INDUSTRY BRIEFS

Marketing

China Petrochemical Corp. (Sinopec) plans to build 300 gasoline stations in China this year for 2 billion yuan and to buy 400-500 stations owned by local concerns. The plan is part of Sinopec's larger strategy to increase its products market share by 10%. Last year, Sinopec sold 62.23 million metric tons of oil products-about 70% of China's total oil product consumption. Sinopec owns 8,000 of the 86,000 total gasoline stations in China; China National Petroleum Corp. owns 4,000.

Conoco Inc.
and Malaysian partner Sime Darby Bhd. began construction on the first of a chain of new retail motor fuel outlets and convenience stores in the Kuala Lumpur area. Conoco is the first foreign oil firm permitted to enter the Malaysian retail motor fuels market since 1969. The stores will use the ProJET brand name to market products; the first of the stores is expected to open in August. Conoco will shortly begin construction of at least three more stores, with plans to build about 100 in the next few years.

Companies

Apache Corp., Houston, will acquire oil and gas assets on the Outer Continental Shelf of the Gulf of Mexico from Shell Exploration & Production Co., Houston, for $715 million cash plus 1 million shares of Apache stock. The assets, which include 22 fields in less than 700 ft of water, have a production and reserves mix of 54% oil and 46% natural gas. Included are 16 undeveloped blocks and access to 3D seismic data covering more than 1,000 blocks.

Petro-Canada,
Calgary, says it will support any move by the federal government to sell its remaining 18% interest in the former national oil company, worth an estimated $1 billion (Canadian). While Petro-Canada is not campaigning for a quick sale, Ottawa is being urged by the investment industry to sell its share. Share value has increased about 25% since the start of 1999. Petro-Canada also would like to see restrictions removed on foreign ownership of the company. A federal finance official said Ottawa is not persuaded that it is the right time to move on a sale.

Magnum Hunter Resources,
Irving, Tex., will acquire certain onshore U.S. oil and gas reserves and related assets from Vastar Resources Inc., Houston, for about $33.9 million. The deal includes Vastar's interests in 476 wells, a gas processing plant, and two gas gathering systems. The assets-located in Walnut Bend field in North Central Texas, Madill field in southern Oklahoma, and Walker Creek field in southwestern Arkansas-produce over 1,000 b/d of liquids and 10 MMcfd of natural gas. Magnum Hunter unit Gruy Petroleum Management Co. will operate the wells and other assets once the deal closes.

Samson Canada Ltd.,
Calgary, a unit of privately owned Samson Investment Co., launched an unsolicited $75 million (Canadian) takeover bid for Highridge Exploration Ltd., Calgary. The offer includes assumption of about $27.8 million in Highridge debt. Highridge said the offer was neither expected nor welcome. Highridge has production of about 2,800 boed, primarily from properties in central Alberta, and proven reserves, as of Jan. 1, of 44.6 bcf of gas and 3.6 million bbl of liquids.

Woodside Petroleum Ltd.,
Melbourne, will join Oil Search Ltd. of Papua New Guinea in the proposed Papua New Guinea-Queensland natural gas pipeline by acquiring 56.4 million shares of Oil Search for $2.10 (Australian) each. This represents a premium over Oil Search's current share price of $1.92. The deal gives Woodside 12% of Oil Search and furthers its move away from dependence on its North West Shelf/Timor Sea operations. Recently, Woodside acquired a 10% stake in Bass Strait's Kipper gas field (OGJ, Mar. 15, 1999, p. 30). The latest deal requires Oil Search shareholder approval and entitles Woodside to a seat on the Oil Search board.

Hurricane Hydrocarbons Ltd.,
Calgary, is negotiating with a bank in Kazakh stan to buy a refinery at Chimkent in the former Soviet republic. The purchase would be part of a restructuring program by Hurricane, which has experienced problems securing processing for the crude it produces in Kazakh stan. If the deal is completed, Kazkommerts Bank would likely become Hurricane's largest shareholder, according to Hurricane. The company has long-term debt of about $180 million.

An Alberta court
delayed a decision on the sale of financially troubled Fracmaster Ltd., Calgary, until at least May 14. The court adjourned an application for approval of Fracmaster's sale to UTI Energy Corp., Houston, for $60.7 million and ordered the firm to provide access to all necessary documents to former Fracmaster chairman Alfred Balm. Balm, who controls 40% of the Fracmaster, is making a bid to regain control of the company and offered to lend it $20 million (Canadian) if he is allowed to return to restructure it. Fracmaster filed Mar. 18 for protection from creditors while it restructured (OGJ, Mar. 29, 1999, p. 30).

Rising Star Energy LLC,
Dallas, acquired 140 producing wells in three fields in West Texas and eastern New Mexico from Sonat Exploration Co., Houston, for $42 million. Total proven reserves, although not quantified, are composed of 83% natural gas and 17% oil.

Oil shale

Suncor Energy Australia Pty. Ltd., Southern Pacific Petroleum NL, and Central Pacific Minerals NL completed Stage 1 of the Stuart oil shale project near Gladstone, Queensland (OGJ, Oct. 26, 1998, p. 42). Stage 1 comprises a 4,500 b/d demonstration plant, built by Bechtel Inc.; Stages 2 and 3 are intended to take commercial production to 85,000 b/d in the next decade. The project uses a new kiln technology to extract oil from the shale feed. The feed has a handling advantage over other shale deposits because it is silica-based. The more typical carbonate-based deposits, such as those in Colorado and Utah, produce a difficult-to-handle, fine powder-like waste.

Gas supply

In Salah Gas, a natural gas marketing joint venture of BP Amoco plc and Algeria's Sonatrach, clinched a 15-year deal to supply 4 billion cu m/year of gas to Italy's Edison Gas SpA. The gas will come from a number of fields in the In Salah area of Algeria, which BP Amoco and Sonatrach are working to bring into production in 2003 (OGJ, Dec. 25, 1995, p. 26). In Salah Gas said exploration and appraisal activities are completed, and negotiations are under way with other gas buyers. The In Salah fields are expected to produce a combined 9-11 billion cu m/year of gas.

Drilling-production

Venoco Inc.'s Holly platform in the Santa Barbara Channel and its onshore Ellwood processing facility were shut down indefinitely Apr. 29 by Santa Barbara County due to a 1 bbl oil spill and 25-min gas leak. Holly has suffered six gas leaks in the last 9 months and faces three misdemeanor charges by the Santa Barbara District Attorney's office for failure to properly notify authorities of leaks in July 1998 and in February and March 1999. Venoco agreed to install a gas flare and back-up power system to control the leaks, but before it was able to do so, experienced the latest gas leak following a small oil overflow. Venoco will not be allowed to restart operations until it determines the cause and an effective solution.

Conoco Indonesia Inc.
let a contract valued at $130 million to Indonesia's PT Citra Panji Manunggal and Hyundai Heavy Industries Co. Ltd., Seoul, for the engineering, procurement, onshore fabrication, and offshore installation of a mobile gas production unit on Block B in West Natuna Sea. The contract, which also includes modifications to the existing Belida field platforms, is part of a project that will deliver Indonesian gas to Singapore by mid-2001 (OGJ, Jan. 25, 1999, p. 44).

Phillips Petroleum Co. Norway
restarted the Ekofisk complex in the Norwegian North Sea after being shut down Apr. 22 for gas cooler repairs (OGJ, Apr. 26, 1999, p. 32). Maintenance workers discovered a hole in one of the 3,500 gas-carrying pipes inside the gas cooler on Platform 2/4J. Phillips, Ekofisk operator, does not know what caused the hole. During the shutdown, Phillips completed some maintenance work planned for August. Phillips expects to offset any lost production from the 10-day shutdown with new production from U.K. North Sea fields and fields off Australia.

Marathon International
Petroleum Ireland Ltd.
let an engineering, procurement, installation, and construction contract for an undisclosed sum to Coflexip Stena Offshore Ltd. (CSO), Aberdeen. CSO will tie back the discovery well for Southwest Kinsale gas field, on Block 48/25 off southeast Ireland, to Marathon's Kinsale Bravo platform 7 km away (OGJ, Nov. 17, 1997, p. 31). The tie-back will be made with a 12-in. rigid flowline and umbilical, which will be laid this summer with the CSO Apache pipe-lay ship. CSO will also modify existing installations in Kinsale Head field to export gas from Southwest Kinsale. First production is slated for Oct. 1, 1999.

Amerada Hess Ltd.
halted production from Fife, Fergus, and Flora fields in the U.K. North Sea so the Uisge Gorm production, storage, and off loading ship can be removed for repairs. Amerada said the vessel's No. 4 port cargo tank became overpressurized, but that no spill or pollution occurred. After the crude oil was offloaded, vessel operator and owner Bluewater Offshore Production Systems Ltd., Aberdeen, found that the overpressure had deformed some structural members and deck plating of the ship around the No. 4 tank. Bluewater was reportedly looking for a shipyard to carry out repairs. The Uisge Gorm is expected to be back in production in about 4 months.

Phillips Petroleum Co. U.K. Ltd.
let a front-end engineering design contract to AMEC Process & Energy for development of U.K. North Sea Jade field (OGJ, Apr. 12, 1999, p. 31). Block 30/2c Jade is a high- pressure/high temperature gas and condensate field 9 miles north of Phillips's Judy platform. It will be developed with an unmanned platform, comprising a 2,700 metric ton steel jacket and 2,000-ton topsides in 260 ft of water, tied back to Judy platform with a 16-in. multiphase pipeline.

Exploration

Apache Energy Ltd.'s Sage 1 wildcat well, off northwestern Western Australia, tested 48.5° gravity oil through three choke settings without any water inflow. The highest flow rate was 2,155 b/d through a 32/64-in. choke at 522 psi flowing wellhead pressure from Saffron sands. The well has been plugged as a potentially economic discovery. Appraisal drilling is likely to follow analysis of seismic data. Sage 1 is between the Wandoo producing oil field and the proposed oil project at Legendre field.

Pipelines

Equilon Pipeline Co. LLC, and Williams Energy Services, a unit of Williams, Tulsa, formed a 50-50 joint venture called Aspen Products Pipeline LLC to build, own, and operate a 1,010-mile products pipeline from West Texas to Salt Lake City. The pipeline, due to come on stream by mid-2001, will have an initial capacity of 65,000 b/d. It will be fed by the partners' existing Gulf Coast pipeline systems. Aspen Products Pipeline may increase the capacity of the new system to 85,000 b/d. In a separate transaction, the partners plan to build three product distribution terminals: in Albuquerque; Thompson, Utah; and near Salt Lake City.

U.S. Federal Energy
Regulatory Commission
proposed a rule that would require interstate gas pipeline companies to notify landowners of proposed routes when filing applications for construction and operation of facilities. The rule would ensure that affected landowners have sufficient opportunity to participate in the pipeline certificate process. Currently, FERC notifies landowners when it issues a notice that it intends to draft an environmental impact statement or an environmental assessment. Under the new rule, affected landowners would be notified within 3 business days after the pipeline files its application with the commission, if the application is for a certificate of public convenience and necessity.

Lubes

Excel Paralubes, a base oil joint venture of Conoco Inc. and Pennzoil-Quaker State Co., increased its Lake Charles, La., plant's Group II base oil capacity by 17%, or 21,000 b/d, over its original design capacity. The increase was attributed to a "robust quality system." Group II base oils contain greater than 90% saturated molecules and less than 0.03% sulfur.

Refining

Equilon Enterprises LLC, a joint venture of Shell Oil Co. and Texaco Inc., restarted a 55,000 b/d fluid catalytic cracker at its Anacortes, Wash., refinery following 2 months of turnaround work. Various units at the refinery had been taken down since the beginning of 1999 for the turnaround. A delayed coker, which was damaged in a fire last November, was returned to service Mar. 22 (OGJ, Dec. 7, 1998, p.44).

Tosco Corp.,
Stamford, Conn., plans to restart its Avon refinery at San Francisco by mid-May. Tosco idled the plant to perform a safety review following a fire in February (OGJ, Mar. 8, 1999, p. 40). Tosco expects the plant to be fully operational in about 8 weeks.

The Lindsey oil refinery
joint venture of Petrofina (U.K.) Ltd. and Total Oil Great Britain Ltd. let a revamp contract to AMEC Process & Energy, a unit of AMEC plc, London. The work will comprise upgrading the refinery's benzene recovery unit, No. 1 crude unit, and marine loading facility to enable the plant to meet tighter European Union transport fuel standards due in place next year. AMEC will perform project management, engineering design, procurement, inspection, and other services. Construction is slated for completion in September 1999.

LNG

CMS Marketing, Services, & Trading, a unit of Dearborn, Mich.-based CMS Energy Corp., plans to purchase four cargoes of liquefied natural gas-about 9.3 bcf of gas-from the North West Shelf LNG project in Australia for delivery to CMS Trunkline Co.'s LNG terminal in Lake Charles, La. The terms of the transaction were not disclosed. The LNG shipments, from Withnell Bay in the port of Dampier, Australia, will load in May, July, September, and November 1999, arriving 30 days later at the CMS plant.

Copyright 1999 Oil & Gas Journal. All Rights Reserved.