Industry Briefs

Energy marketing

Tenaska Inc., Omaha, let contract to the Power Team division of PECO Energy Co., Philadelphia, to market the output of an 800-MW gas-fired merchant power plant at Shiro, Tex., about 65 miles northwest of Houston. Tenaska claims the plant will be the largest merchant power plant in the U.S. Tenaska will construct, own, and operate the plant, scheduled to start up in spring of 2000.

Courts

Second Court of Appeals, Fort Worth, reversed a $204 million damage award against Mitchell Energy Corp., The Woodlands, Tex. Plaintiffs had alleged that Mitchell's oil and gas operations in Wise County, Tex., had affected local water wells. The appeals court said most claims had exceeded the statute of limitations and that all plaintiffs had failed to prove that Mitchell's actions caused the alleged damages.

Drilling-production

A blowout of a natural gas well prompted the evacuation of more than 1,400 people from the Karang Baru subdistrict in Aceh, northern Sumatra, Indonesia. State oil firm Pertamina said its KSB-S4 well encountered a gas kick at 117 ft. When Pertamina attempted to kill the well, gas leaked through 15 small ground seeps near the well. The resulting fissures spread to nearby villages. At presstime, the company had cut the number of leak sites to five. Almost 200 homes were damaged by gas erupting from the fissures.

Woodside Petroleum Ltd.,
Melbourne, let an $80 million (Australian) contract to Atwood Oceanics Australia Pty. Ltd., O'Conner, Australia, for refurbishing drilling facilities on Woodside's North Rankin and Goodwyn North West Shelf gas platforms. The work, scheduled for completion in first quarter 1999, involves modifying drilling rigs on both platforms. Most of the work will be done on North Rankin-the older of the two platforms-which has not been in drilling mode since 1991.

Khazoil Co. Ltd.,
a unit of Russia's Lukoil, let a $26 million contract to Aker Rauma Offshore Oy of Pori, Finland, to upgrade its Khazoil 1 jack up rig. The rig, formerly called Marawah, was dismantled and transported to the Caspian Sea along the Volga-Balt river and canal route. The rig was delivered to an Astrakhan shipyard in the summer for reassembly.

Exploration

BHP Petroleum Pty. Ltd. acquired a 25% paying interest in two ARCO-operated deepwater permits off Gabon. The Otiti and Tolo permits are 50 km offshore in the northern Gabon basin. The blocks, immediately north of the Cap Lopez peninsula, together cover 6,600 sq km. Water depths are 200-2,000 m. Acquisition of 280 sq km of 2D seismic and 300 sq km of 3D seismic has been completed. The first well, Padouck-1, will spud early next year.

U.S. Minerals Management Service
scheduled a central Gulf of Mexico lease sale for Mar. 18 in New Orleans. The sale, No. 169, will offer 4,244 blocks 3-200 miles offshore in 4-3,400 m of water. Most of the blocks-3,428-are in more than 200 m of water. The sale will include several blocks in an area claimed by both the U.S. and Mexico (OGJ, Oct. 6, 1997, Newsletter).

Agip Petroli SpA
and China National Petroleum Corp. signed a joint exploration agreement for Beipuxi block in China's Bohai Bay. The 370 sq km block is in shallow water in the western portion of the bay.

Companies

Gothic Energy Corp., Tulsa, agreed to purchase producing natural gas properties in Oklahoma's Anadarko and Arkoma basins from Amoco Production Co. Gothic will acquire 705 gross wells and assume operation of 296 of the properties for $237.5 million cash and a warrant for 1.5 million shares of Gothic common at $3/share. Gothic estimates total proven reserves attributable to the acquisition at 230 bcfe of gas. Net production is 63 MMcfd of gas equivalent. Under terms of the deal, Gothic will receive Amoco's advanced well-operating technology and significant 2D and 3D seismic data and geological information.

HS Resources Inc.,
San Francisco, agreed to purchase Amoco's oil and gas properties in the Denver-Julesburg basin of northeastern Colorado for $333 million. The purchase price includes $290 million cash, 1.2 million shares of HS common stock, and the transfer of certain HS Midcontinent properties. The acquisition will add about 60 million boe to HS's proved reserves base and increase production by a net 44.1 MMcfd of gas and 1,400 b/d of oil.

Sumitomo Petroleum

Development Co. Ltd. (SPDC) agreed to acquire Enterprise Oil plc's interests in Sedgwick and Galley oil field developments and 18 exploration blocks in the U.K. North Sea. SPDC will pay £35 million for a 40% stake in Block 16/6a-N (containing Sedgwick) and 17.42% in Block 15/23a (containing Galley). The fields will give SPDC about 13 million boe of net reserves. SPDC will reimburse Enterprise for all related costs from Apr. 1, 1997. SPDC also will pay £25 million to acquire farmouts on the 18 exploration blocks, mostly in the central North Sea. SPDC will earn interests of 6.25-50% in the blocks.

Denbury Resources Inc.,
Dallas, agreed to purchase Chevron U.S.A. Inc.'s producing properties in Heidelberg field, Jasper County, Miss., for $202 million. The field includes operated, nonoperated, and royalty interests and 122 producing wells, 96 of which will be Denbury-operated. Average daily production from the properties is a net 2,900 b/d of oil and 600 Mcfd of gas. Denbury acquired minor Heidelberg interests from other companies for $5.9 million. The acquisitions have combined reserves of 30.2 million boe. Denbury's 1998 development budget for Heidelberg is about $28 million.

Western Gas Resources Inc.,
Denver, and Ultra Resources Ltd., Midland, Tex., will jointly explore and develop at least 16 prospects in the greater Green River basin of Wyoming. Production from the wells will be gathered through the Bird Canyon Gathering System (BIGS) to the Granger gas processing complex. In a separate transaction, Resources International Corp., Vancouver, B.C., agreed to purchase a 50% interest in BIGS for $3 million and bought a $1 million option for 50% of Western Gas Resources' full ownership in the Granger complex.

Suncor Inc.,
Calgary, increased planned 1998 capital spending to $1 billion (Canadian) from $800 million. Half of the planned increase will go to expand Suncor's Northern Alberta oilsands operation to 105,000 b/d from 85,000 b/d. A further increase to 210,000 b/d by 2002 is planned. The integrated company also will expand its Ontario retail operations and spend $145 million on its Stuart oil shale project in Australia.

A unit of
Bow Valley Energy Ltd., Calgary, acquired a 13.75% working interest in Block 22/2a in the U.K. North Sea from BG Exploration & Production Ltd. and BG North Sea Holdings Ltd. The block contains Chestnut oil field, discovered in 1986.

LNG

Korea Gas Corp. (KGC) let a basic engineering and consultancy contract to M.W. Kellogg Ltd., London, for an LNG receiving terminal to be built at Tong Young, South Korea. The terminal will comprise unloading facilities, three 140,000 cu m storage tanks, and regasification facilities with capacity of 990 metric tons/hr. KGC plans to expand terminal throughput to 6 million tons/year. First LNG delivery is due in 2002. Kellogg will perform basic engineering and cost estimates; prepare a bid package for engineering, procurement, and construction; evaluate bids; and provide project management consultancy.

Total SA
commissioned a seventh liquefaction train at the Bontang LNG export plant in Indonesia. The new 2.7 million metric ton/year unit brings total capacity at the plant-the world's largest-to 18.4 million tons/year. Most of the output is marketed in Japan. Total plans to start up a 2.95 million ton/year train, the plant's eighth, in December 1999. Total supplies more than 70% of the feed for the new unit and almost 50% of the feed for the entire plant. Total produces 1.5 bcfd of gas in offshore Tunu field and expects output to reach 2.2 bcfd in 1999 with completion of Peciko field development. Sisi and Nubi field developments will follow.

Terminals

Hurricane Hydrocarbons Ltd., Calgary, formed a joint venture with Kazakhstan's Eastern Gate Co. to complete a $10 million rail transshipment terminal at Druzhba on the Kazakhstan-China border. Hurricane has a 66.7% interest in the terminal, which will have capacity of 20,000 b/d. The company said the terminal has a potential throughput of 100,000 b/d.

Pipelines

Extremists allegedly bombed Oil India Ltd. (OIL) pipelines at three points late last month. Officials blamed the sabotage on the United Liberation Front of Asom (ULFA), which wants independence for Assam state. As a result, movement of oil was halted from fields in upper Assam to refineries at Guwahati, Bongaigaon, and Barauni. The blasts occurred at Supariguri, Madanipur, and Jorhat, India. Sources said the three refineries had a few days' oil inventory and were not in immediate danger of shutdown. If repair work takes too long, however, production will be curtailed.

A natural gas leak
from a 30-in. pipeline owned by TransCanada Pipelines Ltd. caused an explosion near Swift Current, Sask. No injuries have been reported. The cause of the leak was not known at presstime. Automatic shut-off valves isolated the section where the leak occurred, and the fire burned itself out.

Chevron Asiatic Ltd.
received approval from Queensland aborigines, representing traditional landowners, for construction of the proposed $2 billion (Australian) gas pipeline between Papua New Guinea and Australia. The agreement involved numerous traditional land owners. Further agreements, needed for passage of the line through Torres Strait and in Papua New Guinea, are under negotiation. Chevron hopes to gain gas supply contracts and environmental approvals early next year. A final green light is expected in October 1998, with first gas planned for 2001.

An explosion
in a Nigerian Gas Co. gas pipeline destroyed the company's headquarters at Ughelli, Nigeria. The incident was thought to be caused by excessive pressure in the line. The explosion damaged the company's entire pipeline network and its control room. Disruption of gas supply to the Egbin and Delta IV electric power stations is likely to worsen the country's electricity supply problems.

U.S. Department of Transportation's
Research and Special Programs Administration extended the time for companies to comply with requirements for pressure testing of older hazardous liquids and carbon dioxide pipelines. The deadline for planning tests was extended 1 year to Dec. 7, 1998, and the date for completing the tests was extended 1 year to Dec. 7, 1999, for pre-1970 lines and to Dec. 7, 2000, for newer lines.

U.S. Federal Energy

Regulatory Commission proposed several regulations setting standards for electronic business transactions by interstate natural gas pipelines. FERC will require pipelines to post all data and conduct all business transactions using Internet protocols by June 1, 1999.

Cogeneration

Norway's Statoil plans to become a 20% partner in a venture to build a gas-fired cogeneration plant at Skogn, Norway. Partners will be paper manufacturer Norske Skog and Elkem metals group, each owning 40%. The plant will take gas by pipeline from Statoil's Tjeldbergodden terminal in central Norway. The plant and pipeline are expected to cost 4 billion kroner ($555 million). The plant will include two 350-MW generating sets, one due in operation in 2002 and the other 2 years later.

Petrochemicals

Saudi Arabia's Alujain Corp., ENI subsidiary Ecofuel SpA, and Finland's Neste Oy will form a joint venture to build a 900,000 metric ton/year MTBE plant at Yanbu, Saudi Arabia. Total cost of the project is about $400 million. Stakes in the JV, called Tahseen, will be Alujain 30% and Ecofuel and Neste 15% each. Local Saudi investors are expected to take the remaining 40%. Tahseen will have initial capital of $133 million. Neste and Ecofuel will market production from the plant, which is scheduled to start up in 2000.

Catalysts

Phillips Petroleum Co. is building a metallocene compound plant to produce raw material for the company's metallocene polyethylene catalysts. The plant will come on stream at Phillips's research center at Bartlesville, Okla., late in first quarter 1998. Phillips's slurry loop technology, for which its metallocene catalysts are designed, accounts for more than 30% of high-density polyethylene production worldwide.

Refining

Mineraloel Raffinerie Oberrhein GmbH (MiRO) let contract to ABB Lummus Global, Bloomfield, N.J., to provide technology licensing and basic engineering for a 190,000 metric ton/year propylene plant, to be built at MiRO's Karlsruhe, Germany, refinery. The plant will use Lummus' low-pressure FCC offgas recovery system and olefin conversion technology. Start-up is scheduled for mid-2000. MiRO is a joint venture of OMV AG and Esso AG.

Futures

International Petroleum Exchange (IPE), London, announced that, starting Dec. 17, members will be able to trade Brent crude oil futures out for a maximum of 3 years, compared with 1 year currently. IPE said traders felt extended Brent futures could be used to offset swap positions and will facilitate arbitrage with the light sweet crude contract on the New York Mercantile Exchange.