INDUSTRY BRIEFS

Courts

Methanex Corp., Vancouver, B.C., says Revenue Canada filed suit for at least $113 million (Canadian) in back taxes dating to 1991. The international methanol producer is listed as a codefendant by tax authorities. Other defendants were not named by Methanex. The company has discussed the case with Ottawa and will file a notice of objection to a tax reassessment.

NGL

Warren Petroleum Co. Ltd. and Amoco Corp. formed a limited partnership, Cedar Bayou Fractionators LP, to own and operate the 200,000 b/d Warren natural gas liquids fractionator at Mount Belvieu, Tex. Warren, a subsidiary of Houston-based NGC Corp., will retain 88% ownership; Amoco has a 12% stake with an option to increase its share to 25% in the partnership.

Drilling-production

Texaco Inc. let contract to Falcon Drilling Co. Inc. for the Peregrine VIII dynamically positioned drillship capable of operating in 8,000 ft of water. The contract provides for a primary term of 3-5 years to assess Texaco's ultradeepwater acreage off West Africa. Falcon will convert the Kassos, a 921 ft, 135,000 dwt oil bulkore carrier into the Peregrine VIII drillship, which is similar to the Peregrine VI, currently undergoing conversion in Portugal. The unit will have oil storage capacity in excess of 300,000 bbl and is expected to be ready for service in mid-1999.

Premier Oil
let a $23 million contract for Marine Drilling Co. Inc.'s Kan Tan 3 semisubmersible drilling rig. The contract is for 9 months beginning Apr. 1, for work off Myanmar. Marine Drilling has a bareboat charter agreement for the Chinese-owned Kan Tan 3 for 5 years, with charter fees payable only when the rig is under contract.

Abu Dhabi Co.
let contract to Western Geophysical, Houston, to acquire a 3D onshore survey of Asab field. Western claims that the 700 sq km survey will use 1,900 channels, twice the typical industry channel count and greater than any known 3D project acquired in the Middle East or Africa. The project will be completed in March 1999.

TransGlobe Energy Corp.,
Calgary, signed a production-sharing agreement with Yemen's president for the Damis S1 block. TransGlobe will pay a signature bonus of $2 million to the Ministry of Oil and Mineral Resources following the PSA's ratification by the parliament. The agreement requires TransGlobe to acquire 350 sq km of 3D seismic and drill 3 wells in 21/2 years at a cost of $11 million. Block S1 covers 4,500 sq km and was previously explored by Royal Dutch/Shell during 1990-93. Shell drilled four wells that encountered several oil shows, which were not tested.

U.S. Minerals Management Service
clarified royalty payment transportation cost deductions for natural gas produced on federal and Indian lands. The rule does not allow deductions for costs associated with long term storage fees, penalties, and intrahub title transfer fees.

British Petroleum Co. plc
let contract to Consafe Engineering Ltd., Abderdeen, to refurbish and upgrade BP's Shelf 5 semisubmersible drilling vessel for its Shah Deniz project in the Caspian Sea. Although initial engineering studies will be conducted from Consafe's Aberdeen offices, the project team will complete electronic engineering packages and design at the company's new offices in Baku late in December.

Kerr-McGee Corp.'s
third appraisal well on Block 04/36, 3.5 miles east of its discovery well in China's Bohai Bay, flowed 1,311 b/d of light oil and 1.4 MMcfd of gas (OGJ, June 24, 1996, p. 25). The first appraisal well, CFD 2-1-2, drilled in May, flowed 4,100 b/d of light oil. The second appraisal well, CFD 2-1-3, found an oil reservoir on an adjacent fault block. The company will report potential reserves after completion of reservoir stimulation. Kerr-McGee will acquire more 3D seismic and drill more delineation wells before committing to a development program.

Esso Norge
tested a gas/condensate discovery near Sleipner field in the Norwegian North Sea. The Norwegian Petroleum Directorate said combined rate from two tests was 556 cu m/day of liquids and 265,000 cu m/day of gas through a 44/64-in. choke. The well, 16/7-7S, was drilled to 2,993 m. Esso has a 40% stake in Block 16/7, Statoil 50%, and Norsk Hydro Produksjon 10%.

Alternate fuels

Three heavy machinery companies and two steelmakers in Japan will jointly import and commercialize German biogas technology to produce methane from organic household refuse. NKK Corp. and Nippon Steel Corp., together with Ishikawajima-Harima Heavy Industries Co., Mitsui Engineering & Shipbuilding Co., and Toray Engineering Co., will handle operations beginning in spring 1998 for Japanese municipalities, the main operators of waste disposal services. Technology developed by German firm Schwarting Uhde GmbH will be used to generate methane and compost.

TransCanada
will construct in spring 1998 an $80 million electric power generation plant at Calstock, Ont., next to a TransCanada compressor station. The 33-MW plant will be fueled by wood waste and powered by waste heat and begin service in 2000. Potter Station Powered Co. Inc. of Ontario was selected as development and construction contractor. The power will be sold exclusively to Ontario Hydro.

Exploration

Talisman Energy Inc., Calgary, signed a production-sharing contract for exploration covering the Madura Block in the Java Sea off Indonesia. The company has extensive seismic data on the 2,638-sq mile block and plans to drill its first well in 1999. Talisman has a 100% interest in the block, the second awarded off Madura Island in recent weeks (OGJ, Dec. 22, 1997, p. 27). Talisman already produces 30,000 boed from other Indonesian interests and has a 30% interest in the Corridor Block project operated by Gulf Canada Resources Ltd., which is expected to produce 300 MMcfd of natural gas.

Nuevo Ghana Inc.,
a unit of Houston-based Nuevo Energy Co., obtained a second concession off Ghana. The block covers 2.7 million acres in the Accra-Keta prospect area. As operator, Nuevo holds a 100% working interest in the prospect. The acreage lies 60 miles east of Nuevo's 1.7 million acre concession, awarded in August 1997.

Forcenergy Inc.,
Miami, spudded an exploratory well on its Phoenix Marin concession off Gabon. The Moubenga prospect is in 380 ft of water. The well is targeted to 10,000 ft and will test two zones. A previous well drilled by another operator found hydrocarbons in one of the zones.

Reading & Bates Development Co.'s
discovery on East Breaks 643 North Boomvang prospect in the Gulf of Mexico, cut a 350 ft gross column with average net pay of 40-50 ft and oil gravity of 31°. The well was drilled to 12,312 ft measured depth in 3,668 ft of water. Operator Reading & Bates, with 62.5% interest in the find, estimated reserves at 35-45 million boe based on seismic data. Norcen Energy Resources Ltd., Calgary, holds the remaining 37.5% working interest. The well was suspended pending commercial development plans for the nearby East Boomvang discovery.

Companies

Enron Ventures Corp. (EVC), Houston, a unit of Enron Corp., will take a 15% minority interest in Catalytica Combustion Systems Inc. (CCSI), a subsidiary of Catalytica Inc., Mountain View, Calif., for $30 million. EVC also has a 3-year option to purchase an additional 5% stake for $14.4 million. EVC hopes CCSI's Xonon Combustion System technology will contribute to growth in gas turbine power generation. CCSI is counting on EVC to further the company's commercial development of Xonon in 1998.

Grey Wolf Inc.,
Houston, will acquire Shreveport, La.-based Murco Drilling Corp. for $56.4 million in stock and cash, provided Murco's liabilities do not exceed $8.6 million. Grey Wolf has an option of paying as much as $10 million in Grey Wolf shares, with the remainder in cash. Murco operates 10 onshore drilling rigs in East Texas, Louisiana, Mississippi, and Alabama, and has 230 employees.

Taurus Exploration Inc.,
Birmingham, Ala., a subsidiary of Energen Corp., agreed to acquire 81 bcfe of proved oil and gas reserves in the Permian basin of West Texas from B.C. Oil & Gas Ltd. for $44 million. Taurus said more than 50% of proved reserves are undeveloped, with about 48% classified as proved, developed, and producing. The company plans to spend another $17 million over several years to exploit the significant behind-pipe, waterflood, and other undeveloped reserves. The properties include 350 producing wells, of which Taurus operates 248.

Chevron Corp.'s
Chevron U.S.A. Production Co., its Gulf of Mexico deepwater business unit, agreed to form an alliance with Aker Maritime Inc., Brown & Root Energy Services, Han-Padron Associates, and Saipem SpA for services related to development of its deepwater leases. The alliance will provide a full range of project services including conceptual studies, engineering, fabrication, and heavy lift capability. The addition of other suppliers to the alliance on a project-by-project basis is expected.

Lubes

Unique Gas Hong Kong, a joint venture (JV) of Japan's Mitsui Co. and Unique Gas of Thailand, will increase production of lubricants and solvents in Viet Nam with a $22.5 million investment. A license granted by the Vietnamese government to Unique Gas & Petrochemicals Vietnam, a Thai subsidiary of the JV, will use the funds to expand production at its Dong Nai province plant, about 40 km outside Ho Chi Minh City.

Products marketing

Shell Oil Co. will open about 40 retail outlets in Croatia over the next 4 years. Total project costs are estimated at $70 million, with construction set to begin this year. Products will be sent from Croatia's two refineries at Sisak, southeast of Zagreb near the port of Rijeka.

Refining

Sun Northeast Refining will begin maintenance work in the first quarter at its two Pennsylvania refineries, the 307,000 b/d Philadelphia refinery and the 175,000 b/d Marcus Hook refinery. A 24-day turnaround of a 33,000 b/d reformer in the Girard Point section of the Philadelphia refinery starts Jan. 18 for catalyst regeneration. A 14-day repair to the 90,000 b/d cat cracker at the Marcus Hook refinery begins Feb. 15 to correct an operational problem that occurred when it was restarted in November. The Philadelphia-Marcus Hook complex has 190,000 b/d of fluid catalytic cracking capacity.

Farmland Industries Inc.,
Kansas City, Mo., let contracts to construct a $263 million coke gasification plant next to its Coffeyville, Kan., refinery. Scheduled for completion in 22 months, the plant will use Texaco Inc. technology to convert petroleum coke into anhydrous ammonia and liquid UAN fertilizer. Farmland plans to lease the plant under a long-term agreement.

Pipelines

Interprovincial Pipe Line Inc., Calgary, is seeking approval from Canada's National Energy Board (NEB) to begin the first phase of its $640 million (Canadian) Terrance oil pipeline expansion project. Phase I requires laying 15 new spreads of 36-in. pipe connected to existing 48-in. pipe to create a fifth pipeline between Kerrobert, Sask., and Gretna, Man. New pipe requirements total 383 miles of pipeline, 30 pumping unit additions, and 14 tie-in facilities. The expansion would increase throughput capacity to 160,000 b/d.

Alliance Pipeline Ltd.
let 10 construction contracts in the U.S. and Canada for its planned 1,864-mile natural gas pipeline from British Columbia to Chicago. Construction of the $3.7 billion (Canadian) project to move 1.3 bcfd of gas from western Canada is to begin this fall if NEB approves. The pipeline is opposed by Nova Corp. and TransCanada PipeLines Ltd. Nova wants Alliance gas moved through Alberta on its system. TransCanada's rival projects would move gas to U.S. midwestern and eastern markets. The U.S. segment would traverse North Dakota, Minnesota, and Iowa en route to Chicago.

NEB
approved Interprovincial Pipe Line Inc.'s application for an $89 million (Canadian) Line 9 crude oil pipeline reversal project. Line 9 is a 30-in., 517 mile pipeline extending from Montreal to Sarnia, Ont. The project will increase capacity to 240,000 b/d. The board, however, denied 100% priority access to the pipeline as proposed by IPL for four refiners in Ontario, instead requiring that 20% of capacity remain open for all potential shippers.

Westcoast Energy Inc.,
Vancouver, B.C., secured approval from NEB to begin construction of the Maritimes & Northeast Pipeline project. The project, estimated to take 22 months, calls for a 560-km pipeline to move Sable Island area natural gas off eastern Canada to the maritime provinces and U.S. Northeast. The pipeline is to originate at Country Harbour, N.S., and terminate at the Canadian/U.S. border near St. Stephen, N.B. The project is backed by a group of Westcoast and Duke Energy 37.5% each and Mobil Oil Canada 25%. Total investment could reach $500 million (Canadian).

LNG

Sonatrach, Algeria's state-owned oil company, will be able to handle 30.7 billion cu m/year of gas this year following a $2 billion revamp of its liquefied natural gas facilities. Sonatrach has new LNG contracts, starting this year, with Greece's Depa (700 million cu m/year ) and Italy's Snam (1.8 billion cu m/year). Sontrach's current LNG contracts are with Gaz de France (10.24 billion cu m/year), Spain's Enagas (3.8 billion cu m/year), Turkey's Botas (3 billion cu m/year), and U.S. companies Distrigaz and Trunkline, 1.2 billion cu m/year and 800 million cu m/year gas, respectively.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.