Industry Briefs

Nov. 29, 1999
Sempra Energy was awarded natural gas distribution rights in Nova Scotia.

Gas distribution

Sempra Energy
was awarded natural gas distribution rights in Nova Scotia. The company said it will build a $1 billion (Can.) system to distribute gas to 78% of Nova Scotia households within 7 years (OGJ, Feb. 15, 1999, p. 36). Maritimes NRG-a consortium led by Irving Oil Ltd.-proposed a smaller system but was outbid by Sempra. The award is subject to approval from the Nova Scotia cabinet. The gas would come from the $3 billion Sable Offshore Energy Project, an offshore gas field development and related pipeline now nearing start-up (see related brief, next page).


Nova Chemicals Corp.,
Calgary, is in preliminary talks to build new petrochemical plants in Qatar and in Trinidad and Tobago. Nova said talks are in early stages with Qatar General Petroleum Corp. to build an ethane-based complex at Ras Laffan. It didn't elaborate on plans for Trinidad and Tobago. Nova expanded its international operations in October, when it bought polystyrene plants in Europe from Royal Dutch/Shell for $185 million (Can.).


BG International Ltd.,
a unit of the UK's BG PLC, agreed to buy the Bolivian upstream assets of Tesoro Petroleum Corp., San Antonio, under a stock deal valued at $100 million. Included in the sale are: five shared-risk exploration and production contracts covering more than 1 million acres in two producing and three nonproducing blocks in Bolivia; and a sales deal under a 20-year take-or-pay contract with Petroleo Brasileiro SA. The deal marks Tesoro's exit from exploration and production following sale of its US upstream business.

Occidental Petroleum Corp.'s
OXY USA unit will receive $775 million from Chevron Corp. unit Chevron USA Inc. to resolve its long-standing lawsuit over a terminated merger. In 1982, Tulsa-based Cities Service Co., later acquired by OXY, sued Gulf Oil Corp., later acquired by Chevron, after Gulf terminated an agreement to merge with Cities. In 1996, a Tulsa court ruled in favor of OXY on behalf of the former Cities Service in that suit, awarding OXY $742.2 million-with accrued interest, about $935 million. The Oklahoma Supreme Court recently affirmed the trial court judgment, and Chevron filed a petition with the US Supreme Court to review the judgment (OGJ, Mar. 15, 1999, p. 31). That petition is still pending but will be withdrawn as part of the agreement.

Global Industries Ltd.,
Houston, terminated its share-purchase agreement with Groupe GTM, the construction unit of France's Suez Lyonnaise des Eaux, to acquire all the outstanding stock of ETPM SA (OGJ, Aug. 30, 1999, p. 47). Global said that certain conditions precedent to the closing have not been met under the agreement. Groupe GTM contends that all such conditions have been met and that Global's failure to close constitutes a breach of the agreement.

Fortum Oil & Gas Oy
and Norwegian state oil firm Statoil AS will not transfer both companies' service stations and oil terminal operations in Russia, the Baltic countries, and Poland into a joint venture company as previously planned (OGJ, June 7, 1999, p. 31). The firms said they could not find sufficient preconditions for such cooperation. Instead, the companies will continue discussions with the aim of better exploiting shared logistics systems and oil terminals in the Baltic Rim.

Crown Central Petroleum Corp.,
Baltimore, plans to review "strategic alternatives" to an unsolicited takeover offer it received from privately held Apex Oil Co. Inc. On Nov. 10, Apex offered to restructure beleaguered Crown's debt and assume management of the firm in exchange for 35% of its outstanding common stock. In addition, Apex cited as a chief condition of the deal a "satisfactory resolution" of the boycott against Crown and its subsidiaries by the Paper, Allied-Industrial, Chemical, and Energy Workers Union (PACE). In February 1996, Crown locked out 252 PACE International Union members from its Pasadena, Tex., refinery. A year later, PACE began a boycott, which the union says may have contributed to Crown's decline in net profits for 5 successive quarters.

Burlington Resources Inc.
(BR), Houston, completed its $1.75 billion takeover of Poco Petroleums Ltd., Calgary (OGJ, Aug. 23, 1999, p. 35). Poco will operate as the Canadian division of BR North America.

Coastal Field Services Co.,
a unit of Houston-based Coastal Corp., agreed to buy the US midstream facilities and NGL marketing and trading business of TransCanada PipeLines Ltd., Calgary. Included in the sale, slated to close this quarter, are all of TransCanada's Louisiana midstream facilities, including its interests in four gas processing plants, three NGL fractionators, 380 miles of NGL pipelines, and 2.4 million bbl of NGL storage, as well as its US NGL marketing and trading operations.


Apache Corp.,
Houston, found oil with its Nasutus 1 well off Northwest Australia. On test, the well flowed 1,595 b/d of 20.6° gravity oil through a 1/2-in. choke with 486 psi flowing tubing pressure. The test was conducted over a 13-ft interval at 2,195-2,208 ft in Flacourt sandstones at the top of the Barrow Group. Operator Apache holds a 50% working interest, with OMV AG holding the other 50%; Australian independents Arc Energy NL and Omega Oil NL each have an option to repurchase a 5% interest. The discovery, on Permit 409 in the Barrow sub-basin of the Carnarvon basin, is 12 miles east of Airlie Island.

International Petroleum Libya Ltd.
(IPL) and Lundin Oil AB, Vancouver, BC, reached TD of 12,007 ft with their C1-NC177 wildcat drilled on the Haruj A prospect in area NC177 in Libya. At least three zones will undergo production flow tests, including the Gir A carbonate reservoir at 4,000 ft, the Gir F carbonate at 6,500 ft, and the Beda C carbonate at 9,000 ft. At 10,388 ft, the well penetrated 600 ft of Sirte sand-shale section with strong oil and gas shows. Operator IPL holds 60% interest in area NC177, while Lundin holds the remaining 40%.

Kerr-McGee Oil & Gas Corp.,
a unit of Kerr-McGee Corp., Oklahoma City, and its 50-50 partner Agip Petroleum Exploration Co. Inc. found gas on Garden Banks Block 184 in the Gulf of Mexico. The well, drilled to 14,625 ft in 692 ft of water, is in the Flex trend area and has tapped into an estimated 40 bcf of gas reserves, says operator Kerr-McGee. The partners will develop the well as a subsea tieback to an existing production facility on the shelf.


Benton Oil & Gas Co.,
Carpinteria, Calif., formed a long-term, incentive-based alliance with Schlumberger Oilfield Services to further develop Uracoa field in Benton's oil-producing South Monagas unit in eastern Venezuela. Once a formal agreement is signed, the partners will begin to infill drill and initiate programs to optimize operations with an eye to increase production 20%/year over the next 2 years, from current stabilized production of about 25,000 b/d of oil. As part of the alliance agreement, Schlumberger will contribute up to four professionals-to include a drilling engineer, a completion engineer, and a reservoir engineer-who will work full-time until production goals are met. The partners have chosen Helmerich & Payne as their drilling contractor for the development program.

decided to take part in the liquids-recovery phase of the Phillips Petroleum Pty. Ltd.-operated Bayu-Undan project in the Timor Gap area between Australia and Indonesia. The $1.4 billion liquids phase is expected to come on stream in 2004 (OGJ, Nov. 8, 1999, p. 34). The project involves producing and processing natural gas, separating and exporting condensate and LPG, and reinjecting lean gas into the reservoir. The facilities are being designed to process 1.1 bcfd of raw gas and extract 110,000 b/d of condensate and LPG. The liquids will be stored in a floating production, storage, and offloading vessel stationed at the field and loaded from there onto offtake charter vessels for the journey to market. Future recovery and export of sales gas could comprise a second phase.

Global Marine Inc.,
Houston, agreed to provide financial assistance to Harland & Wolff Shipbuilding & Heavy Industries Ltd. to ensure completion of two drillships, the Glomar C.R. Luigs and the Glomar Jack Ryan, in exchange for certain assurances by the shipbuilder and its parent. Global will release two cash-collateralized letters of credit, giving Harland & Wolff access to $40 million. In addition, Global will advance the shipbuilder $93 million above the drillships' $315 million contract price and advance amounts equal to half of subsequent cost overruns until Global's total advances reach $106 million. If the maximum advances are reached, then the shipbuilder's parent, Fred Olsen Energy ASA, will provide all additional funds necessary to complete the drillships. The new agreement will not delay the drillships' expected delivery dates.


TotalFina SA
acquired a 15% interest in Shell Gas Eastern Inc., which owns an LPG import and storage terminal at Tabangao, the Philippines. This is the only refrigerated butane and propane storage facility in the Philippines and has a combined storage capacity of 50,000 tonnes. TotalFina said its acquisition, through unit Total Philippines Corp., is intended to enable the firm to enter the Philippines market and provide logistical support for its other LPG marketing operations in Southeast Asia.


Sable Offshore Energy Inc.
(SOE) completed work with the Saipem 7000 heavy lift crane vessel and the Solitaire pipelay vessel at its natural gas project off Nova Scotia. SOE plans to focus on the testing and commissioning of offshore processing platforms and testing gas and fractionation plants and a number of its wells. The project, which will deliver gas via pipeline to New England and Atlantic Canada markets, is slated to be on stream this month, subject to final approval by Canada's National Energy Board. NEB could allow the project to proceed after Nov. 17, while a dispute between area aboriginals and SOE is resolved.

Caspian Pipeline Consortium
(CPC) began laying the pipe for a new oil pipeline in Russia that will connect western Kazakhstan to the Russian port of Novo- rossiisk on the Black Sea (OGJ, Nov. 22, 1999, p. 40). The pipe will be laid in a new 450-mile section, which will extend from Komsolmoskya, Russia, to Novorossiisk. CPC equity interest holders are: Russia, 24%; Kazakhstan, 19%; Chevron Caspian Pipeline Consortium Co., 15%; Lukarco BV, 12.5%; Rosneft-Shell Caspian Ventures Ltd., 7.5%; Mobil Caspian Pipeline Co., 7.5%; Oman, 7%; Agip International (NA) NV, 2%; BG Overseas Holdings Ltd., 2%; Kazakhstan Pipeline Ventures LLC, 1.75%; and Oryx Caspian Pipeline LLC, 1.75%.

Blue Stream Pipeline Co. BV,
a 50-50 joint venture of Russian gas giant Gazprom and Italian state energy company ENI SPA, let a contract valued at about $1.7 billion to Saipem SPA, Bouygues SA, and a combine of Mitsui Co. Ltd., Sumitomo Corp., and Itochu Corp. for design, engineering, procurement, and construction of the offshore section of the proposed Blue Stream pipeline across the Black Sea. Blue Stream will transport 16 billion cu m/year of Russian gas to Turkey via two 380-km subsea pipelines traversing the Black Sea at a maximum water depth of 2,150 m. First gas delivery is slated for 2001, after the first line is laid; construction of both lines is to be completed in 2002. Gazprom and Turkish state pipeline firm Botas will build and operate the respective Russian and Turkish onshore sections of the Blue Stream system.

Iroquois Gas Transmission System LP
is holding an open season until Dec. 17 for delivery of natural gas into the New York City area. To meet the needed supply, Iroquois intends to lay a 29-mile extension of its mainline, dubbed Eastchester, which will extend from Northport, Long Island, beneath Long Island Sound, to a new interconnect with Consolidated Edison in the Bronx. If there are sufficient bids to warrant a proposed expansion, Iroquois expects construction to be completed by November 2001.

Epic Energy
is considering spending as much as $300 million (Aus.) to construct a natural gas pipeline through southern Western Australia. Epic plans to capitalize on the company's $2.4 billion investment in the Dampier-to-Bunbury gas trunk line by adding an extension initially to Albany on the southern coast and then possibly on to Raventhorpe and Esperence further east (OGJ, Aug. 24, 1998, p. 34). The project is currently in feasibility stage and would cost $150-300 million to construct over 6-8 years.

Gas processing

Coastal Field Services Co.,
a unit of Coastal Corp., Houston, acquired a natural gas processing plant in Hidalgo County, Tex., from a unit of PG&E Gas Transmission-Texas (PG&E-GTT). Coastal holds 100% ownership of the Gilmore No. 3 plant, located near Edinburg. The Gilmore plant has the capacity to extract about 6,000 b/d of NGL from inlet volumes of up to 125 MMcfd. Coastal will control the plant's upstream and outlet capacity. PG&E-GTT will continue to own and operate the Gilmore Nos. 1 and 2 plants, which have capacity to extract about 6,800 b/d of NGL from combined inlet volumes of up to 140 MMcfd. PG&E-GTT will continue as operator of the No. 3 plant.


Reliant Energy
plans to build a $185-190 million, 340-Mw, gas-fired peaking power plant in Shelby Co., Ill. The plant will consist of eight 45-Mw, natural gas-fired turbines. Construction is expected to begin in January 2000, with start-up expected the following summer.