INDUSTRY BRIEFS

Spills

A Japanese tanker spilled 1,610 bbl of gas oil off northern Japan Sept. 4 after colliding with a small fishing boat, a coast guard official said. The 998-metric ton tanker, No. 8 Daiju-maru, struck the boat 25 km off Esashi, Hokkaido, in the Sea of Japan. "The tanker lost all the light oil it carried following the collision," the official said. "But since it was not crude oil, the impact of the leakage on the environment is likely to be limited." No one was injured in the accident.

Gas processing

Norway's Statoil AS inaugurated the world's first plant for producing bioprotein from natural gas at its Tjeldbergodden gas terminal on the coast of central Norway (OGJ, Aug. 17, 1998, p. 31). Production is expected to begin in October, when feedstock gas from Heidrun field is available after the platform's September turnaround. The plant is designed to produce 10,000 metric tons/year of bioprotein for use in animal feed. The process uses bacteria to convert natural gas to a product comprising 70% protein, 12% carbohydrates, 10% fat, and 8% minerals.

Drilling-production

India's Oil & Natural Gas Corp. (ONGC) let a $2.1 million contract to Gaffney Cline & Associates Ltd., Alton, U.K., for help in boosting oil production from the Bombay High oil fields complex. The firm will provide advice on infill drilling, sidetracking wells, gel technology use, reservoir characterization, horizontal well problems, high gas:oil and water:oil ratios, gas lift, extended-reach and horizontal well repair, stimulation techniques, workover fluids and loss-control mechanisms, and water-alternating-gas use. Based on results of the study and a 3D seismic survey, ONGC will launch in October a pilot project that could be followed by a $2 billion expansion program.

Texaco North Sea Ltd.,
London, commissioned the world's first downhole multiphase pump in U.K. North Sea Captain field. The pump was developed by Weir Group plc, Glasgow, as a gas handling version of its hydraulic turbine-driven downhole pump. Since its installation in June, the pump has operated on gas fractions of 35-75% at pump suction without gas locking. Deployed in Captain's C-13 well from the wellhead platform, the pump typically handles 5,500 b/d of well fluids, rising to more than 18,000 b/d at inlet with the addition of free gas. Weir says the technology is key to developing several marginal North Sea prospects.

Mitsubishi Oil Co. Ltd.,
Tokyo, began production from the northern edge of Viet Nam's Rang Dong oil field. Output is expected to reach 45,000 b/d at the peak of the current production phase. Under an agreement with Viet Nam, Mitsubishi's Vietnamese subsidiary, Japan Vietnam Petroleum Co., will receive 50% of production. Mitsubishi's Mizushima, Japan, refinery will begin processing the low-sulfur oil in October. The oil is suitable for processing at most Asia-Pacific refineries, says Mitsubishi.

Research

Construction will begin next year on an $11 million (Canadian) petroleum research center at the University of Regina in Saskatchewan. The center will be financed by federal and provincial funds and focus on enhanced oil recovery techniques, especially for heavy oil.

Exports-Imports

Japan's Marubeni Corp. began receiving stabilized condensate from Qatar General Petroleum Corp.'s (QGPC) Arab D-Gas liquids recovery plant. The condensate is being imported under a 3-year contract with QGPC. It is transported from the plant at Dukhan, Qatar, via pipeline to the port of Mesaieed, from which it is shipped to Japan in tankers. Marubeni will use the condensate as petrochemical feedstock. It did not disclose the contract quantities. The gas plant produces 40,000 b/d of condensate and 750 metric tons/day of NGL.

Petrochemicals

Dow Europe SA will acquire the general-purpose rubber business of Shell Chemicals Ltd. This includes manufacturing plants at Berre l'Etang, France, and Pernis, the Netherlands, that produce, respectively, polybutadiene rubber and emulsion styrene butadiene rubber. The transaction is due to be completed by yearend. Shell's Isoprene rubber and Kraton polymers businesses are not affected by the deal.

Pakistan's Caustic Soda Manufacturing Association
(CSMA) plans to build a $100 million plant to produce polyvinyl chloride, urea fertilizer, acetic acid, and acrylic fiber, said CSMA Chairman Muhammad Address. About 100 cu m/hr of natural gas feed will be cracked to produce acetylene feed for the plant. Cofeeds will include byproducts from Pakistan's chlor-alka* industry, which produces 80,000 metric tons of surplus chlorine. The location of the proposed plant was not disclosed.

Pipelines

Maritimes & Northeast Pipeline Management Ltd. (M&NP) applied to Canada's National Energy Board to build and operate a natural gas lateral to Point Tupper, N.S., from its main transmission line near Goldboro, N.S. About 55 km of 8-in. pipeline will move gas from the Sable Offshore Energy Inc. (SOE) gas processing plant to SOE's Point Tupper fractionation plant. A further 4 km of 6-in. pipeline will move gas to two other delivery points in the Point Tupper area. Estimated capital cost is $21 million (Canadian). M&NP set an in-service date of Jan. 1, 2000.

Futures

International Petroleum Exchange, London, launched a natural gas futures index to enable gas traders to link long-term contracts to floating rather than fixed prices. The index will be a rolling average of prompt futures prices calculated daily. Richard Ward, executive vice-president for business development at IPE, said, "We have already had many companies using the IPE as a basis for floating-price deals. One of the advantages of doing this is that it makes risk management very easy."

Companies

H.C. Price Co., Dallas, agreed to acquired O.J. Pipelines from its owner, Ocelot Energy Inc., Calgary, for $48.2 million (Canadian) in cash. In addition, Ocelot will retain about $3 million of O.J. working capital. Ocelot will use the funds to supplement working capital and reduce bank debt. Following the sale, which Ocelot expected to close Sept. 14, the firm will have bank debt of about $15 million. Ocelot said it will continue to focus on developing international projects. It now has projects in Gabon and Tanzania.

Enron Oil & Gas Co.,
Houston, acquired Fort Worth-based Union Pacific Resources Group Inc.'s 19% nonoperated working interest in Matagorda Island Block 623 field and surrounding blocks for $158 million. The sale is part of UPR's effort to divest noncore assets, which comprise nonoperated fields on the Gulf of Mexico shelf off Texas. UPR redefined its core business area after acquiring Norcen Energy Resources Ltd. earlier this year (OGJ, Feb. 2, 1998, p. 30). UPR expects to sell more assets in the coming months.

A Dallas County jury
awarded Breezevale Ltd., London, more than $38 million in a lawsuit against Exxon Corp. regarding interest in exploration blocks off Nigeria. The jury found that Exxon breached an oral contract to give Breezevale a 2.5% working interest in the blocks in return for Breezevale's assistance in bidding on them. Exxon will file a motion asking the court to disregard the jury's finding. If its request is not accepted, Exxon will appeal, said counsel David J. Beck, of Houston's Beck, Redden & Secrest.

Lomak Petroleum Inc.
and Domain Energy Corp. completed their $1 billion merger (OGJ, May 18, 1998, p. 32). The new firm, called Range Resources Corp., will be headquartered in Fort Worth.

Smith International Inc.,
Houston, agreed to acquire a 36% interest in M-I LLC, Houston, from Halliburton Co., Dallas, for $265 million. M-I is a supplier of drilling and completion fluids, systems, and services. The deal will give Smith a 100% interest in M-I. Smith will pay the purchase price in the form of a non-interest-bearing promissory note, due 240 days after closing. All of M-I's debt will remain an obligation of M-I. Halliburton was required to sell the interest as a condition of its pending merger with Dresser Industries Inc.

Giant Industries Inc.,
Scottsdale, Ariz., and Holly Corp., Dallas, terminated their proposed merger agreement (OGJ, Apr. 20, 1998, Newsletter). The companies were unable to reach a solution to concerns raised by the Federal Trade Commission.

Refining

M&S Petroleum Inc., former operator of a 25,000 b/d refinery in Vicksburg, Miss., and three of its officers were indicted in a Jackson, Miss., federal court on 16 counts of violating environmental laws and making false statements, said the U.S. Environmental Protection Agency. John Cooke, Donnie Mullins, and Jerry LaBarba allegedly discharged benzene and other pollutants into the Mississippi River and Hatcher Bayou, released benzene into the air, and abandoned more than 1 million gal of hazardous wastes at the refinery.

Environment

EPA announced tighter emission standards for nitrogen oxides from new electric utility and industrial boilers. It said the new limits will reduce the projected growth in NOx emissions by 42% (45,800 tons/year) from levels allowed under current standards. The Natural Gas Supply Association praised the rule because it is fuel-neutral.

Cogeneration

Husky Oil Ltd., Calgary, began construction of a $160 million (Canadian) cogeneration plant at its heavy oil upgrader in Lloydminster, Sask. Husky and TransAlta Energy Corp., Calgary, will develop the 215-MW plant in time for the start of an expansion project at Husky's upgrader in 1999. The $500 million expansion will increase upgrader capacity to 150,000 b/d from 69,000 b/d. It is slated for completion late in 2001.

Exploration

Shell Petroleum Development Ltd. (Falklands Branch) reported its Sebald-1A wildcat, drilled north of the Falkland Islands, encountered hydrocarbons at various levels but not in commercial quantities. This was the third well drilled to date in this virgin play and the second to find a small amount of hydrocarbons. The second well was dry (OGJ, July 6, 1998, Newsletter). The operator said Borgny Dolphin semisubmersible drilled the well vertically in 464 m of water; it reached total depth of 4,525 m in 57 days. Shell plans to drill another well in the area in fourth quarter.

Conoco Indonesia Inc.
conducted four drill stem tests of its Belut 3 exploration well on Block B in the Natuna Sea off Indonesia. The well, drilled to a total depth of 10,450 ft, flowed at a combined rate of 5,600 b/d of oil from two zones at 5,300 ft and 8,300 ft. A shallow gas zone was encountered but not tested.

Oil India Ltd.
(OIL), one of India's two state-owned exploration and production companies, agreed to acquire a 20% equity interest in the proposed Omani exploration venture of Total. OIL will pay $10 million for the stake in Total Exploration Oman. Total will retain an 80% equity interest in the project, which involves a $50 million investment for Phase 1 exploration of Oman's Block 4. Both partners are awaiting clearance from the government of Oman. Further investments will be based on the level of success in the first phase. Drilling is expected to start in December 1998.

Malaysia's Petronas
signed a production-sharing contract (PSC) with Sarawak Shell Bhd. for Block SK308 and the E6, F14, and F28 fields off Bintulu. Shell and Petronas Cariga* will hold equal shares in the PSC. Sarawak Shell Managing Director Lim Haw Kuang said the PSC could lead to investment by Shell of as much as 2 billion ringgit.

Barrett Resources Corp.
reached total depth of 6,678 ft and logged its Paiche 67-20-1X well on Block 67 in Peru's Mara?on basin. Oil shows were encountered in several sandstone benches in the basal Tena, Vivian, and Chonta sandstones. Log calculations indicate potential for about 175 ft of combined oil pay. The zones will be tested through production casing by late September. This is the third discovery on the block by operator and 70% interest holder Barrett. Its partners are Korea Petroleum Development Co. 20% and Hyundai Corp. 10%. A feasibility study is under way to assess the commercial significance of the finds.

NGL

Shell Petroleum Development Co. of Nigeria Ltd. signed a 20-year contract to supply 80 MMscfd of natural gas from two of its Cawthorne Channel flow stations to a Nigerian unit of Global Energy & Refining Inc. (GE&R). GE&R will use the gas as feed to an NGL plant it is building at Cawthorne Island, Rivers State. The plant is slated to start up in fourth quarter 1999. The NGL will be exported via tanker. The move is part of Shell's program to halt all unnecessary gas flaring in Nigeria.

Gas storage

Polish Oil & Gas Co. (POGC) let contract to Gaz de France engineering unit Sofregaz and Slovak engineering firm Naftoprojekt for a 4.3 billion cu m underground natural gas storage facility in Wierchowice, Poland. The project involves converting an existing gas field that produces poor-quality gas into what will become one of Europe's largest underground storage facilities. The 180 million ecu cost will be financed by the European Investment Bank. The 3-year contract includes basic and detailed engineering, equipment and work procurement, supervision and start-up, and project management.

Energy marketing

Country Energy LLC, a joint venture of two farmer cooperative groups, Farmland Industries Inc. and Cenex Harvest States Cooperatives, began operations as a petroleum products marketer. The alliance markets, sells, and distributes refined products, propane, lubricants, and petroleum equipment to local cooperatives and farmer-owners in rural areas in Canada, the U.S., and Mexico. Revenues for the first year are expected to be about $3 billion, which would make it the largest farmer-owned petroleum entity in North America. Neither partner's pipelines, refineries, or other plants are included in the alliance.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.