INDUSTRY BRIEFS

Exploration

Tight gas sands in Northern Ireland will be targeted by two Denver companies experienced in Colorado's Denver basin. Morrice & Associates Ltd. and Priority Oil & Gas LLC applied for exploration licenses in Fermanagh, Armagh, and Tyrone counties, N.I., reported Arthur Andersen Petroleum Services Ltd. Drilling in the 1960s and 1980s tapped small amounts of gas at 2,000-7,500 ft in the area's Northwest Carboniferous basin. If licenses are granted, drilling is expected in 1997.

Refining

Nippon Oil Co. closed its purchase of Caltex Petroleum Corp.'s 50% interest in Nippon Petroleum Refining Co. (NPRC) for $2 billion. Nippon Oil now is 100% owner of NPRC, which operates five refineries in Japan. Nippon Oil and Caltex created the NPRC venture in 1951.

Mitsui & Co. will lend Petroleos Brasileiro SA $210 million to buy a diesel hydrodesulfurization unit to be installed at one of its refineries in Sao Paulo province, Brazil.

Petrochemicals

Argentina's YPF SA and Shell Cia. Argentina de Petroleo SA are in the final stages of engineering studies for construction of a polyethylene terephthalate plant in Buenos Aires. The plant, of undisclosed capacity, is to be on stream in 1998.

Oilsands

Alberta is seeking buyers for its 10% interest in the shelved Other Six Lease Operations (OSLO) oilsands mining project near Fort McMurray, Alta. OSLO is a $4.1 billion, 77,000 b/d (Canadian) oilsands project proposed in 1988 but shelved in 1991 because of an outlook for low oil prices. Alberta's partners in OSLO are Imperial Oil Ltd. 25%, Canadian Occidental Petroleum Ltd. 20%, Petro-Canada 15%, Gulf Canada Resources Ltd. 20%, and PanCanadian Petroleum Ltd. 10%. The OSLO group sold some of its leases to Syncrude Canada Ltd. in 1995.

Taxes

Imperial Oil Ltd., Toronto, won a tax refund of $843 million (Canadian), including interest of $500 million, from Ottawa for overpayment of resource allowance taxes during 1974-90. The refund is related to a 1992 court ruling in favor of Gulf Canada Resources Ltd., Calgary, on a resource allowance formula. Imperial is one of six oil and mining companies that have settled such claims. There are 24 large resource firms still negotiating settlements with Ottawa and claims involving about 100 smaller firms to be dealt with after major claims are settled.

Drilling-production

Itochu Oil Exploration Co. Ltd. signed a definitive agreement to buy about half of Pennzoil Co.'s interest in the Azeri-Chirag-Guneshli field development unit off Azerbaijan in the Caspian Sea. Itochu will pay Pennzoil about $132 million cash for a 5% interest in the unit and the right to receive 51% of payments due Pennzoil for reimbursement of gas utilization project costs. Pennzoil will retain a 4.8175% working interest in the unit. Itochu will fund all of Pennzoil's obligations in the $8-9 billion project until all outlays and accrued interest are recovered from Pennzoil's share of production from the unit (OGJ, Mar. 11, p. 104).

Kelt Cameroon unit of Perenco plc, London, KF-2 appraisal well on its Kribi concession off Cameroon flowed 9,800 b/d of 33.5-36 gravity oil from three zones in a lower Cretaceous reservoir. Kelt will continue appraising its Kribi discovery with a view to development. Kribi partners are operator Kelt 30%, Mobil Producing Cameroon Inc. 45%, and state owned Ste. Nationale des Hydrocarbures 25%.

Total SA and partners tested an appraisal well on a Badamyar sands structure next to Yadana gas field in the Andaman Sea off Myanmar, interest owner Unocal Corp. reported. The 1 Badamyar well, drilled to 3,676 ft, cut about 170 ft of gas pay in upper Miocene Badamyar sands overlying the main Yadana reservoir. Three drillstem tests flowed a combined 32 MMcfd through 40/64 in. choke. The well is the second of a six well 1996 program on Moattama Blocks 5 and 6 by the Total group. Unocal said the Badamyar and nearby Sein discovery could easily be developed from Yadana platforms.

U.S. Minerals Management Service hired Tetrahedron, a Baltimore engineering consulting firm, to conduct a 9 month study on blowout preventer (BOP) equipment and the testing frequency it requires. The U.S. offshore oil industry had urged MMS to consider changes for BOP equipment. American Petroleum Institute, Independent Petroleum Association of America, International Association of Drilling Contractors, National Ocean Industries Association, and Offshore Operators Committee are participating in the study and underwriting half its $100,000 cost.

Norway's Den norske stats oljeselskap AS said a strike by workers on its Yme converted jack up/producing/storage system off Norway halted production only weeks after oil flow began (OGJ, Mar. 18, p. 42). The strike involves 20 Schlumberger Norge AS workers seeking the same pay and conditions as crews on Norway's permanent platforms. Statoil said Yme production had reached 14,000 b/d when the dispute began, but drilling and construction work is not affected.

North Sea Production Co., a venture of SLP Engineering Ltd. and Maersk AS developing MacCulloch field on behalf of operator Conoco (U.K.) Ltd., let contract to Coflexip Stena Offshore Ltd., Aberdeen, for construction and installation of subsea facilities. The U.K. Block 15/24b field is to be developed using a production/storage ship with oil and gas shipped via Piper B platform. Separately, Piper B platform operator Elf U.K. plc let contract to Coflexip Stena for construction and installation of two 35 km pipelines-a 10 in. oil line and a 6 in. gas line-from Piper field to MacCulloch. All installation work is to be complete this year.

Norsk Hydro AS let contract to Expro North Sea Ltd., Aberdeen, to conduct an extended test on its Block 25/11 Hermod discovery off Norway. The test will take place in April-June. Expro will supply and operate its 5 in. bore subsea test tree to deliver as much as 20,000 b/d of 19 gravity crude oil for tanker export.

BP Exploration Operating Co. Ltd. let a $62 million contract for installation of subsea development facilities and pipelaying for its seven field Eastern Trough Area Project (ETAP) to ECS, a venture of European Marine Contractors Ltd., New Malden, U.K., and Coflexip Stena Offshore Ltd., Aberdeen. Offshore work , to begin this year and end in 1998, will involve installation of oil and gas export lines, in field pipelines, drilling templates, subsea manifolds, and a wellhead protection structure. ETAP is to start up in second half 1998 (OGJ, Jan. 22, p. 21).

Texaco North Sea U.K. Co. installed a platform jacket in 300 ft of water in U.K. Block 23/26a Erskine field, the first high temperature/high pressure reservoir to be developed in the North Sea. An unmanned platform will produce through six wells, with production sent unprocessed through a 16 in. pipeline to Lomond platform operated by Amoco (U.K.) Ltd. First production is slated for October 1997. A 1,200 metric ton topsides with capacity of 120 MMcfd of gas and 29,600 b/d of condensate will be installed in April 1997.

Amerada Hess Ltd. chartered a production/storage vessel for use in developing its Durward and Dauntless discoveries on adjacent Blocks 21/16 and 21/11, respectively, in the U.K. North Sea. Bluewater Offshore Production Systems, Essen, Belgium, will purchase and convert a tanker for the project and operate it during production. Contracts are conditional on Department of Trade & Industry approval for Amerada's development plan, expected this month. First oil is slated for first quarter 1997, with exports by shuttle tanker. Reserves are estimated at 100 million bbl of oil for Dauntless and 40-50 million bbl for Durward.

Seagull Energy Corp., Houston, signed a definitive agreement to purchase a package of producing oil and gas leases, undeveloped reserves, seismic data, and 180,000 net undeveloped acres of leases in western Oklahoma, West Texas, and the Texas panhandle from several private companies for $26.1 million. Proved reserves are estimated at 30 bcf of gas equivalent, and production is about 10 MMcfd of gas and 200 b/d of liquids from about 186 wells. Future development work could involve more than 30 wells plus recompletions.

B.C. Gas Inc., Vancouver, B.C., wants to sell its Calgary unit Inland Gas & Oil Ltd. Inland has production of 1,300 b/d of liquids and 16 MMcfd of gas and reserves of 3.4 million bbl of liquids and 73 bcf of gas.

Safety

U.K. Health & Safety Commission's (HSC) new rules for design and construction of offshore installations and wells will take effect June 30. The new rules complete most of HSC's review of offshore safety legislation following recommendations of the Cullen report on the 1988 Piper Alpha platform blast (OGJ, Feb. 14, 1994, p. 25).

HSC published a comparative assessment of advanced techniques for evaluating confidence levels in calculated safety margins. The report details the mathematical technique and compares its performance in five test problems, including a simulation of a hydrocarbon jet fire, with the more familiar Monte Carlo method.

Pipelines

Amoco Norway Oil Co. let a $15.1 million contract to Allseas Marine Contractors SA, Chatel-St. Denis, Switzerland, for engineering, construction, and pipelaying in Valhall field off Norway. Allseas is to provide a 241/2 km, 20 in. gas line from Valhall platform to the Norpipe export trunk line. Pipelaying is scheduled for second quarter 1997. Also, Amoco (U.K.) Ltd. awarded Allseas four contracts totaling $21.8 million for work in developing Arkwright field off the U.K. (OGJ, Feb. 19, p. 58).

Canada's National Energy Board approved a settlement for tolls on the British Columbia gas pipeline operated by Westcoast Energy Inc., Vancouver, B.C. Tolls will be increased on the system, which moves gas in British Columbia and to export border points, by about 7.8% retroactive to Jan. 1. The tolls were negotiated between Westcoast and producers, shippers, and marketers. The next step is for the parties to negotiate incentive rate agreements to cut transportation costs, with savings shared by Westcoast and producers.

Companies

ARCO purchased 94,764 bonds convertible into 2.5% interest of voting shares of giant Russian oil company Lukoil for $88.8 million at a Mar. 29 auction in Russia. The bonds are to be converted into 16.1 million voting shares Apr. 6, giving ARCO 8.8% of Lukoil voting shares and about 8% of its total equity. Last September, ARCO spent $250 million to purchase 241,080 bonds convertible into about 41 million voting shares, or 6.3% of Lukoil voting shares and 5.7% of total equity.

Mobil Exploration & Producing U.S. Inc. cut 585 jobs as part of a restructuring in the U.S. The restructuring also affects Mobil Drilling, which will lose 30 jobs as a result. The job cuts are in Bakersfield, Calif., Dallas, Houston, Midland, Tex., and New Orleans.

Conoco Inc. and Enogex Products Corp. agreed to buy substantially all assets of Cimarron Gas Holding Co. from Zapata Corp., Houston, for about $24 million. Conoco will buy Cimarron's Texas assets and Enogex its Oklahoma assets. Cimarron is a natural gas liquids marketing company.

Sceptre Resources Ltd., Calgary, opened a data room for potential buyers to inspect assets after a number of inquiries. A merger or takeover, conversion to a royalty trust, or splitting the exploration and development operations of the company are options. Three Quebec companies, Caisse depot et placement du Quebec, Gaz Metropolitain Inc., and Soquip, hold about 34% of Sceptre shares. The company last year reported flat production, declining reserves, reduced cash flow, and a loss of $2.1 million (Canadian) compared with a profit of $23.9 million in 1994.

Environment

Abu Dhabi National Oil Co. (Adnoc) plans to build Abu Dhabi's first integrated hazardous and toxic waste treatment and disposal facility to handle wastes generated by its 19 operating companies. Working with Acer Environmental, Adnoc is creating an inventory of hazardous and toxic wastes and identifying treatment and disposal options. It will build the facility at Ruwais.

Lubricants

Nippon Oil started supplying lubricants from its Tianjin, China, plant to Nissan's network of Chinese retail outlets, the first time it has supplied products manufactured overseas to a Japanese carmaker. The move is part of Nippon Oil's efforts to expand its foreign business, notably in Asia, in light of increasing domestic competition in refining/marketing with the liberalization of Japan's petroleum import laws effective Apr. 1.

Alternate fuels

A typical plant using a natural gas to diesel process being marketed by Sasol Ltd. and Haldor Topsoe AS would produce 10,000 b/d of diesel from 85 billion cu m/year of gas feedstock, not 1 million b/d as reported (OGJ, Mar. 4, p. 43). Sasol is negotiating with various parties over utilizing the process, said to allow economic development of remote, currently nonviable gas reserves.