Industry Briefs

Aug. 23, 1999

The oil shale demonstration plant
listed in the last line of the table on Australia's initial hydrocarbon indications and discoveries should have read "Stuart" and not "Surat" (OGJ, June 7, 1999, p. 39).


The oil shale demonstration plant
listed in the last line of the table on Australia's initial hydrocarbon indications and discoveries should have read "Stuart" and not "Surat" (OGJ, June 7, 1999, p. 39).


An explosion
that occurred Aug. 9 at Citgo Petroleum Corp.'s Corpus Christi, Tex., refinery killed one worker and injured another, said the Tulsa-based firm. The blast, which was not accompanied by a fire, happened in Block 60 of the refinery's east plant, site of the refinery's steam boilers. At presstime, the cause of the explosion remains unknown. The rest of the refinery was undamaged.

India's Reliance Petroleum Ltd.
announced plans for a second increase in the capacity of its Jamnagar refinery at Gujarat, even before the refinery has started up. Reliance earlier announced a planned increase in the refinery's capacity to 540,000 b/d from 360,000 b/d (OGJ, June 7, 1999, p. 27) after it begins full commercial operations in October. Reliance now says it wants to boost capacity further to 800,000 b/d. The second expansion calls for the addition of a third processing train, consisting of a 260,000 b/d crude distillation unit and a vacuum tower. The expansion is expected to cost 4.25 billion rupees.

Mexico's Petroleos Mexicanos
began the $1.2 billion revamp work on its Ciudad Madero refinery (OGJ, June 7, 1999, p. 27). The project is part of Pemex's $5.7 billion refinery refurbishing plan.


China issued a banon building certain industrial facilities, including atmospheric distillation units that process low-sulfur crude. China has 4.8 million b/d of low-sulfur crude distillation capacity and will likely begin importing more sour crude as a result of declines in domestic sweet crude output. The State Economic and Trade Commission also banned the construction of ethylene plants smaller than 600,000 metric tons/year, propylene plants smaller than 70,000 tons/year, and acrylonitrile-butadiene-styrene resin plants smaller than 100,000 tons/year. The ban will nullify plans for about 201 projects in seven industries.


Argentina's Petrolera San Jorge
made two oil discoveries in the Rio Negro Norte area in the western Neuquen sedimentary basin in Argentina. On test, wells AMO x-1 and LEA x-1 flowed 5,690 b/d of oil and 2,415 b/d, respectively. The firm intends to drill several more wells on the concession. San Jorge's partners are International Finance Corp. and Metro Holdings.

Elf Aquitaine unit
Elf Exploration Inc. made a deepwater discovery on Mississippi Canyon Block 243 in 2,835 ft of water in the Gulf of Mexico. The Matterhorn well, drilled by Global Marine's Celtic Sea semisubmersible to 8,165 ft TD, cut 370 gross ft of oil-bearing reservoirs in two zones. On test, the well flowed 6,640 b/d of 36? gravity oil and associated gas. Elf holds 100% working interest in the block.

Marathon Oil Co.,
Houston, made a natural gas discovery on its Camden Hills prospect on Mississippi Canyon Block 348 in the Gulf of Mexico. The MC348-1 well cut about 200 ft of gas pay and was drilled to 15,080 ft TD by a unit of Diamond Offshore Drilling Inc., Houston. Block interest holders are: operator Marathon, 50.03%; WI Inc., 33.3%; and TotalFina SA unit Total Exploration & Production USA Inc., 16.67%. The block, in 7,200 ft of water, is about 140 miles southeast of New Orleans. The partners plan appraisal drilling later this year.

Indian state oil firm
Oil & Natural Gas Corp. (ONGC) made an oil discovery off southern Andhra Pradesh state. The well flowed 3,000 b/d of oil and 1.4 MMcfd of gas on test. The find marks the first major oil discovery off India since Bombay High, says ONGC. ONGC will now focus its exploration efforts in the Krishna Godavari and Cauvery basins.


Qatar's Ras Laffan LNG Co.
(Rasgas) will transport its first liquefied natural gas shipment to South Korea under a 25-year supply agreement with Korean Gas Corp. (Kogas). Kogas will purchase 600,000 metric tons of LNG from Rasgas this year and 4.8 million tons/year starting in 2000. South Korea's demand for LNG is about 12.5 million tons/year, but because that figure is expected to increase, the country has secured additional supplies from Qatar and elsewhere. The LNG is used mostly in power generation.


Petroleos Mexicanos
let an underbalanced drilling services contract worth $2.5-2.9 million to Alpine Oil Services Corp., Calgary. Part of an international tender, the contract begins Aug. 24 and is valid until Dec. 31, 2001. During the contract's term, Alpine will drill 10-12 underbalanced wells in Tabasco and Chiapas states in southern Mexico. Development wells in this area of Mexico, says Alpine, are particularly good candidates for underbalanced drilling.

The Ecuadorian unit
of Argentina's Tecpetrol SA acquired operatorship of Bermejo marginal oil field in Ecuador's eastern Amazon region. Last month, Tecpetrol signed a 20-year concession agreement with Ecuadorian state oil firm Petroecuador to boost production from the field. Tecpetrol plans to invest $36 million over the next 3 years to increase production to 15,000 b/d from 4,000 b/d. The agreement calls for supply of 4,000 b/d of oil to Petroecuador, with Tecpetrol receiving a percentage of any additional production. Separately, Argentina's Cia. General Combustibles also agreed in principle to take a share in the Bermejo area.

Enterprise Oil plc
and partners drilled a second well in Corrib field, 70 km from Achill Island off Ireland's west coast (OGJ, May 17, 1999, p. 38). Well 18/25-1 is on Block 18/25 in the Slyne Trough in 350 m of water. On test, the well flowed 64 MMscfd through a 11/2-in. choke with 1,653 psi flowing wellhead pressure. Drilled by the Sedco 711 semisubmersible to 3,741 ft TVD subsea in Triassic Sherwood sandstone, the well is 2 km from the joint venture's first appraisal well. Block 18/25 partners are: operator Enterprise, 45%; Marathon International Petroleum Hibernia Ltd., 18.5%; Statoil Exploration (Ireland) Ltd., 15%; and Saga Petroleum Ireland Ltd., 21.5%. The partners are studying the feasibility of and possible routes for a pipeline to bring the gas to market.

Husky Oil Ltd.,
Calgary, and partners extended their 1999 delineation drilling program in White Rose oil field on the Grand Banks off Newfoundland. The firms will drill the N-30 appraisal well 4.6 miles north-northwest of the A-17 test well with the Bill Shoemaker rig. White Rose is 217 miles off Newfoundland and 31 miles east of Hibernia oil field. White Rose partners are: Husky, 71.2%; Petro-Canada Ltd., 17.5%; Norsk Hydro Canada Oil & Gas, 7.5%; and Denison Mines Ltd., 3.8%.


Chevron Canada Resources Ltd.
and Western Oil Sands Inc. became partners in the Shell Canada Ltd.-led Athabasca oilsands project in Alberta. Shell had been seeking new partners since Australian firm BHP Petroleum Ltd. withdrew from the project earlier this year. Chevron and Western Oil each own a 20% interest in the $3.8 billion (Canadian) project, with Shell retaining the remainder. The Athabasca project comprises: the $1.4 billion Muskeg River mine, near Fort McMurray; the $1.9 billion Scotford heavy oil upgrader, north of Edmonton; and the $500 million Corridor pipeline, which connects the mine with the upgrader. Initial production of 150,000 b/d of synthetic crude is slated for 2002.


Enron Oil & Gas Co.
(EOG), Houston, completed its share-exchange spin-off from Enron Corp., establishing itself as an independent company (OGJ, July 26, 1999, Newsletter). EOG will adopt the name EOG Resources Inc.

Unit Corp.,
Tulsa, acquired 13 U.S. Lower 48 land drilling rigs from Parker Drilling Co., Tulsa, for about $48 million, comprising $40 million in cash and 1 million shares of Unit common stock. The 13 diesel-electric, deep-drilling rigs comprised all of Parker's Lower-48 onshore drilling assets. The divestment, says Parker, is in concert with its redirected efforts towards domestic and international offshore markets and international land drilling markets (OGJ, July 26, 1999, p. 37). The sale leaves Parker with 83 marketable rigs worldwide; Unit now owns 47 onshore drilling rigs.

Hunter Gas Gathering Inc.,
a unit of Magnum Hunter Resources Inc., Irving, Tex., signed an agreement to acquire a 50% interest in the Madill gas processing plant and related gathering systems in Marshall and Bryan counties, Okla., from Dynegy unit Dynegy Midstream Services LP. The plant has 3,350 hp of high-speed compression and capacity to process 18 MMcfd of gas. The cost of the transaction was undisclosed.

DuPont Co.
completed its spin-off of Conoco Inc. About 217.6 million shares of DuPont common stock were swapped, each for 2.95 shares of Conoco Class B common shares. DuPont had agreed to accept 148 million of its own shares, but dthe offer was overprescribed. Later, Conoco initiated a prorated structure, through which it accepted 41.64% of the tendered shares from each shareholder. Upon completion of the offer, Conoco entered the S&P 500 Index Aug. 6.

The merger of
Devon Energy Corp., Oklahoma City, and PennzEnergy Co., Houston, was completed; the newly formed company retains the name Devon Energy Corp. (OGJ, May 31, 1999, p. 29).

BP Amoco plc
outsourced its Topnir technology licensing business to Eutech Technology under undisclosed terms. Eutech will continue to develop and license the Topnir technology, which is based on near-infrared spectroscopy hardware paired with topological modeling software created by BP Amoco. Topnir technology is used to optimize the performance of various oil and gas refining and petrochemical processes.

ATP Oil & Gas Corp.
acquired 100% interest in three leases in the Gulf of Mexico for an undisclosed sum. The assets include: Ship Shoal 105, from a group of firms led by Ocean Energy Inc.; High Island A-253, from Vastar Resources Inc.; and High Island A-354, from Seneca Resources Corp. As part of its $100 million capital expenditure program for 1999, ATP intends to begin drilling on the three leases soon. All companies involved in the transactions are based in Houston.


Chevron Corp. unit
Chevron Nigeria Ltd. was appointed project manager of the proposed West African Gas Pipeline project-the proposed line that will transport 120 MMcfd of natural gas from Nigeria to Benin, Togo, and Ghana by mid-2002. The appointment is part of a formal joint venture agreement, signed by Chevron, Royal Dutch/Shell, and the governments of the four countries (OGJ, Aug. 16, 1999, Newsletter).

Indian Oil Corp.
(IOC) intends to acquire a 26% equity stake in the Mangalore-Bangalore crude oil and refined products pipeline project-a joint venture of Hindustan Petroleum Corp. Ltd., Mangalore Refinery & Petrochemicals, and Petronet India. IOC's decision was prompted by the proposal of Hindustan Petroleum and Mangalore Refinery to trim their equity stakes in the project to 13% from 26% each; Petronet retains a 26% interest. The 11 billion rupee ($254 million) project, which is based on a 3:1 debt-equity ratio, is slated to be commissioned by yearend 2002.

Joint venture partners
in the Atlantic Alliance natural gas pipeline project are holding an open season until Sept. 30 for firm transportation service on the proposed line (OGJ, July 26, 1999, p. 46). Project partners are El Paso Energy Corp. unit Tennessee Gas Pipeline Co. and Consolidated Natural Gas Co. unit CNG Transmission Corp.

Gas processing

Gulf Resources Canada Ltd.'s
Indonesian unit is seeking contractors to install gas-treatment equipment in the Corridor Block production-sharing contract area in South Sumatra, Indonesia. Contractors will be required to design the required piping and electrical and instrumentation cables and procure pipe valves, fittings, and electrical and other equipment. Gulf Resources will provide gas-treatment equipment, including eight 100-ton high-pressure vessels. Gas production will be exported to Singapore via pipeline (OGJ, Aug. 9, 1999, p. 23).

Coalbed methane

A Greka Energy Corp. unit
and China United Coalbed Methane Corp. Ltd. signed a production-sharing agreement to jointly explore for coalbed methane in Fengcheng in East China's Jiangxi province. Greka holds a 49% interest and is operator of the production area, which covers 380,534 acres about 30 miles from Nanchang. The area has an estimated 1.2 tcf of coalbed methane reserves. Reservoir depths are 500-2,000 ft. Greka will drill at least 10 wells over a 3-year term and spend an initial sum of $4.6 million. The Chinese firm is reportedly due to sign four more production-sharing contracts later this year-one with Phillips Petroleum Co. and three with Texaco Inc.

Gas supply

Sempra Energy Trading,
Stamford, Conn., signed a 1-year contract with California's Department of General Services to supply 117 of its facilities with 15.3 bcf of natural gas. Sempra will manage gas supply, storage, and transportation services for various state facilities in northern and southern California, including San Francisco International Airport and San Quentin Prison. The two contracts are worth $30-35 million, said Sempra.