INDUSTRY BRIEFS

Exploration

Petrofina SA is evaluating commerciality of an oil and gas discovery off Viet Nam. Its 46-DD-1X wildcat on Block 46 in the Malay basin about 130 km southwest of Nam Can flowed 22 MMcfd of gas and 3,000 b/d of oil from two Miocene intervals at undisclosed depths. Petrofina holds 75% interest in the block and Japan's Sodec 25%. State owned Petrovietnam may acquire as much as a 15% stake if partners opt to develop the field.

Pakistan's Oil & Gas Development Corp. and Polish Oil & Gas Co. signed a memorandum of understanding for joint exploration in Bitrism district of Pakistan's Sindh province. They plan to collect and interpret seismic data and drill 13 exploratory wells.

Exxon Neftegaz Ltd. let contract to a venture of Petroleum Geo-Services ASA, Houston and Oslo, and Dalmorneftegeofizika Trust (DMNG) for a 3D seismic survey of the Sakhalin I and Sakhalin III production sharing areas off Sakhalin Island, Russia. DMNG's Orient Explorer has begun collecting data, to be processed onboard the seismic vessel using IBM parallel supercomputers and PGS 3D seismic software. The Russian government in June formally approved the $15 billion Sakhalin I project (see related story, p. 38).

Gas processing

South Australia's Cooper basin producers completed construction of an ethane concentrate plant at Moomba gas processing complex that is to provide 152 bcf of ethane feedstock for 10 years to ICI Australia Ltd.'s polyethylene plant at Botany, N.S.W., via a 1,375 km pipeline built under management of East Australia Pipelines Ltd. Value of the deal to the Cooper basin producers' group is about $400 million. Cost of Moomba ethane production and storage facilities is about $179 million and of Moomba-Botany pipeline $240 million.

Nigerian National Petroleum Corp. expects to approve this month a proposed $318.43 million contract for construction of a gas treating plant to a group of Japanese and Italian companies. The plant, slated for start-up May 1, 1999, will provide enough treated dry gas to supply 53.33% of the 931 MMcfd of gas required by Nigeria's proposed $3.8 billion Bonny liquefied natural gas export project.

Petrochemicals

Mitsubishi Gas Chemical Co. and partners will abandon a project to produce methanol from natural gas in Australia. Drilling since 1990 in northern Queensland has failed to yield adequate reserves for the project, and the company cited weaker than expected methanol prices. Mitsubishi, with 73.33% of MGS Resources Australia Pty. Ltd., and Itochu Corp. and Japan Exploration Co. splitting the remaining interests equally, will liquidate the company by March-about when methanol production was originally slated to begin.

Exxon Chemical Americas let contract to Jacobs Engineering Group Inc., Pasadena, Calif., for construction of a $45 million xylene recovery project at Exxon's Baton Rouge, La., petrochemical complex. The project includes a new unit and modifications to existing ones. As part of the upgrade, Jacobs is to move a 100 ft wide storage tank with a process that uses air bags to lift an object before towing.

Companies

Basis Petroleum Inc. and Howell Corp., Houston, agreed in a letter of intent to combine crude oil gathering, marketing, and transportation operations into a master limited partnership (MLP) to be offered to the public later this year. Basis, a unit of Salomon Inc., New York, would own 54% of the MLP, Howell, 46%. Combined assets are in Texas, New Mexico, Louisiana, Oklahoma, Mississippi, Alabama, and Florida.

Seagull Energy Corp. and Global Natural Resources Inc. agreed to merge, creating a $1.5 billion company. The deal would combine Seagull core areas in the Gulf of Mexico, U.S. Midcontinent and mid-South regions, Canada, and the U.K. with Global Natural's holdings in the Gulf of Mexico, U.S. Gulf Coast, Egypt, Cote d'Ivoire, Indonesia, and Tatarstan. The combined Houston companies would have production of almost 400 MMcfd of gas and more than 16,000 b/d of oil and condensate and proved reserves of 1.2 tcf of gas and 70 million bbl of liquids as.

Seagull agreed to pay about $168 million in cash and receivables to acquire Esso Suez Inc. (ESI) and certain assets of Esso Egypt Ltd. (EEL), including ESI's East Zeit concession producing 16,000 b/d of oil in the Gulf of Suez off Egypt and EEL's 63,000 acre South Hurghada exploration concession, which has two oil discoveries and further potential about 250 miles south of Cairo on the Gulf of Suez coast.

Drilling-production

Elf Petroland BV began production from L7H Southeast gas field on Block L7 off the Netherlands in the North Sea from the field discovery well, completed in June after drilling from L7H platform, a satellite of the Block L7 central gas processing complex. About 70 MMcfd of gas is flowing to shore from the Block L7 complex through Noord Gas Transport pipeline.

Algeria provisionally approved development plans by a group led by Anadarko Petroleum Corp., Houston, for Hassi Berkine and Hassi Berkine South fields on Block 404 in Southeast Algeria. That allows partners to proceed with design and construction of first phase facilities. Interests are operator Anadarko Algeria Corp. 50% and Lasmo Oil (Algeria) Ltd. and Maersk Olie Algeriet AS 25% each.

Swift Energy Co., Houston, McDermott International Inc., New Orleans, and MOL Hungarian Oil & Gas Co., Budapest, formed an equal partnership to develop Russia's Samburg and Evo Yakha fields in western Siberia. Partners aim to form a Russian joint stock company (JSC) with Russian JSC Senega that could lead to development of as much as 700 million bbl of oil and condensate and 7.5 tcf of gas in Samburg license area. Initial work on the tract involves plans for a 2 year, $60-70 million program to recover as much as 69 million bbl of liquids and 1 tcf of gas.

Sonat Exploration Inc., Birmingham, Ala., is producing about 89 MMcfd of gas equivalent from two wells on High Island Block 39 off Texas in the Gulf of Mexico. Sonat's B1 well, which came on line in February, is producing 24 MMcfd of gas and 270 b/d of condensate from Miocene at 14,800 ft. The B2 well, which began producing in June, is contributing 61 MMcfd of gas and 450 b/d of condensate from a Miocene interval at 11,500 ft. Sonat holds 100% interest in both wells.

Hyundai Heavy Industries, Seoul, hired Enercon Engineering Inc., Houston, to design the deck and topsides for China National Offshore Oil Corp.'s development of Pinghu oil and gas field in about 287 ft of water in the East China Sea about 250 miles southeast of Shanghai. Enercon is to provide detailed structural, mechanical, electrical, and instrument designs for the platform deck and facilities, including living quarters for a crew of 90 and a production system capable of handling 21,000 b/d of oil and 57 MMcfd of gas.

Gulf Canada Resources Ltd., Calgary, completed acquisition of Pennzoil Co.'s western Canada oil and gas assets, paying about $184 million for properties in Alberta and British Columbia with net production of about 5,500 b/d of liquids and 34 MMcfd of gas and net reserves of about 35 million bbl of oil equivalent. In addition, Gulf Canada and Pennzoil formed a 50-50 joint venture to develop gas in Alberta's Zama-Virgo area.

Russia awarded a development license to Total for development of Khariaga oil field, north of the Arctic Circle in Nenets autonomous territory of Komi republic about 100 miles east-southeast of Nar'yan Mar. Total, seeking a long term contract to transport Khariaga oil through Russia's pipeline system, expects outlays of about $1 billion on the project, with production to peak at about 50,000 b/d.

Shell U.K. Exploration & Production let a 4 year production services contract for development of Curlew field on Block 29/7 in the U.K. North Sea to Maersk Co. Ltd., U.K. The pact covers subsea installations and a gas export pipeline for tie-in to Fulmar gas pipeline; a floating production, storage, and offloading (FPSO) vessel capable of producing 45,000 b/d of oil and 100 MMcfd of gas and storing as much as 560,000 bbl of crude; and operation of the FPSO and subsea facilities. First oil from Curlew is expected in fall 1997.

Well control specialists capped a horizontal gas well near Dime Box, Tex., nearly a week after it exploded and killed two men July 13 during reentry drilling with a rig owned by operator WCS Oil & Gas Inc., Dallas (OGJ, July 22, Newsletter). Joe Bowden's Wild Well Control Inc., Spring, Tex., July 19 extinguished the fire at 1A Marshall-Westbrook with three 1,500 gpm water jet cannons. Texas Railroad Commission, while investigating the incident, allowed WCS to begin producing the well with the drill pipe still in the well bore.

A group of foreign contractors led by Schlumberger agreed to secure financing for construction of production facilities valued at $150 million for Nigeria's Amni International Petroleum Development Co. This is in addition to a $30 million loan from a U.K. bank intended for Amni's development of oil discoveries on licenses OPL 469 and 237 in Nigeria. Production is scheduled to start up by yearend and build to 35,000 b/d of oil. Other contractors participating in the project financing scheme include Dresser Rand, Sedco Forex, Saipem-Bouygues, Norway's Taggart Shipping, and Switzerland's SBM.

Pipelines

Petroleo Brasileiro SA signed a memorandum of understanding with British Gas plc, BHP Petroleum Pty. Ltd., and Tenneco Energy to build a $1.8 billion pipeline to transport gas from Bolivia to Southeast Brazil. Construction is to begin next year, and first gas supply is scheduled for late 1998. Another $1.6 billion is to be spent to build gas fired power generation plants, $800 million more on proving and developing Bolivia's gas reserves, and $400 million more on expanding Brazil's gas distribution network.

Egypt and Libya agreed to jointly lay a 600 km pipeline to transport Libyan crude from Tobruk to Alexandria. The 3 year, $300 million project is to begin early next year.

Enron Global Power & Pipelines LLP and Perez Companc agreed to acquire a 25% interest in Argentina's Cia. de Inversiones de Energia SA (Ciesa) from Argentina Private Development Trust Co. Ltd., boosting Enron Global's holding in Ciesa to 331/3-371/2% and Perez Companc's share to 371/2%. Cia. de Inversiones de Transporte en Gas SA will retain 25% interest in Ciesa and Enron Corp. any remaining interest. Ciesa owns 70% of Transportadora de Gas del Sur SA, Argentina's largest gas pipeline, which operates a 4,104 mile, 1.9 bcfd system.

Cogeneration

Italy's ISAB Energy, a joint venture of ERG SpA, Genoa, and Edison Mission Energy, Irvine, Calif., let a $730 million contract to a venture of Snamprogetti SpA and Foster Wheeler Italiana SpA to build an integrated gasification combined cycle cogeneration power plant alongside ISAB's Priolo Gargallo, Sicily, refinery, where it will convert high sulfur heavy oil residue into synthetic gas to generate electricity and steam. Construction is to take 40 months.

LNG

Atlantic LNG Co. of Trinidad & Tobago selected Phillips Petroleum Co.'s proprietary LNG technology for a 3 million metric ton/year LNG export project in Trinidad, the first baseload LNG plant built in the Western Hemisphere since 1969 (OGJ, July 8, p. 36). Output of the LNG complex is to be exported to markets in the U.S. Northeast and Spain. Phillips' LNG process uses propane, ethane, and methane to progressively cool and compress gas into a liquid state.

Qatar Liquefied Gas Co. (Qatargas) let contract to Babcock King-Wilkinson Ltd. for engineering, management, inspection, and construction services for the operation, maintenance, and upgrading of a 4 million metric ton/year LNG plant being commissioned in Qatar. Facilities for the project-the second fed by North Dome offshore gas field-include offshore production platforms, an 80 km subsea pipeline, onshore gas treatment and liquefaction plant, and LNG tanker loading equipment. First shipment of LNG from the facility, which is expandable to 6 million tons/year, is due early in 1997.

Government

U.K. gas industry regulator Office of Gas Supply (Ofgas) delayed a month to mid-August disclosure of final proposals for gas pipeline transportation prices. When Ofgas revealed plans to cut U.K. residential gas bills through cuts in transportation costs, British Gas complained its transportation division would have to lay off as many as half its employees as a result (OGJ, May 20, Newsletter).

Courts

A state district court jury in Tulsa awarded Occidental Petroleum Corp. unit Oxy U.S.A. $742 million in compensatory damages and interest regarding breach of a 1982 merger agreement between Oxy U.S.A. predecessor Cities Service Co. and Gulf Oil Corp. Chevron later acquired Gulf, inheriting the lawsuit. The case was in abeyance until April 1996 pending completion of actions brought by Cities shareholders.

Copyright 1996 Oil & Gas Journal. All Rights Reserved.