Industry Briefs

Nov. 1, 1999
Petrochemicals - Saudi Yanbu Petrochemical Co., a joint venture of Saudi Basic Industries Corp. and Mobil Corp., began start-up of a major expansion project at its complex in Yanbu, Saudi Arabia.


The gas processing section

of the Worldwide Construction Update misidentified the contractor for a 350 MMscfd cryogenic gas plant expansion at the Williams Energy Services facility at Opal, Wyo. (OGJ, Oct. 11, 1999, p. 92). The contractor is Pro-Quip Corp., Tulsa.


Saudi Yanbu Petrochemical Co.,

a joint venture of Saudi Basic Industries Corp. and Mobil Corp., began start-up of a major expansion project at its complex in Yanbu, Saudi Arabia. The project cost over $2 billion and included new units with capacity to produce 800,000 tonnes/year of polyethylene, 410,000 tonnes/year of ethylene glycol, 260,000 tonnes/year of poly- propylene, and 125,000 tonnes/year of pyrolysis gasoline (OGJ, Aug. 11, 1997, p. 34).


Exxon Corp.

unit Esso Italiana SPA plans to integrate its Augusta refinery in Italy with the neighboring Priolo refinery, owned by Italy's Agip Petro* SPA. The $110 million integration and rationalization project will create a refining complex with a combined crude capacity of about 240,000 b/d, says Esso. The firmswill form a 50-50 joint venture to operate the plant. When the plants are fully integrated in about 2 years, the firms will sell the Priolo motor gasoline production facility to Erg Petro* under a nonbinding memorandum of understanding just signed.

Phillips Petroleum Co.

plans to build a 6,000 b/d semicommercial gasoline desulfurization unit at its Borger, Tex., refinery. Construction of the unit, which will use Phillips's novel S Zorb sulfur-removal process, will begin during first quarter 2000, with start-up slated for early 2001. Phillips says the unit will help the refinery produce low-sulfur gasoline while limiting manufacturing cost increases.


US District Judge

Emmet Sullivan sentenced Nicholas Bush, former Natural Gas Supply Association president, to 41 months in prison for embezzling more than $3 million from NGSA over 16 years (OGJ, Mar. 1, 1999, Newsletter). Sullivan ordered Bush to repay the association and gave him the maximum sentence under federal guidelines, saying Bush deserved an even longer sentence.


Petrolera Argentina San Jorge

announced an oil discovery on Rio Negro Norte Block in Argentina's Rio Negro province. On test, the El Latigo Este well flowed 3,880 b/d of 39° gravity oil from reservoirs in multiple Upper Jurassic Punta Rosada zones at 7,115-7,886 ft. San Jorge, a wholly owned subsidiary of Chevron Corp. (OGJ, Oct. 11, 1999, p. 36), says the find is the seventh this year in the area of Loma Negra field complex, which is estimated to hold 240 million boe of potential reserves. Block partners are: San Jorge, 37.5%; Repsol-YPF SA, 35%; International Finance Corp., 15%; and Metro Holding SA, 12.5%.

Conoco Indonesia Inc.

made another oil and gas discovery on Block B in the South Natuna Sea (OGJ, Aug. 16, 1999, p. 36). On test, North Belut 3 flowed 2,480 b/d of oil and 38 MMcfd of natural gas from three zones. The well was drilled to 9,082 ft and cut about 200 ft of oil and gas pay. The well also proved up a hydrocarbon column greater than 1,500 ft. North Belut 3 is the fifth well to be drilled in Conoco's 10-well 1999 drilling program on Block B.

An agreement was reached

in a dispute between Shell Australia Pty. Ltd. and the Australian government over a $75 million (Aus.), 35-well, unfinished exploration program at Cornea oil field in the Browse basin (OGJ, May 31, 1999, Newsletter). Shell will spend $30 million to explore areas not licensed in recent bid rounds. This equals Shell's 50% share of the cost of drilling the outstanding commitment wells on the two Cornea leases. The deal means Shell's past performance in Cornea will not be taken into account in future Australia bid rounds. There is no word on whether the other Cornea interest holders-Chevron Asiatic Ltd. and Cultus Petroleum NL, 25% each-will reach a similar agreement.


US Federal Trade Commission

approved El Paso Energy Corp.'s $6 billion purchase of Sonat Inc., provided assets are sold to ensure competition in gas shipments from the Gulf of Mexico to southeastern US states. El Paso will sell its wholly owned East Tennessee Natural Gas Co., which serves eastern Tennessee and northern Georgia, and Sonat will divest its 100% ownership of Sea Robin Pipeline Co. and its one-third interest in Destin Pipeline Co. LLC. After restructuring, El Paso cut 607 jobs in: Houston, El Paso, and Tyler, Tex.; Birmingham, Ala.; and Oklahoma City.

A group of investors

plans to acquire MidAmerican Energy Holding Co., Des Moines, for about $2.35 billion in cash and assumed debt. Berkshire Hathaway Inc., MidAmerican's largest individual stockholder Walter Scott, and MidAmerican Chairman and CEO David Sokol will pay $35.05/share in cash-a 29% premium over the Oct. 22 closing price. After close of the transaction, expected by April 2000, MidAmerican will be a privately owned firm with publicly traded fixed-income securites. MidAmerican will retain its name and remain headquartered in Des Moines; no management changes or job cuts are planned.

Burlington Resources Inc.

(BR) will acquire Villano field on Block 10 in Ecuador and other undeveloped properties in Colombia and Peru from ARCO for $214 million plus $90 million in closing adjustments. The firms began negotiating on the assets earlier this year (OGJ, Aug. 9, 1999, Newsletter). Key among the acquired properties is Villano field, which began production recently and is estimated to hold 200 million bbl of oil reserves (OGJ, Aug. 2, 1999, p. 19). The deal includes: 100 miles of secondary pipeline from Villano to the SOTE Pipeline and Block 24, a 25% interest in Block 64 in Peru, and a 50% stake in Los Galeneos and Fragata Blocks in Colombia.

Abu Dhabi's

International Petroleum Investment Co. signed an agreement with South Korea's Hyundai group to acquire a 50% interest in Hyundai Oil Refining Co. (HDO) through the acquisition of about $500 million worth of newly issued HDO shares. In order to maintain a 50% stake, Hyundai shareholders will need to invest an additional $75.8 million in the company, which has 665,000 b/d of refining capacity. HDO took over Hanwha Energy Co. Ltd.'s refining division last April and soon after began negotiating with IPIC on the sale of a 50% stake in the combine (OGJ, Oct. 11, 1999, p. 25).

Texaco Inc.

signed an agreement to acquire 45% of the Malampaya deepwater natural gas project in the Philippines from Royal Dutch/Shell units Shell Philippines Exploration BV and Shell Philippines LLC. As part of the deal, Texaco will assist with a portion of the funding of the $2 billion upstream project, which includes the drilling and operation of deepwater gas wells, on and offshore production facilities, and a 500-km subsea pipeline. Shell will continue as the project's operator.

Russian oil firm Yukos

said it is evaluating setting up an exploration consortium with Hungary's MOL Rt. in about 6 months. Yukos is studying MOL's proposal to explore on a parity basis areas where MOL holds licenses-particularly Angola, Libya, Yemen, and Tunisia. Yukos would join one of these projects to gain foreign experience, it said. This is a strategic decision, because Yukos needs to diversify its reserves. Yukos brokers Russian oil exports to Hungary.

The Portuguese government

The Portuguese government
will partially privatize state firm Petróleos de Gás de Portugal (Petrogal) through an issue of as many as 65.4 million shares of new stock. The issue is expected to generate capital of 829 million euros. The new shares are reserved for subscription by current shareholder Petrocontrol, electricity firm EDP, bank CGD, and natural gas companies Portgás and Setgás. If the firms subscribe to the maximum number of shares allotted, interests in Petrogal will be: the state, 60.56%; Petrocontrol, 33.34%; EDP, 3.27%; CGD, 2.75%; and Setgás and Portgás, 0.04% each. Completion of the transaction is expected by Nov. 15.


Carlos R. Leffler Inc.,

Richland, Pa., will pay a $435,000 penalty and spend an additional $110,000 to improve 15 acres of developed property in Juniata County, Pa., based on an Oct. 20 federal court settlement of an oil spill prevention case. The federal government sued the petroleum products marketer for violating the US Oil Pollution Act of 1990, alleging that the company failed to prepare timely facility response plans or perform required personnel training for seven facilities in Pennsylvania.

Gas supply

BHP Petroleum Great Britain PLC

renegotiated the gas supply contract for the Liverpool Bay fields development in the UK Irish Sea with electric power generator PowerGen UK PLC. License interests in the fields are: operator BHP, 46.1%; Lasmo (ULX) Ltd., 45%; and Centrica Resources Ltd., 8.9%. PowerGen will pay a combined £197 million to the license partners in return for a one-third reduction in the price of gas delivered under the contract for 5 years beginning June 1, 1999. At the end of the 5-year period, the contract will either return to the price levels before this deal or be succeeded by a new agreement.

Malaysia's Petronas Carigali Sdn. Bhd.

and Sarawak Shell Bhd. (SSB) signed an agreement with Comalco Malaysia Pty. Ltd. for the supply of natural gas to Comalco's proposed alumina refinery at Similajau, Sarawak. Gas sellers Petronas, Petronas Carigali, and SSB will supply gas to the proposed project for 20 years starting in 2002. The project, which will be implemented in stages, will have a total gas requirement of about 137 MMcfd. Initially, gas will be supplied from several existing producing fields off Bintulu, Sarawak, and then from new reserves in the SK-308 production-sharing block in the same area.


Conoco Inc.

decided not to pursue a project with State Oil Co. of Azerbaijan Republic (SOCAR) to improve oil and natural gas recovery from Gunesh* field in The Caspian Sea off Azerbaijan. Conoco said, "After numerous discussions and significant technical work, it was apparent that it would not be possible to reach an agreement containing the commercial terms necessaryellipseto invest in the project." As a result of its decision, Conoco will close the Baku office of unit Conoco Khazar Ltd.

Exxon Corp.

affiliate Esso Norge AS and partners began oil production Oct. 25 from Jotun field on Blocks 25/8 and 25/7, about 200 km west of Stavanger. Jotun's initial production of 25,000 b/d is expected to increase to 100,000 b/d by early 2000. Jotun utilizes a floating production system tied back to a wellhead platform with dedicated drilling facilities and with oil exported via shuttle tanker. Jotun's reserves are estimated at 210 million boe. Jotun partners are: operator Esso, 45%; Enterprise Oil Norge Ltd., 45%; Statoil AS, 5%; Norske Conoco AS, 3.75%; and Amerada Hess Corp., 1.25%.

Shell Temir Petroleum Development BV

disclosed first oil from Saigak field in Kazakhstan, where it is operator of a 60-40 joint venture with Veba Oel Kasachstan GMBH under a production-sharing contract. The Saigak-2 well is being developed with a view to appraising reserves and reservoir characteristics over a 3-month period. So far, 1,200 tonnes of crude have been delivered to a nearby terminal at Shubarkduk, 150 km south of Aktobe, from where it will be exported by rail. Shell intends to reach a decision on full field development early in 2000, before which it must prove viability of an export route and commerciality of the small, remote find.

Phillips Petroleum Co.

said it is uncertain when production from giant Norwegian North Sea oil and gas field Ekofisk will restart. A gas leak Oct. 22 closed the field, which normally produces 330,000 b/d of oil and 12.5 million cu m/day of gas. At presstime, the leak had not been found or repaired. Phillips, meanwhile, submitted to Norway a $1.1 billion plan to dismantle 14 platforms to recycle the steel (OGJ, Sept. 7, 1998, p. 32).

State oil firm Petroecuador

drilled a successful delineation well in Huamayacu field, southeast of Sacha field, in Ecuador. Huamayacu 3, drilled in T sandstone, flowed 3,101 b/d of 29° gravity oil. Huamayacu 2 is being drilled to the same horizon and might increase the field's reserves, which are estimated at 80 million bbl. The field was discovered with Huamayacu 1 well, drilled to 10,370 ft in T sandstone, in the Napo formation.


A gas pipeline explosion

Oct. 23 on two of the three main pipelines supplying gas to Faisalabad, Pakistan, and other cities killed 13 people and injured 35 others, according to local press reports. The explosion took place on Sui Northern Gas Pipelines Ltd. (SNGPL) lines about 1.5 km from Toba Tek Singh. Ten SNGPL workers had been repairing the lines, which had been leaking for 4 months.

US Environmental Protection Agency

and the US Department of Transportation's Office of Pipeline Safety issued an environmental assessment that concludes there would be no significant impact from construction of the proposed 700-mile Longhorn Partners products pipeline from Houston to El Paso (OGJ, Apr. 12, 1999, p. 35). The environmental assessment now enters a public comment phase that will run through Nov. 29.