US House panel considers gasoline tax increase
The US House Transportation and Infrastructure Committee is considering raising the federal gasoline tax to fund repairs of bridges and other infrastructure in the National Highway System. The proposal is part of a larger response to the Aug. 1 rush-hour collapse of the I-35W bridge in Minneapolis that killed at least five people.
“Certainly, raising [the gasoline tax] is on the table. Historically, it’s how we’ve funded bridge and highway projects,” a committee spokesman told OGJ on Aug. 9. “It probably is how we’ll go this time, but nothing, including the amount of an increase, has been decided yet.”
As he announced the initiative on Aug. 8 in Minneapolis, HTI Committee Chairman James L. Oberstar (D-Minn.) said the US Department of Transportation rates as “structurally deficient” about 73,784 US highway bridges. Oberstar said the bill would significantly increase bridge inspection requirements, provide dedicated funding, distribute funds based on public safety and need, and establish a fund similar to the Highway Trust Fund, which would finance repairs and replacement of structurally deficient highway bridges.
Oberstar said he has scheduled a hearing of the full committee to examine the highway bridge problem on Oct. 5, and that he will work to get the bill through Congress. He and other committee members emphasized that congressional and administrative earmarks would be prohibited under the legislation and that revenues deposited in its trust fund would not be available for any other purpose.
EU countries disagree over unbundling issue
Nine European Union countries, led by France, have sent a joint letter to the European Commission disputing the need for integrated energy operators to give up ownership of their transmission networks, unbundling gas and electricity transportation from energy production and supply. The letter was made public by France’s Minister for Ecology and Sustainable Development Jean-Louis Borloo, who also oversees energy matters.
Saying the unbundling process has not been proven effective, the nine countries-France, Germany, Austria, Bulgaria, Slovakia, Cyprus, Greece, Luxembourg, and Latvia-insist it “should remain optional and not compulsory.” Unbundling, they say, “brings no automatic guarantee of low prices for consumers and of sufficient investments.”
Indeed, in the Netherlands, Denmark, and the UK, where unbundling has been carried out, prices have soared and are the highest in Europe, note observers close to Borloo.
The nine countries agree that stronger and harmonized regulations in Europe constitute an “efficient” answer to current market dysfunctions.
However eight other EU countries-Denmark, Belgium, Spain, Finland, the Netherlands, Romania, the UK, and Sweden-sent their own letter to the Commission June 22 backing unbundling. To these eight should be added Portugal, which holds the current 6-month presidency of the EU and is an ardent defender of unbundling.
The Commission is to present in September a series of measures to bolster the liberalization of the electric power and gas markets. The gas market since July 1 officially has been fully opened, but an open market has not yet materialized.
Meanwhile the EU Commission is giving fresh momentum to its antitrust offensive. It has opened two investigations; one concerning France’s electricity utility EdF and Belgium’s Electrabel, which are suspected of signing long-term contracts with industrial clients to safeguard their domestic markets, and the other with Germany’s gas operator E.On AG and France’s Gaz de France, which are suspected of a secret agreement under which each party would avoid entering the domestic market of the other.
The Megal gas pipeline, a joint venture of the two companies, seems to be at the crux of this suspected agreement. Megal carries Russian gas between the German-Czech Republic and German-Austrian borders on the one hand and the German-French border on the other, the only one that carries Russian gas into France.
GDF has a 44% stake in the 1,077 km Megal pipeline, E.On has 51%, and Austria’s OMV AG 5%. It was built in 1976. GDF has about 60% of the Megal capacity.
Nigeria’s president replaces NNPC head
Nigeria President Umaru Yar’Adua has removed Funso Kupolokun, group managing director of Nigeria National Petroleum Corp., from his post.
Yar’Adua has replaced him with the next most-senior executive, Abubakar Yar’Adua-of no relation to the president-until further notice.
The firing comes amid intense speculation in Nigerian media that the president was unhappy with the performance of NNPC, the allegations of corruption in awarding contracts and misappropriation of funds, and that Kupolokun was on his way out. However, the president did not give a reason for dropping him.
The president, who took office on May 29, is committed to revamping Nigeria’s energy sector (OGJ Online, Aug. 7, 2007).
Abubakar Yar’Adua was previously the company’s executive director overseeing refineries and petrochemicals since 2003.
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Exploration & Development - Quick TakesTotal makes oil discovery off Congo
Operator Total E&P Congo made an oil discovery with its Cassiopee Est Marine-1 well on Mer Très Profonde Sud block in ultradeep water off Congo (Brazzaville).
The well, which was drilled to a TD of 3,330 m, flowed 5,600 b/d of oil on test. The MTPS Block lies 170 km offshore in 2,000 m of water. Field development studies will be launched once the reserves are assessed.
Total said the discovery aimed “at building an economically viable pole of development in this ultradeepwater permit.”
This is the fourth discovery since 2000 on the MTPS permit, which covers more than 5,000 sq km.
Total has a 40% interest with partners Eni Congo and Esso Exploration & Production Congo (Mer Très Profonde Sud) Ltd., each with 30%.
Cabinda makes 11th oil find off Angola
Chevron Corp. unit Cabinda Gulf Oil Co. Ltd. (Cabgoc) and its partners reported an oil discovery on deepwater Block 14 off Angola.
The well, Malange-1, was drilled in December 2006 in 873 ft of water to a TVD of 15,562 ft. The well found 212 net ft of oil in the Cretaceous-age Pinda reservoir. The well was tested in March and flowed 7,669 b/d of high-quality crude.
The discovery will be followed by further drilling in addition to geologic and engineering studies to appraise the field and assess its potential reserves.
Malange-1 is the first Pinda discovery on Block 14 and the 11th exploration discovery made in Block 14 since 1997. Most recently, Cabinda and its partners drilled its 10th exploration well on Block 14 in January (OGJ Online, Jan. 26, 2007).
Cabgoc serves as operator of the block’s contractor group with 31% interest. Partners are Sonangol 20%, Eni Angola Exploration BV 20%, Total E&P Angola 20%, and Galp 9%.
Centurion makes gas discovery in Egypt
Centurion Petroleum Corp., the upstream division of Dana Gas PJSC, made a gas-condensate discovery with its Dabayaa-1 well on the West Manzala exploration concession in Egypt.
On test, the well flowed 16.5 MMcfd of gas and 330 b/d of condensate through a 32/64-in. choke. Centurion drilled the well to a TD of 3,001 m and encountered a hydrocarbon-bearing interval that extended over a 10-sq-km area.
The well is 6 km from existing facilities. Centurion expects to finalize the new field’s development plan so as to bring the well on production, possibly by November.
Centurion has plans to drill a total 12 exploration wells in Egypt before yearend.
Tiger Shoal gulf wildcat finds more pay
McMoRan Exploration Co., New Orleans, said its Flatrock deeper pool discovery well in Tiger Shoal field has encountered Miocene gas-condensate pay in three zones deeper than the five previously indicated productive on South Marsh Island Block 212 in the Gulf of Mexico off Louisiana.
Wireline logs indicated 30 net ft of hydrocarbon-bearing sands in a 120-ft gross interval in one sand, and log-while-drilling tools indicated 41 net ft in a 153-ft gross interval in two sands, all in the Operc section. Drilling has reached 18,100 ft enroute to 19,000 ft to evaluate more of the Operc.
The well previously cut 189 net ft of hydrocarbon-bearing sands in a combined 364-ft gross interval above 16,500 ft in the Rob-L section as indicated by wireline logs (OGJ Online, July 16, 2007).
McMoRan, operator with 25% interest, is permitting three offset locations to provide further options to develop the multiple reservoirs. Plains Exploration & Production Co. holds 30%.
Tiger Shoal field produced more than 3 tcf of gas from less than 12,500 ft.
Drilling & Production - Quick TakesNewfield hikes gas flow in three Texas areas
Newfield Exploration Co., Houston, reported having boosted gas production in the Val Verde basin, Texas Panhandle, and South Texas areas in the quarter ended June 30.
Gas output in the Val Verde basin reached a new high rate of more than 100 MMcfd gross. Development involves the Canyon, Strawn, and Ellenberger formations. Newfield, which entered the basin in 2001 by acquiring properties from EEX Corp., has an average 70% working interest in the basin.
Production from Stiles/Britt Ranch field in Wheeler County in the Texas Panhandle reached a record 74 MMcfd gross, and five operated rigs are running in the field. Newfield is operator with 95-100% working interest.
Production reached a new high of 82 MMcfd gross in a South Texas joint venture with ExxonMobil Corp. in which Newfield has 50% interest. Two rigs are running there, and Newfield has 20 prospects ready to drill. The acreage is in Kenedy, Starr, and Hidalgo counties.
Statoil installs Tordis subsea production system
Statoil ASA has installed the 1,250-tonne Tordis subsea production unit near Gullfaks field in the Norwegian North Sea, using the Saipem S7000 heavy-lift crane vessel.
The system is said to be the world’s first subsea installation to separate water and sand from oil wells and pump them directly into the bedrock from the seabed, a process that needs no energy-intensive detour to a surface platform.
The project will improve oil recovery on Tordis to 55% from 49%, essentially producing an additional 35 million bbl of oil (OGJ Online, Aug. 3, 2007).
Marine operations in Tordis field will continue over the next few months, Statoil said. The seabed separator will be tied back now with pipelines and control cables to the Statoil-operated Gullfaks C platform, and subsea separation will begin this autumn.
Although the unit was successfully installed as planned, a man from Saipem fell overboard and died when the Tordis structure was at a depth of 180 m. Statoil has launched an investigation.
Oil is transported from Tordis by pipeline to Gullfaks C, 11 km to the southeast, for processing, storage, and export.
Operation contract let for Al Zaafarana FPSO
Gemsa Petroleum Co., on behalf of its partners, has let a contract valued at 200 million kroner to Aker Kvaerner for operation, management, and maintenance of the Al Zaafarana floating production, storage, and offloading vessel, which it operates in the Red Sea off Egypt.
The 5-year contract begins Sept. 1 and includes options to extend the primary term.
The 120-dwt FPSO processes about 30,000 b/d of crude oil from Al Zaafarana field. It also stores the produced oil, which is transported onshore via shuttle tankers. It can accommodate a crew of 25.
The vessel previously had undergone repairs of the lower strakes of two longitudinal bulkheads that had corroded (OGJ, Oct. 3, 2005, Newsletter).
Peru heavy oil fields await development
Barrett Resources (Peru) LLC, based in Lima and registered in Delaware, retained a financial advisor to review alternatives to facilitate development of three large heavy oil fields in northeastern Peru.
The Peruvian government recently approved Barrett’s initial development plan for Paiche, Piranya, and Dorado fields on Block 67 in the Maranon basin. The analysis of strategic and financing alternatives should be completed by yearend.
The company said development would require 400 km of 16-in. pipeline and production could start in 2010, attaining 100,000 b/d thereafter.
The former Barrett Resources Corp., public Denver independent, discovered the three fields in 1998 and was unable to attract a partner with heavy oil development expertise before its sale to Williams Cos., Tulsa, in August 2001 (OGJ Online, Jan. 17, 2006).
Three 7,000-ft discovery wells identified an estimated 90-313 million bbl of recoverable oil. Dorado cut 71 ft of pay with 14-16° gravity oil. Pirana cut 84 ft of oil pay with 12-21° gravity oil. Paiche cut 179 ft of total pay, including 122 ft of oil pay, with 12-13° gravity oil and low-btu gas.
Processing - Quick TakesPDVSA building refinery in Nicaragua
Venezuela’s President Hugo Chavez and his Nicaraguan counterpart Daniel Ortega recently launched construction of a 150,000 b/d refinery in Piedras Blancas, near Nicaragua’s Pacific coast and about 90 km west of its capital, Managua.
Because the refinery will produce five times more product than Nicaragua uses, Chavez said the arrangement will transform the Central American nation into a net exporter after start-up in 4-5 years. Plans call for exports to other Central American countries, to the western coast of North America, and possibly to Asia.
Chavez said that total investment in the project could reach $4 billion and that the entire amount will be financed by a newly formed joint venture called Alba de Nicaragua SA (Albanisa). Albanisa is comprised of Petroleos de Venezuela SA (PDVSA) subsidiary PDV Caribe 55% and the Nicaraguan state oil company Petronic 45%.
The immediate investment aim of the Sandino-Bolivar refinery-named in memory of the national heroes of Nicaragua and Venezuela, respectively-will be to increase storage capacity to 27,000 bbl from the current 14,000 bbl. Further plans call for the eventual construction of a petrochemical complex.
Last year, PDVSA said it planned to build a pipeline through Nicaragua to transport oil from the Caribbean to the Pacific, bypassing the Panama Canal (OGJ Online, Dec. 19, 2006).
JV to build Egyptian gas liquids plant
Dana Gas PJSC reported that its Bahraini affiliate Danagaz Bahrain will build, own, and operate the Gulf of Suez gas liquids plant in Egypt by late 2009.
The 55 bcf/year plant, to be built near Ras Shukheir on the western shore of the gulf, will produce 120,000 tonnes/year of propane and butane.
Egyptian General Petroleum Corp. (EGPC) will supply gas for the plant under a long-term supply contract. Danagaz and its partners also have signed the land and sea berth agreements for products exports. Civil engineering and installation construction will be performed by local contractors.
The plant will operate at highly efficient recovery rates, recovering 99% of the propane in the gas stream and 100% of the butane, Dana Gas said. Due to the nature of the gas supply, the project will produce 110,000 tonnes/year of exportable international specification propane, which will represent about 90% of the total gas liquid product from the plant.
France, Spain, Italy, and Turkey are expected to buy propane from the plant. “Potentially higher-margin Indian Ocean region markets are a future possibility,” as well, Dana Gas said. The butane produced, about 10,000 tonnes/year, will be sold on long-term contracts to help meet Egypt’s domestic requirements.
Gassled to upgrade Karsto gas plant
The Gassled partnership plans to invest 6.5 billion kroner to upgrade electrical and instrumentation systems at the Karsto gas plant north of Stavanger. Work is slated to begin in third quarter 2008 and complete in 2012.
Gassco AS is operator of Gassled and the Karsto plant on behalf of the partners, handling the transportation system and plant system operations. Statoil is the technical services provider.
“The upgrade mainly concerns replacing older with more modern equipment,” said Knut Barland, senior vice-president of Statoil’s natural gas processing and transport group. Mechanical modifications and upgrades also will take place to improve regularity, accessibility, and technical safety.
“This is an extensive operation that will take place in many areas of the plant and a number of systems simultaneously,” Barland said. “Our main focus will be [health, safety, and the environment] receiving top priority throughout the project period.”
More than 30 fields are tied back to Karsto via pipeline, and about 30% of Norway’s annual gas exports exit from the Karsto plant. The work will be tailored to planned turnarounds to minimize production disruption, said Arnulf Ostensen, Gassco’s vice-president for technical operations.
MW Kellogg Ltd., London, has been awarded a 1 billion kroner contract for KEP2010 engineering work. MW Kellogg has been conducting the pre-engineering since June 2006, with Sorco AS and Norconsult AS serving as subcontractors.
Transportation - Quick TakesAlgonquin to begin Ramapo pipeline expansion
Algonquin Gas Transmission LLC soon will begin construction associated with the Ramapo expansion project, which will enable transportation of new volumes of natural gas to two major distribution companies serving the northeastern US.
The $200 million expansion involves replacing a 4.8-mile section of 26-in. pipeline with 42-in. pipe in Ramapo, NY; building a compressor station in Oxford, Conn.; adding turbine compressor units at three existing stations in New York and New Jersey; modifying piping and other facilities at an existing meter station in Ramapo; and rebuilding a meter station in Brookfield, Conn.
The expanded pipeline, to be placed into service in November 2008, will deliver 319 MMcfd of gas to KeySpan Energy and Con Edison of New York via the Millennium Pipeline, currently under construction.
Interest in the pipeline is held 100% by Algonquin’s parent company Spectra Energy.
FERC gives approval for Calhoun LNG project
Gulf Coast LNG Partners LP said the US Federal Energy Regulatory Commission has issued the final environmental impact statement for its proposed Calhoun LNG receiving terminal and associated pipeline at Port Lavaca-Point Comfort in Calhoun County, Tex.
FERC concluded in the FEIS that the construction of the Calhoun LNG project, with appropriate mitigating measures as recommended, would be an environmentally acceptable action.
The Calhoun project, slated for full operation in 2009-10, consists of an LNG terminal with two 160,000 cu m storage tanks and 1 bcfd of gas vaporization and liquid separation capacity. It also includes a 27-mile, 36-in. pipeline-Point Comfort Pipeline-which will extend from the terminal and connect with nine major pipelines including five interstate and four intrastate pipeline systems serving Texas and the Midwest, the Northeast, and the Southeast. The Point Comfort Pipeline is designed to transport 1 bcfd.
Earlier this year, GCLP signed a memorandum of understanding for Port Lavaca LNG Services LLC to become operator of the terminal (OGJ Online, Mar. 27, 2007).
Malaysian firm plans tank farms in China
Malaysian trading firm Ben Rautin Sdn. Bhd. plans to develop a cluster of oil tank farms and a port in Lufeng, China, as part of a wider project to build a petroleum hub for the region.
Ben Rautin managing director Ismail Rautin Ibrahim said the firm owns a 30-sq-km site in Lufeng that it plans to develop into the petroleum hub for southern China. The development will be comprised of industrial park, township, tank farms, and a port.
Ben Rautin is working with the Beijing Petroleum Design Institute to determine storage capacity requirements and construction costs, Ismail said.
It also plans to build four storage tanks for petroleum products at Huizhou port, between Lufeng and Shenzhen in southern China. Construction starting dates were not given.
Meanwhile, Ben Rautin will discuss oil supplies and financing for the two projects with investors from the Middle East, which are due in Malaysia next month. Ismail did not name the investors or their counties.
To cut transportation costs, Ismail said, Ben Rautin may use the proposed $7 billion transpeninsular oil pipeline as part of the supply chain transporting crude from the Middle East to the China industrial park.
Last month, Malaysian Prime Minister Abdullah Ahmad Badawi said Malaysia will examine the cost and environmental impact of a proposed multibillion dollar oil pipeline before approving the project (OGJ Online, July 18, 2007).
Earlier, Ranhill Engineers & Constructors secured a contract for the design, engineering, procurement, construction, and testing of a 320-km west-east oil pipeline across Malaysia (OGJ Online, May 29, 2007).
Pertamina plans LNG plant at Senoro
Indonesia’s PT Pertamina will join Mitsubishi Gas Chemical Co. Inc. in building a $1 billion LNG plant at Senoro in Central Sulawesi. An agreement will be signed by Indonesia and Japan when Japanese Prime Minister Shinzo Abe visits Indonesia Aug. 19-21, said Pertamina Pres. Director Ari Sumarno.
Construction of the 2 million tonnes/year plant is scheduled to begin this year and to come on stream by 2010.
Mitsubishi, which will become the sole buyer of the facility’s LNG, is the project’s majority shareholder, with a 51% stake, while Pertamina owns 29% and Medco, 20% (OGJ Online, Jan. 19, 2007).
Source gas will come from the Senoro Block, which has 1.53 tcf of proved reserves and is jointly operated by Pertamina and Medco. Additional supplies will come from Pertamina-operated Matindok Block, which has 0.7 tcf of proved reserves.
The Senoro LNG plant is one of four energy deals to be signed between Indonesia and Japan, according to Energy and Mineral Resources Minister Purnomo Yusgiantoro. The other three agreements will take up the development of a gas pipeline and two coal-fired power plants.