PowerDominion Resources Inc., Richmond, Va., signed an agreement with General Electric Co. for the option to buy 10 natural gas-fired power generation turbines for an undisclosed sum. Dominion-which is slated to merge with Consolidated Natural Gas Co., Pittsburgh (OGJ, May 24, 1999, p. 46)-will use the 172-MW units in four planned power plants in Ohio, Pennsylvania, and West Virginia along the CNG natural gas system. Construction of the plants is slated to start in 2001 and to be completed by mid-2002. Dominion expects to spend $800 million on the plants, which will have a combined capacity of 2,400 MW.
Four U.S. power generators
started up new natural gas reburn systems at coal-fired power stations. The units use technology licensed from Gas Research Institute, Chicago, to reduce NOx emissions 30-65% by injecting 5-25% of total energy input as natural gas. Estimated cost is $700-2,000/ton of NOx removed, says GRI. The units were installed at: Baltimore Gas & Electric, Baltimore; Duquesne Light Co., Pittsburgh; Public Service Electric & Gas, Newark; and Conectiv, Wilmington, Del. They help meet Phase II NOx reductions under an Ozone Transport Commission rule that took effect May 1 in the U.S. Northeast.
PipelinesTransportadora Sulbrasileira de Gas (TSB) will lay a 615-km, $265 million natural gas pipeline from Uruguaiana, Brazil, state, on the border with Argentina, to Porto Alegre, the capital of Rio Grande do Sul state. TSB is an international consortium comprising Ipiranga Petroquimica SA, Petroleo Brasileiro SA's natural gas unit Gaspetro, YPF SA, Total's Global Gas Ventures, Argentina's Cia. General de Combustibles, Italian-Argentine firm Tecgas NV, Techint, and Nova Gas Internacional. The first stage of the line, which will transport 12 million cu m/day of gas, is slated for completion in first half 2000.
The Sudanese oil pipeline
connecting fields in south-central Sudan to a terminal at the Red Sea port of Beshair began flowing crude May 31 (see map, OGJ, May 31, 1999, p. 22). The 1,600-km, 70-cm line has an initial capacity of 150,000 b/d. Exports from the $1 billion project are slated to begin June 30.
Vector Pipeline partners
Enbridge Inc., Calgary, and MCN Energy Group Inc., Detroit, received approval from the Federal Energy Regulatory Commission for the U.S. segment of the natural gas pipeline, which will extend from southern Ontario to Chicago. Construction of the $508 million, 683-mile line is slated to start in December. FERC approval follows Canadian approval for the 18.6-mile Canadian segment (OGJ, Apr. 12, 1999, p. 38). The 1 bcfd line will carry gas from Western Canada to markets in Ontario and the U.S. Midwest starting in 2000. It will connect with the Alliance and Northern Border pipelines.
KN Energy Inc.,
Lakewood, Colo., will hold an open season until June 25 for 300 MMcfd of firm natural gas transportation capacity on its Horizon pipeline project from Joliet, Ill., to Hales Corners, Wis. (OGJ, May 17, 1999, p. 38). The 36-in., 129-mile line, which will ship up to 1.2 bcfd of gas, is slated for completion in fall of 2000.
Norse Pipeline LLC,
Houston, acquired the 341-mile Project Penny natural gas pipeline and seven compressor facilities from Columbia Energy Group unit Columbia Gas Transmission Corp., Charleston, W.Va., for $21.5 million. The pipeline extends through northwestern Pennsylvania and southwestern New York. Norse is a joint venture of Schanson Energy LLC, Los Angeles, and oil and gas exploration firm Nornew Inc., Houston.
ResearchHouston Advanced Research Center (HARC), The Woodlands, Tex., established the Center for Integrated Reservoir Management Systems-a coalition that will engage research and development firms and oil and gas companies in a multiyear study of reservoir management. The center will create a database using data from producing fields then build new models for "optimal production strategies and reservoir management," said HARC.
LPG World Gas,
a Thai-Dutch-owned LPG trading firm, acquired the Thailand LPG marketing and distribution assets of Shell Co. of Thailand Ltd. for an undisclosed sum. The deal includes storage facilities and a bottling plant at Chongnonsi. Not included is Shell's share of LPG output from the Thai Oil Co. Ltd. and Rayong Refinery Co. refineries, in which Shell owns minority stakes, and from an LPG separation plant at Kamphaeng Phet. The sale brings World Gas's LPG sales to more than 30,000 metric tons/year, an amount equivalent to 20% of Thailand's market.
CompaniesOccidental Petroleum Corp., Los Angeles, signed share purchase agreements with Unocal Corp. under which Oxy will acquire a 100% interest in Unocal Yemen Ltd. and Unocal will acquire 100% of the stock of Occidental of Bangladesh Ltd. and Occidental Exploration of Bangladesh Ltd. The Yemen assets include a 28.57% working interest in the production-sharing contracts (PSCs) of the East Shabwa area-comprising Kharir, Atuf Northwest, and Wadi Taribah fields-with gross production of about 15,000 b/d of oil. The Bangladesh assets include a 50% working interest in two PSCs for Blocks 12, 13, and 14 in northeastern Bangladesh.
Woodside Petroleum Ltd.'s
acquisition from Australia Worldwide Exploration NL of a stake in Kipper gas field off Australia was preempted by an equivalent offer from Shell Australia Ltd. and Santos Ltd., which already hold interests in the field (OGJ, Mar. 15, 1999, p. 30). Shell plans to take an additional 7.3%, bringing its interest to 27.3%, while Santos will take another 2.7%, increasing its share to 10.2%. Woodside will still be involved in any planned development of the field under a strategic alliance between it and Shell, which is a major shareholder of Woodside.
plans to relocate 930 of its 1,400 San Francisco-based workers from its two downtown San Francisco buildings into company offices in the East Bay area in an effort to save more than $500 million this year. The buildings will be sold. Chevron will retain its corporate headquarters in the San Francisco area.
Houston, signed a letter of intent with Kaiser-Francis Oil Co., Tulsa, to allow Kaiser-Francis to manage and provide administrative support for all of PetroCorp's operations. The service arrangement is subject to negotiation of a definitive management agreement and to board and shareholder approval. In February, PetroCorp invited merger and acquisition proposals from other companies, but no viable offers were made. PetroCorp estimates the deal with Kaiser-Francis, together with cost cuts already implemented, will save it $4.5 million/year.
At least two unsuccessful bidders
vying for Fracmaster Ltd., Calgary, will challenge a court ruling that turned the insolvent firm over to BJ Services Co., Houston, for $80 million (Canadian). Former Fracmaster chairman Alfred Balm, owner of 40% of the company, claims a $90 million proposal he made should have been approved because it was the only one that met the requirements of the Creditors Arrangement Act, under which Fracmaster received protection (OGJ, May 10, 1999, p. 36). Also appealing the ruling is UTI Energy Corp., Houston, which made a $60.7 million offer that was initially accepted by the Fracmaster board and its bankers. Calfrac Ltd., Calgary, which bid $71 million, is also considering an appeal.
Blue Dolphin Exploration Co.,
Houston, acquired 75% ownership interest in American Resources Offshore Inc. (ARO), Versailles, Ky., through the issuance of new shares. The transaction is valued at $33.75 million. Contingent on this transaction, ARO will divest its Appalachian assets and 80% of its Gulf of Mexico assets. The gulf assets comprise 29% of non-operating working interest in 49 central and western gulf blocks.
Bouygues Offshore SA
will acquire the Kvaerner group's French process unit Kvaerner (France) SA for £30 million. The deal excludes Kvaerner Heurtey (France) SA.
Coastal Power Co.,
Houston, and Gener SA made a joint bid to purchase 50% of Itabo Generation Co., Dominican Republic. Coastal Power will hold 49.99% of the combine and Gener 50.01%. Itabo owns and operates six thermal power plants with a total capacity of 586 MW; the units are all near Santo Domingo. This capacity is equivalent to about one-third of the Dominican Republic's peak electrical demand.
PetrochemicalsHunstman ICI Holdings (HICI) agreed in principle to buy BP Amoco plc's 20% stake in the 865,000 metric ton/year olefins cracker at Teesside, U.K., together with shares in associated butadiene and gasoline treating units. HICI is a 70-30 joint venture of Huntsman Corp. and Imperial Chemicals Industries (ICI), formed in April to acquire ICI's polyurethanes, titanium dioxide, petrochemicals, and aromatics businesses. BP Amoco will retain the right to use ethylene storage and distribution facilities at the site and to enter into long-term olefins supply agreements with HICI.
Phillips Petroleum Co.
increased by 40% the K-Resin styrene-butadiene copolymer (SBC) capacity at its Houston chemical complex through the start-up of a new 100 million lb/year unit. The plant now produces 370 million lb/year of SBC, which is used in products such as medical components, toys, and food packaging.
Drilling-productionElk Point Resources Inc., Calgary, said Bellevue 1-17 well at East Lost Hills, which blew out Nov. 23, 1998, was successfully killed May 29 (OGJ, Nov. 30, 1998, p. 34). The 1-17R relief well, drilled to 16,668 ft, will be used to sidetrack a well into the Temblor zone to replace the original 1-17 well. Completion of a new well is expected to take 75 days. The well had been flowing natural gas, liquid hydrocarbons, and water into containment facilities since December 1998.
Monaco's Single Buoy Mooring
let contract to Singapore's Keppel Fels Ltd. for the upgrade of a floating production, storage, and offloading (FPSO) vessel, FPSO VI. Work will include installation of an internal turret mooring system and replacement of existing oil processing and utility systems. A helideck and supply-handling deck cranes also will be installed, along with walkways, lighting, communication systems, and utilities for various deck facilities. Upon completion in February 2000, FPSO VI will be towed to Espadarte field off Brazil.
Shell Todd Oil Services Ltd.,
Cultus Petroleum NL, and Shell (Petroleum Mining) Co. Ltd. estimate that they can extract up to 46 million bbl of oil from the recently discovered Maari oil field off Taranaki, New Zealand (OGJ, Dec. 14, 1998, p. 33). The partners anticipate more than $160 million in development costs and foresee first oil in 2002 from two of the three main zones-Moki and Kapuni-but not from Zone M2A. The firms estimate initial flows of 35,000 b/d, declining at a rate of about 20%/year for 7 years and then at 10%/year. Interests in the field are operator Shell Todd 21%, Cultus 30%, and Shell 49%.
Agip Algeria Exploration BV,
a unit of Italy's ENI SpA, and Algeria's Sonatrach signed two production-sharing contracts for Blocks 403d and 222b in Algeria. Block 403d is part of the larger Block 403 area, where Agip and Sonatrach have discovered several oil fields that produce 43,000 b/d of oil. Block 222b is in an area with high hydrocarbon potential and nearby discoveries, made by Sonatrach. Block 222b is already equipped with production facilities. The blocks are about 700 km south of Algiers, in the Sahara Desert.
Sproule International Ltd.
announced the results of a third-party certified reserves study in Libya, estimating proven and probable reserves for the En Naga North and West field at 71 million bbl of oil. Sproule submitted a development plan to the National Oil Co. of Libya for approval, which is expected in fourth quarter 1999. The company expects to produce 12,500 b/d of oil within 12 months; peak production is projected to reach 22,000 b/d of oil.
Project financing PT Perussahaan Gas Negara
(PGN), Indonesia's state gas distribution firm, is seeking a $765 million soft loan from Japan to fund a $900 million, 900-km natural gas pipeline that will link South Sumatra to the West Java towns of Subang and Cilegon. PGN said it would raise the remaining $135 million from its own funds for the line. The 40-year loan will carry a 1% annual interest rate. PGN anticipates receiving the money by September.
Russia's Tyumen Oil Co.
secured a $197.6 million loan from the U.S. Eximbank to upgrade its Ryazan oil refinery (OGJ, Aug. 18, 1997). Tyumen Oil said the funds were part of a $500 million loan package the company was negotiating, the second tranche of which would be used to redevelop its water-saturated Samotlor oil field in Siberia. The oil field holds 6% of Russia's known reserves and accounts for more than 85% of Tyumen's oil production. The overall deal would represent the largest foreign credit to any Russian company since the ruble devaluation and domestic default last August.
Alternate energyEnron Corp. unit Enron Wind Corp., Tehachapi, Calif., began building its wind farm, Green Power I, about 8 miles east of Palm Springs, Calif. The 22-turbine, 16.5-MW project is slated for completion this month, supplying enough power for 5,000 homes. Enron says Green Power I will offset equivalent emissions of 77 million lb of carbon dioxide, 400,000 lb of acid rain sulfur dioxide, and 260,000 lb of smog nitrogen oxides.
TerminalsA unit of Williams, Tulsa, signed an agreement to acquire three storage and distribution terminals with a total storage capacity of about 13.3 million bbl from Amerada Hess for an undisclosed sum. The terminals, which are in Houston, Corpus Christi, Tex., and Marrero, La., have capacity for marine, pipeline, railway, and truck loading and unloading. Following this transaction, Williams will own 72 terminals in the U.S. and have a total storage capacity of 42.1 million bbl.
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