Industry Briefs

Sept. 6, 1999

A California Superior Court
ruled in favor of Exxon Corp. in a 13-year-old civil suit against the firm, saying it does not owe California $750 million for allegedly pricing oil pumped from public lands at less than market value. The jury decided that the state had received sufficient payments during 1981-89 for oil taken from Wilmington field off Long Beach.


A California Superior Court
ruled in favor of Exxon Corp. in a 13-year-old civil suit against the firm, saying it does not owe California $750 million for allegedly pricing oil pumped from public lands at less than market value. The jury decided that the state had received sufficient payments during 1981-89 for oil taken from Wilmington field off Long Beach.


Sipetrol Argentina SA
and Repsol-YPF SA made a gas-condensate discovery on CAM 2/A South Block, about 12 km off Argentina on the continental shelf. The firms each hold a 50% interest in the block. The first of two test wells, CAM XE-1, was drilled to 1,725 m TD in 1,658-65 m of water and flowed 15 MMcfd of natural gas and 151 b/d of condensate on test. The second well, XE-1A, drilled in 1,647-52 m of water, flowed 2,000 b/d of oil and 0.62 MMcfd of gas through an 18-mm choke. This discovery in the offshore Austral basin will lead to a more focused exploration effort in the area, says Repsol-YPF.

Veba Oil & Gas Ltd.
made a gas discovery on Block 21/24 off the U.K. after a well was drilled under a farm-out agreement with Shell U.K. Exploration & Production. Shell Expro-the operating joint venture of Shell U.K. Ltd. and Esso Exploration & Production U.K. Ltd.-is the operator of the Guillemot West field on the same block. Veba said the 21/24-6 new-pool wildcat was drilled 8.5 km northwest of Guillemot West to 7,762 ft TVD. The well flowed 5,894 b/d of oil on test through a 36/64-in. choke. Interest holders for the block outside the Guillemot license area are: operator Veba, 50%; Shell, 25%; and Esso, 25%.


Phillips Petroleum Co.
and Solvay Polymers Inc., a unit of Solvay Group, Brussels, signed an agreement to jointly build and operate a 318,000 metric ton/year high-density polyethylene (HDPE) plant at one of the firms' existing U.S. manufacturing sites. The partners will each hold 50% interest in the project and share the plant's production of general purpose, blow-molded HDPE. The companies will market their respective shares of production independently. The plant, expected to be operational in 2002, will obtain a majority of its ethylene feed from Phillips's Sweeny, Tex., olefins complex.


Qatar Chemical Co.
(Q-Chem), a 51-49 joint venture of Qatar General Petroleum Corp. and Phillips Petroleum, signed a $750 million financing agreement with a group of 24 regional and international banks for the construction of a petrochemicals plant at Mesaieed, Qatar. The accord follows the signing of an engineering, procurement, and construction contract with Houston's Kellogg Brown & Root and France's Technip SA (OGJ, June 21, 1999, p. 34). Work on the project is scheduled to begin late this year, and the plant is slated for completion in mid-2002. Among the banks arranging the 12-year loan are Qatar National Bank, Gulf International Bank, and Arab Petroleum Investment Corp.


Mexico chose
Spain's Iberdrola Energia SA to build and operate the 735-MW, natural gas-fired, combined-cycle Monterrey III electricity generation project near Monterrey. The plant, which is expected to reach completion by Apr. 1, 2002, will cost an estimated $300 million to build. It will receive gas from state firm Petroleos Mexicanos. Mexico's Federal Electricity Commission will guarantee the purchase of 490 MW of the plant's output.

American Electric Power
(AEP) and Buckeye Power Inc., both of Columbus, Ohio, signed a long-term power and energy service agreement. Based on the contract, AEP will design, construct, operate, and assume maintenance responsibilities for a 510-MW peaking power plant to be built in an undisclosed area of Ohio. The plant will consist of three natural gas-fired combustion turbines. Completion of the plant is slated for 2002.

Orion Power Holdings Inc.,
owned jointly by units of Goldman, Sachs & Co. and Constellation Energy Group, closed on its $550 million power-generation asset acquisition from Consolidated Edison Co., New York. Purchased were the Astoria generating station and the Gowanus and Narrows gas turbine facilities in the Queens and Brooklyn boroughs of New York. The three facilities represent about 25% of the generating capacity for the city, said Orion.


Ultramar Diamond Shamrock Corp.
unit Ultramar Ltd., Montreal, will buy most of the assets of Universal Terminals Inc. in Ontario for $15 million (Canadian). The purchase includes three petroleum products terminals and five bulk plants along the St. Lawrence Valley and a retail home-heating fuel business.


Elf Exploration Inc.,
a unit of Elf Aquitaine, installed the jacket of the Virgo production platform in the Gulf of Mexico on Viosca Knoll Block 823 off Louisiana (OGJ, Mar. 30, 1998, p. 74). The platform is being installed in 1,130 ft of water. The project's interest holders are: operator Elf Exploration, 64%; Coastal Oil & Gas Corp., 16.2%; Pogo Producing Co., 10.8%; and Nippon Oil Exploration USA Ltd., 9%. All four firms are based in Houston.

Norsk Hydro AS
let an 18-month contract worth an estimated $63 million to Transocean Offshore Inc., on behalf of the Troll License Group, for Transocean's fourth-generation semisubmersible, the Polar Pioneer. The contract period, which is slated to begin in February 2000, could be extended for as many as six, 6-month optional periods, says Transocean. Polar Pioneer is expected to continue a development drilling program on Troll field in the Norwegian North Sea for the duration of the contract.

Norsk Hydro
let a 70 million kroner ($9 million) contract to Kvaerner Oil & Gas AS, Oslo, for pre-engineering work on the Grane field development project off Norway. Grane has estimated reserves of 630 million bbl of oil and 360 bcf of gas and will be developed with a fully integrated platform with a steel jacket. The work is slated for completion by the end of July 2000 and will form the basis for a development and operation plan that Hydro plans to submit to the Norwegian Ministry of Petroleum and Energy in December.

Interstate Oil & Gas Compact Commission
will study how much environmental rules cost U.S. oil and gas producers. A survey will be performed to help states analyze the costs and benefits of regulatory compliance. It is patterned on a study that found environmental rules added $1.97/bbl to the cost of production in Osage County, Okla.


Aux Sable Liquid Products LP
let contract to Kinder Morgan Energy Partners LP for pipeline transportation services related to natural gas liquids extraction and fractionation facilities Aux Sable is building at Channahon, Ill., about 2 miles east of Kinder Morgan's pipeline and storage facilities. The Aux Sable plant will process up to 1.6 bcfd of natural gas from the Alliance natural gas pipeline, originating in Western Canada. Alliance is slated to come on stream in late 2000. Aux Sable will remove from the gas stream up to 40,000 b/d of ethane, 19,000 b/d of propane, 8,000 b/d of butane, and 3,000 b/d of natural gasoline.


Calpine East Acquisition Corp.,
a unit of Calpine Corp., San Jose, Calif., will acquire 80% of Cogeneration Corp. of America (CGCA), Minneapolis, for an estimated $225 million in cash and assumed debt. Calpine will pay $25 for each CGCA share and will assume $80 million of CGCA's corporate debt. Northern States Power unit NRG Energy Inc., Minneapolis, will retain a 20% interest in CGCA following the transaction. NRG owns about 3.1 million shares, or 45.3%, of CGCA's outstanding common stock.

Monitor Clipper Partners
acquired from BP Amoco plc the fibers and yarns business assets of Amoco Fabrics & Fibers Co. for $100 million. The unit makes polypropylene yarn and staple fibers used in home furnishings, automotive interiors, apparel, and industrial applications. Included in the transaction are manufacturing plants in Afton, Va.; Rocky Mount, N.C.; Spartanburg, S.C.; and Bainbridge, Ga.

Royal Dutch/Shell
intends to divest its Brisbane, Australia-based coal mining business, Shell Coal, by international tender. Along with its operations in Australia, Shell Coal also has a 25% interest in Carbones del Guasare, the operator of Paso Diablo export mine in Venezuela.

Coho Energy Inc.,
Dallas, filed a petition for Chapter 11 bankruptcy protection. Acceleration of the firm's $240 million debt payment schedule by bank creditors contributed to Coho's decision. The firm intends to file a reorganization plan with the bankruptcy court.

Harken Energy Corp.,
Houston, acquired Xplor Energy Inc., The Woodlands, Tex. Harken issued 7.5 million shares of its common stock and more than 2.3 million warrants for the purchase of Harken common stock at $2.50/share for all Xplor's outstanding shares. Xplor owns oil and gas assets along the Texas and Louisiana coasts with estimated proved reserves of 42 bcfe. The transaction is worth an estimated $25 million.

Columbia Energy Group unit
Columbia Energy Services (CES), Houston, is seeking potential buyers for its wholesale and trading operations. After the divestment, CES intends to focus on retail sales of natural gas and power and "no longer pursue a strategy aimed at being a top tier wholesale marketer," said Brian Watt, CES president and CEO. Launched earlier this year, the wholesale and trading operations sold 5 bcf of gas and 17 MW of electricity during the first half of 1999.

Taiwan's Ministry of Economic Affairs
(MOEA) sold another 123.14 million shares of Taiwan Fertilizer Co., bringing to less than 49% its total interest in the firm. The average price of the shares, which were sold through auction, was $1.62. MOEA plans to relinquish another 84 million shares of Taiwan Fertilizer stock to the company's employees soon, reducing to 35% the government's stake in the company.

Agip Petroleum Co. Inc,
Houston, a unit of Italian state energy firm ENI SpA, acquired a 34% interest in Macaroni field and a 32% interest in Europa field-both in the Gulf of Mexico-from Shell Deepwater Development Inc. Agip expects this acquisition to nearly triple its oil and gas production in the gulf in 2000. Macaroni is about 360 km southwest of New Orleans on Garden Banks Block 602 in 1,100 m of water; Europa is about 210 km southeast of New Orleans in 1,200 m of water and spans Mississippi Canyon Blocks 890, 891, 934, and 935. Macaroni is slated to begin production in 1999, and Europa in early 2000.

Gas distribution

Mexico's Energy Regulatory Commission
(CRE) issued a definitive distribution permit for the Cananea geographic zone in Sonora state to Distribuidora de Gas de Occidente (DGO). The distribution system is expected to require a $3 million investment, said CRE. CRE issued a provisional natural gas distribution permit in Cananea to C!a. de Gas de Cananea in December 1995; DGO acquired the company in April 1998.


Qatar General Petroleum Corp.
let a $430 million contract to ENI unit Snamprogetti SpA and South Korea's Hyundai Engineering & Construction Co. for the construction of the natural gas liquids complex NGL-4 at Dukhan and Mesaieed, Qatar. The project, expected to reach completion in 29 months, will supply an additional 2,500 metric tons/day of ethane to Q-Chem's projected petrochemical complex and to the existing Qapco complex.

Solex Energy Co. Inc.'s
natural gas liquids plant at Taylor, B.C., damaged by a fire and explosions Jan. 27, will be back in operation by December, the firm said. The blast occurred between the master control center and a dehydrator unit at the 750 MMcfd plant, forced the evacuation of Taylor, and closed the Alaska Highway for 8 hr (OGJ, Feb. 22, 1999, p. 30).


Cleanup work is continuing
after an Aug. 9 fire that killed two workers and destroyed the Hub Oil Co. Ltd. used motor oil recycling plant in Calgary (OGJ, Aug. 16, 1999, p. 36). Some local officials are opposed to rebuilding the plant, which is near residential areas. The company says it has made no decision on the plant location and is concentrating on cleanup of oil, sulfuric acid, and other materials. There were more than 40 explosions during the fire, and several residential areas were evacuated. No cause has been determined, but the fire began in a boiler room 1 day after regular operations had resumed following a 3-week shutdown.

Praxair Inc.,
Danbury, Conn., started production from its hydrogen purification plant at Lake Charles, La. Three fourths of the plant's production will be purchased by Conoco Inc. under a $200 million, long-term contract for use in its Lake Charles refinery. The remaining production will be transported via Praxair's Gulf Coast hydrogen pipeline system for sale to other customers. The plant will purify and compress a hydrogen-containing by-product stream from a nearby chlor alkali plant operated by PPG Industries Inc.


ENCO Gas Ltd.
filed with Canada's National Energy Board for permission to export a total of 11.7 bcf of natural gas from ENCO's reserves in Huntingdon, B.C., to a cogeneration plant at Sumas, Wash. The term of the contract would be from Nov. 1, 1999, until Oct. 31, 2008.

Oil exports

from Sudan began last week when a tanker loaded with 600,000 bbl of Sudanese crude sailed for Singapore. A new oil pipeline is moving production from the Heglig-area oil fields to Beshair, where it is loaded onto tankers for export (OGJ, July 12, 1999, p. 34).