports 12.5 million metric tons/year of LNG to Japan and South Korea. The Arun project, including the development of North Sumatra Offshore A field, is scheduled to come on line in June 1999.

R&B Falcon Corp.,
Houston, signed an agreement with Samsung Heavy Industries to build a $290 million 10,000 ft dynamically positioned drillship, Deepwater IV. It will use a similar hull design to three ships built before at Samsung. Deepwater IV is expected to be delivered in third quarter 2000. R&B Falcon says drilling contract discussions are under way with several major oil companies.

U.S. Minerals Management Service
(MMS) and the Texas General Land Office will conduct a royalty in-kind pilot project for Gulf of Mexico natural gas production. The test will take and sell gas from federal leases in the 8(g) zone, a 3-mile wide band just beyond state waters. MMS shares 27% of 8(g) royalties with coastal states.

MMS
will help Kazakhstan and Turkmenistan develop regulations for Caspian Sea drilling. MMS will also provide some technical assistance to Georgia. The U.S. Agency for International Develepment is providing $425,000 in funding for the projects.

ARCO British Ltd.
started gas production in Waveney field off the U.K. on Oct. 17. Block 48/17c Waveney field was developed with a two-well unmanned Sea Harvester design platform tied back by an 8-km, 10-in. pipeline to the Lancelot export line. Waveney has estimated reserves of 84 bcf of gas and is expected to produce as much as 80 MMcfd. The gas is delivered to Bacton terminal for sale in the spot market. Waveney interest holders are operator ARCO 86% and Oranje-Nassau Energie BV, Amsterdam, 14%.

Gas marketing

Texaco Ltd. let a contract for an undisclosed sum to Amerada Hess Ltd. for sale of uncontracted gas from the U.K. North Sea Galley, Erskine, and Britannia fields. Texaco is operator of Galley and Erskine and holds an interest in Britannia. The company signed the deal with Amerada after it sold its Texaco Natural Gas unit, a U.K. industrial and commercial gas supplier, to Shell U.K. Ltd. (OGJ, Sept. 7, 1998, Newsletter).

Companies

Amber Energy Inc., Calgary, has agreed to a $770 million (Canadian) takeover offer by Alberta Energy Co. (AEC), also of Calgary, after initially fighting the bid (OGJ, Sept. 21, 1998, Newsletter). This price represents a $30 million increase from the initial AEC cash, shares, and debt assumption offer. The takeover would increase AEC's proven and probable reserves to 4 tcf of gas and 375 million bbl of liquids. Production of gas would increase 30% to 900 MMcfd in 1999 and output of liquids would rise 42% to 85,000 b/d.

Houston Industries Inc.
(HI), Houston, formed HI Wholesale Energy Group, combining its existing trading and transportation group with its power generation unit. HI Wholesale Energy trades 4 bcfdof natural gas and 80 million MW/year of power. Charles Oglesby will serve as CEO of the new group and Joe Bob Perkins as president and COO.

ARCO
entered into a multipart agreement with Toronto-based Gulfstream Resources Canada Ltd. Under its guidelines, ARCO will pay Gulfstream $22 million for its interest in Margham field in Dubai and $22 million to settle "contractual obligations." ARCO also will pay 100% of Gulfstream's 27.5% share of production and processing expenses for the first 1.2 bcfd of gas from the Qatar consortium project (OGJ, Jan. 12, 1998, p. 30). Other interest holders in the Qatar consortium include BG plc 25%, Wintershall AG 15%, and Preussag Energie GmbH 5%.

Samson Lonestar LP,
a unit of Tulsa-based Samson Resources Co., acquired certain East Texas natural gas properties from Nuevo Energy Co., Houston, for $190.6 million (OGJ, May 25, 1998, Newsletter). The deal is expected to close by January 1999. The properties have reserves of about 275 bcfe. Nuevo will use the funds to retire some of its senior bank debt.

Profco Resources Ltd.,
Calgary, and GHP Exploration Corp., Houston, have agreed to merge in a deal valued at $28 million (Canadian). The transaction will consist of a share exchange, in which Profco shareholders will receive 1.15 common shares of the combined company for every share held, and GHP shareholders will receive 1.0 common share per share.

Clayton Williams Energy Inc.,
Midland, Tex., acquired certain oil and gas assets located mostly in three East Texas fields from Sonat Exploration Co. for $46.5 million. These assets are primarily long-life gas reserves with "significant potential for behind-pipe recompletions and developmental drilling." The deal is expected to close by Nov. 20.

Energen Resources Corp.,
Birmingham, Ala., completed its acquisition of Total unit Total Minatome Corp., Houston, for $192 million (OGJ, Sept. 21, 1998, p. 47).

Cross Timbers Oil Co.,
Fort Worth, plans to purchase northwest Oklahoma and San Juan basin producing properties from an undisclosed seller for $33.4 million. Net production from the properties is 12 MMcfed from 794 gross wells. The properties have a reserves-to-production index of 9.2 years.

Exploration

Mitchell Energy & Development Corp., The Woodlands, Tex., completed a dual-zone exploratory well on Texas State Tract 86, 22 miles north of Galveston in Umbrella Point field. The 1-R well tested at a calculated open flow potential of 82 MMcfd of gas, with perforations at 9,960-82 ft and 11,100-144 ft in the Frio formation. Mitchell expects the well to produce 15 MMcfd initially.

Williams Cos.,
Tulsa, announced a gas discovery at its Nash No. 2 well in Kenwood field in East Texas. On test, the well flowed at a rate of 25.8 MMcfd through a 24/64-in. choke with flowing tubing pressure of 5,360 psig. It was drilled to 14,558 ft TD and detected more than 350 ft of porous over-pressured Jurrasic Cotton Valley Pinnacle reef. Temporarily shut-in, the well is expected to be connected to a pipeline by early November.

Exxon Corp.'s Angolan unit,
Esso Exploration Angola (Block 15) Ltd. made a fourth oil discovery on Block 15 off Angola (OGJ, July 20, 1998, p. 42). The new find, Dikanza, flowed on test 4,400 b/d from one oil-bearing reservoir. The Dikanza well was drilled in 3,785 ft of water and reached 8,958 ft TD. Interests in the block are: operator Esso 40%, BP Exploration (Angola) Ltd. 26.67%, Agip Angola Ltd. 20%, and Statoil 13.33%.

A consortium
led by Santos Ltd. made a gas discovery with its John Brookes 1 sidetrack well on the North West Shelf off Western Australia. Wireline logs and core and pressure data indicate the presence of a 262 ft gas column in the Cretaceous Top Barrow formation at 9,184-9,512 ft. The well is drilling ahead towards a second objective reservoir in the late Jurassic and is expected to reach 12,464 ft TD. The field lies east of the Gorgon gas/condensate fields and north of East Spar gas field. Partners in the consortium are Santos 45%, Mobil Exploration & Producing Pty Ltd. 35%, and Apache Energy 20%.

The U.S. Court of Appeals
in Washington, D.C., reversed a U.S. Claims Court decision that awarded Mobil Corp. and Marathon Oil Corp. $78 million each for leases off the North Carolina coast. The companies claimed they could not drill the leases due to a federal moratorium, but the appeals court said they had failed to satisfy state objections to their exploration plans.

Gas processing

Allegheny Energy Resources Inc. (AER), Pittsburgh, plans to install UOP LLC's Separex membranes to trap methane in four of its Pittsburgh landfill gas cleanup projects. Each facility will process 5 MMscfd of landfill gas containing 43% CO2. Treated gas will have a CO2 content of less than 2%.

Petrochemicals

PetroFina SA and Solvay SA entered into an agreement for the construction and operation of two 250,000 metric ton high-density polyethylene plants in Belgium. The first, to be built, owned, and operated by Solvay, is scheduled to come on line by 2002. The second, to be built and operated by PetroFina, is scheduled to start up by 2005.

Saudi Basic Industries Corp.
(Sabic) won a bid to supply 150,000 metric tons/year of methyl tertiary butyl ether (MTBE) to Egyptian General Petroleum Corp. for the fourth consecutive year. Through its four affiliate plants, Sabic produces 2.7 million tons/year of MTBE.

Shell Chemicals Ltd.
and Imperial Chemical Industries plc unit ICI Polyurethanes have signed a letter of intent to form a strategic alliance in the global rigid polyurethane foam market. Shell would provide the alliance with rigid polyether polyols, while ICI would provide technical development and marketing of rigid polyurethane foam. The alliance is expected to begin operating in first quarter 1999.

Pipelines

The Southern Cross consortium acquired Western Mining Corp.'s 62.7% stake in Western Australia's Goldfields gas pipeline for $402 million (Australian). The consortium includes AGL Pipelines Ltd. and CMS Gas Transmission & Storage, each 45%, and TransAlta Energy 10%. Southern Cross is expected to buy the remaining pipeline stakes, owned by Normandy Mining 25.5% and BHP Petroleum Pty. Ltd. 12%. The 1,400-km system extends from Karratha, near the Burrup Peninsula North West Shelf gas plant, to Kalgoorlie and Kambalda, 500 km east of Perth. It was purchased by the partners in 1996 for $450 million.

Canada's National Energy Board
approved an application by Souris Valley Pipeline Ltd., Bismarck, N.D., to build and operate a carbon dioxide pipeline in southeastern Saskatchewan. The 38-mile, 12.75-in. line will move CO2 from the proposed Dakota Gasification Co. (DGC) pipeline project in North Dakota to an oil field at Weyburn, Sask. The pipeline will extend from the international border southwest of Estevan, Sask., to Goodwater, Sask. DGC has signed an agreement with PanCanadian Petroleum Ltd., Calgary, to provide 95 MMcfd of CO2 for a miscible flood project, expected to extend the life of Weyburn field by 25 years.

India
approved Gas Authority of India Ltd.'s (GAIL) $300 million proposal to construct a 1,230-km LPG pipeline to deliver 2.5 million metric tons/year from Kandla, in Gujarat, to Loni, near Delhi. The pipeline is scheduled to be commissioned by April 2001. Asian Development Bank has assured a loan of $150 million to GAIL for the project. GAIL, already producing 600,000 tons/year of LPG, plans to increase production by adding four more plants with a combined capacity of 480,000 tons/year.

Lithuania's Lietuvos Dujos
and Russian gas company Gazprom plan to lay a gas pipeline to the Kaliningrad region of Russia, on the Baltic Sea, via Lithuania. One gas pipeline is already in operation to the area. The two firms have been negotiating over the project for about a year. Russia is planning to increase the volume of gas supplies to Kaliningrad to 3 billion cu m/year by 2010. The existing pipeline through Lithuania to Kaliningrad can supply about 600 million cu m/year. The cost of the new pipeline will be about 880 million lits.

The National Gas Co. of Trinidad & Tobago Ltd.
(NGC) let contract to Gulf Interstate Engineering Co., Houston, to design, assist in the procurement for, and construct a 42-mile, 36-in. gas pipeline from the Beachfield station off Trinidad to the onshore Phoenix Park station. The contract also involves work on accompanying facilities, including a gas receiver and regulation facilities at Beachfield, scheduled for start-up January 1999, and metering and regulation facilities at Picton Station, due to be in service February 1999. The pipeline is scheduled to be in service June 1999.

Maine Board of Environmental Protection
granted the Maritimes & Northeast pipeline permission to build the 200-mile, 24-30-in. second phase of its project (OGJ, Oct. 19, 1998, p. 27), as well as about 120 miles of laterals and spurs serving New England markets.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.