INDUSTRY BRIEFS

Petrochemicals

Bataan Polyethylene Corp. (BPC) plans to build the Philippines' first polyethylene plant, a $200 million, 200,000 metric ton/year project at Limay, Bataan, slated to start up in 1998. BPC is a venture of Bataan Polyethylene Holding Corp. 50%, BP Chemicals Ltd. 30%, and Philippines National Oil Co. and Japan's Sumitomo Corp. 10% each. The venture also agreed with state owned refiner/marketer Petron and Petroleum Corp. of Asia Pacific (Petrocorp) to study feasibility of building a naphtha cracker at the site to provide feedstock for the polyethylene unit and a 160,000 ton/year polypropylene plant Petrocorp is building and expects to bring on stream by yearend.

Montell Polyolefins, a venture of Shell International Chemicals Ltd. and Montedison SpA, will build two petrochemical plants at Yanbu, Saudi Arabia, in partnership with local firms. Interests will be Montell 50% and Natpet, a group of Saudi investors led by Xenel Industries Ltd., 50%. The Alfasel project is a 250,000 metric ton/year propylene plant to be fed by Saudi Aramco propane. The Teldene project involves a 240,000 ton/year Spheripol polypropylene resin plant adjoining Alfatel. Both are to start up in first quarter 1999.

Refining

U.S. Commerce Department's Foreign Trade Zones Board (FTZ) received an application to grant Exxon Corp.'s 400,000 b/d Harris County, Tex., refinery complex FTZ status. The board also is considering Sun Co. Inc.'s request to expand FTZ status of its Philadelphia refinery.

Drilling-production

Sonat Offshore Drilling Inc., Houston, confirmed its Offshore Bahram cantilevered jack up sank intact in 40-50 ft of water while under tow from Ras Gharib Bay in the Gulf of Suez off Egypt Jan. 25. The rig was being moved to be stacked and was not under contract at the time. All personnel were evacuated safely. Sonat is investigating the cause of the accident and studying options on future use or disposition of the rig.

Gulf Canada Resources Ltd. and Talisman Energy Inc. secured financing of $450 million from a group led by Itochu Corp. for their $600 million Corridor Block gas project in Sumatra. The two Calgary firms will produce and ship 300 MMcfd from their Corridor Block production sharing contract to displace crude burned for steamflooding in giant Duri oil field and generate power on Batam Island. Plans also call for a 540 km pipeline to Duri and a 280 km spur to Batam costing a combined $600 million. Work is to begin in first half 1996, with start-up set for late 1997 and peak output by mid-1998.

Vanguard Petroleum Ltd., London, said its Russian venture Magma Oil secured a production license for western Siberia's Orekhovskoye oil field, 25 km northwest of Magma's Yuzhnoye oil field. There, Magma laid a 35 km twin oil and gas pipeline to Yermakovskoye field, which is linked into the Russian oil distribution grid. Yuzhnoye produces 3,000 b/d of oil. Vanguard also wants to further develop producing Nezhdennoye oil field southeast of Yuzhnoye and tie the two fields in with Orekhovskoye development. Yuzhnoye development is stalled pending an export tax exemption.

Arch Petroleum Inc., Fort Worth, started a seven well pilot infill program in Teague Blinebry oil and gas field in Lea County, N.M. Arch estimates that halving well spacing to 20 acres and drilling as many as 40 more wells will add about 1.9 million bbl of oil and 8 bcf of gas to the field's primary reserves. Initial average production from each of the first three wells completed in the program was 115 b/d of oil and 525 Mcfd of gas.

Norway's Den norske stats oljeselskap AS let a $40 million contract to Transocean AS, Tananger, Norway, to charter the Ross Rig semisubmersible drilling rig for 12 months off Norway. The rig is working for Saga Petroleum AS in the Norwegian Sea and near the end of March will enter a yard for classification work prior to starting work for Statoil.

Dana Petroleum plc, London, raised more than $16.5 million through a share offering to fund further development work in Russia. Dana is a partner in a venture producing from Vat-Yoganskoye oil field in western Siberia and planning development drilling this year in South Vat-Yoganskoye field (OGJ, Oct. 30, 1995, p. 12).

Mobil Corp. replaced 106% of its oil and gas production with additions to reserves in 1995, excluding asset sales and purchases. This breaks out as 85% replacement of liquids and 126% replacement of gas. Additions to proved reserves in 1995 totaled 617 million bbl of oil equivalent (BOE), while production was 590 million BOE. Proved reserves at yearend 1995 were 6.613 billion BOE, up 27 million BOE from 1994. Mobil's operations outside North America contributed most of the growth in reserves, replacing 124% of production. North American operations reached 76% replacement.

Poco Petroleums Ltd., Calgary, agreed to acquire Amoco Canada Petroleum Ltd.'s interests in Alberta's Swan Hills oil field for $145 million (Canadian). The sale involves Amoco's 46.4% interest in South Swan Hills Unit No. 1, 15.1% of Swan Hills Unit No. 1, and an interest in the Judy Creek treating plant. Swan Hills produces about 6,800 b/d of oil, 2,700 b/d of natural gas liquids, and 6 MMcfd of gas. In addition, Poco agreed to buy 6,000 net acres of leases and an undisclosed volume of production from Harmattan gas field southeast of Caroline, Alta., from an undisclosed buyer. Harmattan produces about 24 MMcfd of gas and 900 b/d of NGL.

Elf Enterprise Petroleum Ltd., the U.K. operating venture owned two thirds by France's Elf Aquitaine and one third by London's Enterprise Oil plc, is being split between the parent companies. Elf Enterprise was formed in May 1991 to take over the U.K. operating assets of Occidental Petroleum Corp. for $1.35 billion when Oxy pulled out of the North Sea. With the deal, Elf Enterprise assumed operatorship of U.K.'s Piper, Saltire, and Claymore fields and Flotta oil terminal. Elf will be operator and Enterprise a license partner in the operated fields and terminal, with each company's direct interests reflecting the venture split.

Companies

Chevron Corp. will appeal an Oakland magistrate's finding that documents in an Indonesian tax case indicate alleged criminal action. The case, under inquiry by the Internal Revenue Service, involves about $1.4 billion in taxes Chevron paid Indonesia in 1983-87. For many years, Chevron said, IRS concurred with an agreement among U.S. Treasury and State departments, Jakarta, and the oil industry that such taxes could be taken as a credit against U.S. taxes due on foreign income. In 1993, the IRS sought to reinterpret the agreement, which Chevron and other U.S. firms are challenging.

Pipelines

TransCanada PipeLines Ltd. and MCN Corp. unit MCN Investment Corp. agreed to join the Portland Natural Gas Transmission System (Pngts) as shippers and equity partners. Pngts, a 250 mile, $230 million pipeline designed to connect with TransCanada's system near Jay, Vt., and with Tennessee Gas Pipeline's system at Haverhill, Mass., is slated to go on stream in November 1998 with initial throughput of 175 MMcfd. TransCanada and MCN agreed to a combined 40% interest and 60 MMcfd of firm capacity. Pngts partners are led by a unit of New England gas distribution firm Bay State Gas Co.

Petroleo Brasileiro SA let a $67 million contract to Stolt Comex Seaway SA, Aberdeen, for deepwater pipelaying in the Campos basin off Brazil. The 3 year contract calls for laying of flexible flow lines and provision of diving and remotely operated vehicle support in water depths to 450 m. Work will begin in September.

Thailand let an $18 million consulting contract to units of NOVA Corp., Calgary, for a $400 million natural gas pipeline in western Thailand. NOVA Gas International Ltd. and its 40% owned Malaysian subsidiary OGP Technical Services Sdn. Bhd. will manage engineering, procurement, and construction of a 161 mile pipeline that will transport as much as 525 MMcfd from a subsea pipeline to be laid to a gas development project off southern Myanmar.

Federal Energy Regulatory Commission was asked to expand its inquiry into alternatives to traditional cost of service pipeline ratemaking. The Natural Gas Supply Association sought the action, saying there are problems surrounding "capacity turnback," which occurs when firm service customers do not renew their pipeline contracts.

NEB granted approvals to two pipelines for complementary system expansions. Interprovincial Pipe Line Inc., Edmonton, will add pump horsepower and related facilities to support an $86 million (Canadian), 120,000 b/d expansion of its crude oil line. Slated for completion by yearend. the project includes added storage at IPL's Hardisty, Alta., and Cromer, Man., terminals. Westspur Pipeline Co., Regina, will lay a 21 mile line from its Steelman terminal in Saskatchewan to the U.S. border near North Portal, Sask. Scheduled for completion in third quarter 1996, the project will include pump additions and modifications to hike Westspur capacity by 50,000 b/d.

Exploration

British Gas plc let contract to PGS Exploration AS, Oslo, to acquire 2,100 sq km of 3D and 900 line km of 2D seismic data over the Rosetta and West Delta Marine blocks in the Nile Delta area of the Mediterranean Sea off Egypt. PGS will conduct the survey in the first quarter using the Ramform Explorer seismic vessel (OGJ, Aug. 28, 1995, p. 72).

Australia's Victoria Petroleum NL and Lakes Oil NL each will take a 50% interest in license area ATP560P in southern Queensland from title holder Oil Wells Inc. of Georgia in the U.S. The 96 sq km block in the Cooper-Eromanga basin contains the McIver prospect. For the license, Victoria and Lakes will pay Oil Wells' past exploration costs of about $750,000. Operator Victoria plans to drill the 1 McIver wildcat by the end of March.

Chevron U.K. Ltd. plans to drill two wildcats this spring in about 40-50 ft of water on U.K. Irish Sea Block 110/18 off Northwest Wales and gather seismic data off Southwest Wales. The block lies south of Block 110/13, where BHP Petroleum Ltd. recently started up four fields under its Liverpool Bay development project. The two targeted structures, Prestatyn and Conway, are 3 miles apart at depths of 6,000 ft and 3,300 ft, respectively. At the end of January, Chevron was to begin a 560 sq mile, 4-6 week, 3D seismic survey covering Blocks 106/24, 106/25, and 106/30a.

Coplex Resources NL, Hobart, Tasmania, agreed to acquire from Shell Oil Co. unit Pecten International an added 25% working interest in the North Sanau block in Yemen in exchange for a royalty interest of as much as 0.865%, or $5 million, in Philippines license GSEC 72 in Manila Bay. This boosts the Coplex interest in North Sanau to 37%.

Marketing

Sweden's OK Petroleum AB grouped 130 of its service stations plus outlets bought from Texaco Inc. to form a retail chain of 500 stations under the name Preem Petroleum AB. The new chain will claim about 11% of Sweden's products market, while the main OK chain of 550 stations will account for about 14%.

Spills

U.S. Coast Guard asked the public to comment on penalties to be assessed against a number of companies for oil spills in the Gulf of Mexico. It said Greenhill Petroleum Corp., Blake Drilling & Workover Co. Inc., and Mike Hicks Tools & Services spilled 2,286 bbl of oil in Timbalier Bay in September 1992, and Shell Offshore Inc. and Shell Pipeline Co. spilled 4,190 bbl of oil from the Hobbit pipeline near Ship Shoal Block 281 in November 1994.

U.S. Coast Guard adopted a final rule setting oil spill response plan requirements for tankers. The rule also sets additional oil spill cleanup standards for tankers and facilities operating in Alaska's Prince William Sound.

Gas measurement

American Petroleum Institute, American Gas Association, and Gas Processors Association want the U.S. gas producing and transmission industries and manufacturers to help them revise the industry's orifice meter standard, which is used to measure $30 billion/year in U.S. natural gas transfers. API said the effort stems from research, mainly through the Gas Research Institute, to improve the accuracy of orifice meters. The revised standard is to be published in 1997.

Exports-imports

Canada's NEB approved three gas export applications and one extension covering combined volumes of 248.6 bcf. Altresco Pittsfield LP received a 16 year license for 31.5 MMcfd for a cogeneration plant at Pittsfield, Mass.; Crestar Energy Ltd. a 5 year license for 6.3 MMcfd from Monchy, Sask., to Minnesota's Northern States Power; and Enron Capital & Trade Resources Corp. a 10 year license for 15 MMcfd from Iroquois, Ont. NEB also approved a Husky Oil Operations Ltd. application extending its export license by 2 years to Oct. 31, 2006, and covering 15.1 MMcfd from Emerson, Man., to Midland Cogeneration Venture Ltd. Partnership at Midland, Mich.

Associations

Canadian Association of Petroleum Producers and Petroleum Services Association of Canada formed an alliance to better represent members on issues of common concern. Involved are cross representation on association committees and collaborative management of issues, including government action and industry standards, practices, and trends.