Industry Briefs

July 26, 1999
International Egyptian Oil Co. (IEOC) acquired interests in two fields-one in the southwest Gulf of Suez and the other in the Nile Delta-held by Marathon Egypt, a subsidiary of Marathon Oil Co., Houston.

A subsidiary of
Southern Natural Gas Co., itself a unit of Sonat Inc., Birmingham, Ala., filed with the U.S. Federal Energy Regulatory Commission to reactivate its Elba Island, Ga., liquefied natural gas import terminal near Savannah, Ga. Recommissioning of the terminal, which has been out of service for 17 years, will cost $26 million. The terminal is one of only four such facilities in the U.S. and is capable of reaching a peak throughput of 540 MMcfd of gas and a baseload throughput of 330 MMcfd. The firm will import LNG from the Atlantic LNG Co. liquefaction plant in Trinidad (OGJ, Apr. 26, 1999, p. 30).

BP Amoco plc
unit Amoco Angola BV discovered oil on Block 18 in 1,362 m of water off Angola. Plutonia-1 flowed at a rate of 5,700 b/d of oil through a restricted choke. Earlier this year BP Amoco tested 6,500 b/d of oil from another discovery well on the block-Platina-1. Further geological and engineering studies are required to evaluate the two discoveries fully, said BP Amoco. BP Amoco was one of three operators that recently won more deepwater licenses off Angola (OGJ, June 7, 1999, p. 32). Operator Amoco Angola shares an equal stake in Block 18 with Shell Exploration & Production Angola BV.

U.S. Minerals Management Service
will hold its annual Western Gulf of Mexico offshore lease sale Aug. 25 in New Orleans. Sale No. 174 covers 3,651 blocks totaling 19.86 million acres. They are 9-200 miles offshore in waters ranging from 8 m to more than 3,000 m. MMS said 2,122 blocks in more than 200 m will be eligible for consideration under the Deep Water Royalty Relief Act. MMS will require a $25/acre minimum bid for blocks in less than 800 m of water but raised the minimum for blocks in more than 800 m to $37.50/acre. MMS said 1,701 blocks in less than 400 m will carry a 162/3% royalty rate, while 1,950 blocks in more than 400 m will have a 121/2% royalty rate.

ENI unit
International Egyptian Oil Co. (IEOC) acquired interests in two fields-one in the southwest Gulf of Suez and the other in the Nile Delta-held by Marathon Egypt, a subsidiary of Marathon Oil Co., Houston. IEOC gained Marathon`s 50% interest in Ashrafi offshore oil field, already in production, and Marathon`s 25% interest in El Qar`a gas- condensate field. The acquisition boosts IEOC`s interest in Ashrafi to 100% and in El Qar`a to 75%; BP Amoco plc holds the remaining interest in El Qar`a.

Santa Fe Snyder Corp.,
Houston, will acquire a farmout of four discoveries in the Gulf of Mexico and certain unexplored acreage in areas bordering the discoveries from Shell Deepwater Development Inc. for $210 million. The purchase includes working interests in Macaroni field in the Auger basin in the Garden Banks area and the Angus complex, comprising three fields, in the Green Canyon area. Both developments are expected to begin producing later this year. Shell will retain majority working interests and continue as operator of both the fields; Santa Fe Snyder`s interests will range from 15% to 49%.

Cookson Group plc,
London, acquired Plaskon Electronic Materials from BP Amoco plc for $121 million. Plaskon, based in Alpharetta, Ga., makes plastic materials used to encapsulate semiconductors. The sale is in concert with BP Amoco`s strategy to focus on activities where it holds a competitive edge. The business is the first to be sold in a massive portfolio clear-out (see story, p. 38). BP Amoco official George Tacquard said, "Plaskon has been an excellent business for BP Amoco, but its maximum value can best be achieved with a company which has a broader portfolio of electronic materials businesses."

Dallas, formerly Texas Utilities Co., is planning to sell its natural gas gathering and processing unit, TXU Processing Co. (TXUP). TXUP, previously known as Enserch Processing Inc., no longer aligns with its core business, said TXU. TXUP owns and operates nine gas processing plants supplied by more than 1,700 miles of company-controlled gas gathering lines, with more than 34,500 hp of gathering compression. TXUP also owns equity interests in five non-operated gas processing plants. TXU has hired Credit Suisse First Boston to assist in the sale.

Semco Energy Inc.,
Port Huron, Mich., signed a definitive purchase agreement with Ocean Energy Inc., Houston, to acquire Ocean`s Anchorage-based Enstar business unit for $290 million. The Enstar unit comprises Enstar Natural Gas Co. and Alaska Pipeline Co. The divestment is in accord with Ocean Energy`s plans to better integrate its assets with those of Seagull Energy Corp. following their merger (OGJ, July 12, 1999, Newsletter).

Ocean Energy
filed with the U.S. Securities Exchange Commission for approval to form Ocean Energy Royalty Trust, which will include assets in the Arkoma basin in Arkansas and Oklahoma and the Bear Paw area in Montana. The trust`s aggregate reserves comprise about 5% of Ocean Energy`s reserve base. Ocean Energy will pass through a 45% net profits interest in the assets to the trust. Pending SEC approval, Ocean plans to offer 75% of the trust units, subject to market conditions.

Talisman Energy Inc.,
Calgary, completed a takeover of Highridge Exploration Ltd., Calgary. About 13.8 million shares of Highridge`s common stock-nearly 96% of the firm`s outstanding shares-were tendered in response to the Talisman offer. Highridge`s board favored Talisman`s offer over a bid made by Samson Canada Ltd. last month. Talisman said it intends to acquire the remaining Highridge shares.

Talisman Energy
unit Talisman Energy (U.K.) Ltd. completed an asset swap with Amerada Hess Corp. that will give the firm Amerada`s interests in the Blake oil field in the Moray Firth region of the U.K. North Sea. In exchange, Amerada will acquire Talisman`s interests in Cromarty, Atlantic, and Goldeneye natural gas and condensate discoveries in the South Halibut basin east of Blake. The deal gives Talisman an average 35% interest in the three Blake blocks. Rigel Energy Corp., Calgary, which is up for sale, also holds interests in Blake; Talsiman is viewed as a likely Rigel buyer.

Ivanhoe Energy Inc.
(formerly Black Sea Energy Ltd.), Vancouver, B.C., acquired Diatom Petroleum Inc., Bakersfield, Calif., in exchange for 500,000 Ivanhoe common shares, making Diatom a wholly owned subsidiary of Ivanhoe. As a result of the deal, Ivanhoe will hold a joint exploration contract in the southern San Joaquin Valley with Aera Energy LLC, a joint venture of Mobil Exploration & Producing U.S. Inc. and Shell Oil Co.

Energy marketing
SkyGen Energy LLC,
Northbrook, Ill., signed an agreement with Coral Energy LP, Houston, under which Coral will manage power marketing and fuel supply for the Pine Bluff energy center. Pine Bluff is a planned 228-MW natural gas-fired cogeneration plant to be built next to International Paper Co.`s mill near Pine Bluff, Ark. Coral also has joined SkyGen as an equity owner of Pine Bluff Energy LLC, which will own and operate the project. The plant is slated to start up in second quarter 2001.

Harken Energy Corp.,
Houston, began accepting bids for the construction of 6 km of flow line extensions from its Catalina field in Colombia to a main pipeline system (OGJ, June 29, 1998, p. 87). The flow line extensions will have a design capacity of 150,000 b/d of oil and 150 MMcfd of gas, although initial capacity will be about one fifth of this total. Construction is slated to begin in August and is expected to last 120 days. Harken also plans to add other production facilities at Catalina.

U.S. Minerals Management Service
issued final rules requiring lessees to file royalty and production reports electronically, effective Nov. 1. MMS said the rules also extend the due date for production reports and eliminate reporting on most wells that are still being drilled.

MMS and Wyoming
are accepting bids for 3,250 b/d of federal and state royalty oil as part of a joint pilot project for taking royalty crude in-kind. The sale will offer production from 66 state and federal leases in Wyoming`s Bighorn and Power River basins, effective for 6 months beginning Oct. 1.

Leviathan Gas Pipeline Partners LP,
Houston, let contract to Modec International LLC for the construction of its Moses tension-leg platform, to be used as part of its Sunday Silence field development project in Ewing Bank Blocks 958, 959, 1002, and 1003 in 1,500 ft of water. The turnkey contract includes the design, fabrication, and installation of the hull, tendons, pilings, and production risers. The hull and tendons will support a 6,000-ton deck and topside. The platform, which will support a workover rig, will process 25,000 b/d of oil and 55 MMcfd of natural gas.

TransCanada Power Services Ltd.,
Calgary, acquired a 66-MW cogeneration plant at Castleton-on-Hudson, N.Y., from Cogen Energy Technology LP for $37.5 million. The plant is near the 500-MW Ocean State power project in Rhode Island, owned by TransCanada PipeLines Ltd. (TCPL), Calgary. TransCanada Power operates power plants in Ontario and is a spin-off of TCPL, which holds a 40% interest. TransCanada Power says it plans to buy more U.S. power assets and will announce at least one Canadian project by the end of the summer.

El Paso Energy Corp.
unit Tennessee Gas Pipeline Co., Houston, and Consolidated Natural Gas Co. unit CNG Transmission Corp., Clarksburg, W.Va., plan to lay a natural gas transmission system that will carry up to 735 MMcfd from the Chicago area, and from the Niagara import point, to eastern U.S. markets, including New York, Pennsylvania, and New England. The system, dubbed Atlantic Alliance, will be built in phases and will use existing facilities and rights-of-way "extensively," say the partners. The line will be fully on stream by Nov. 1, 2001, but about 98 MMcfd of gas will be available by this winter.

approved revised regulations by Canada`s National Energy Board for onshore pipe- lines. The regulations specify requirements for: design, construction, operation, and abandonment of a pipeline; protection of property and the environment; and safety of the public and employees. The revised regulations replace rules set in 1989 and are based on findings of past inquiries, including an inquiry into stress corrosion cracking in Canadian pipelines conducted during 1995-96. The board plans to issue a set of guidance notes by Aug. 1 to assist companies in complying with the regulations.

ARCO Pipe Line Co.,
Houston, and Navajo Refining Co., Artesia, N.M., will swap certain petroleum transportation and storage assets in West Texas and New Mexico. ARCO will gain Navajo`s line between Andrews, Tex., and Hobbs, N.M., and storage tanks in Midland, Tex., while Navajo will acquire certain ARCO pipeline system assets in West Texas and New Mexico. When the exchange is complete, ARCO will be able to offer common-carrier service from Midland to Hobbs.

Citerco LLC,
a joint venture of Citgo Asphalt Refining Co. and Ergon Inc., began production at its new polymer-modified asphalt plant at Paulsboro, N.J. The plant will make modified asphalt-a blend of asphalt and styrene-butadiene-styrene resin-to be sold under the name Citgoflex SP. Production of the special asphalt is based on Sealoflex technology, developed by Dutch firm Ooms Avenhorn Holdings BV. Citgo Asphalt Refining operates an asphalt refinery in Paulsboro.

Syncrude Canada Ltd.
completed the first unit of its Phase 2 Aurora expansion project. A $60 million (Canadian), 80-MW natural gas turbine generator was brought on-line 2 months ahead of schedule. Yet to be completed are two substations at Aurora and Mildred Lake, Alta., and a 260-kv transmission line to the main Mildred Lake site. The Phase 2 expansion project will include the first production train for the new Aurora mine in the Fort McMurray region and an upgrader debottlenecking. Estimated cost of Phase 2 is $900 million.

U.K. electric power utility
Eastern Group plc, Ipswich, received U.K. Department of Industry approval to convert a 1,000-MW coal-fired power plant at Drakelow for running on coal, gas, or a combination of the two. The upgrade is intended to improve the environmental performance of the plant, increasing options for extending the plant`s life while adding operational flexibility. Eastern has applied for consent for a similar conversion at its 1,000- MW Rugeley power station.

MCN Energy Group Inc.,
Detroit, Cobisa Corp., Houston, and contractor H.B. Zachry Co., San Antonio, started up the Cobisa-Person power plant in Bernalillo County, N.M. The 140-MW natural gas-fired plant will serve the Albuquerque area. Public Service Co. of New Mexico (PNM) entered into a 20-year agreement to purchase power from the plant, which is slated for completion in May 2000. Built at the site of PNM`s decommissioned Person power station, the new facility will use existing electricity and gas transmission infrastructure.

Qatar Fertilizers Co.
(Qafco), a joint venture of Qatar General Petroleum Corp. (75%) and Norsk Hydro AS (25%), signed a 5-year agreement with Western Australian organization United Farmers Cooperative Co. for the supply of 100,000 metric tons/year of urea beginning next month. In keeping with its strategy to expand its marketing reach, Qafco increased significantly its exports to Australia in 1998, supplying the country with 120,000 tons of urea and 109,000 tons of ammonia, compared with 123,000 tons and 73,000 tons, respectively, in 1997.