INDUSTRY BRIEFS

Corrections

A report on the Cotton Valley pinnacle reef play incorrectly stated the ownership of Delhi Gas Pipeline Corp. (OGJ, Mar. 10, 1997, p. 34). Delhi is a wholly owned unit of USX Corp., not USX/Marathon Group. USX-Delhi, USX-Marathon, and USX-U.S. Steel Groups are all publicly traded, separate components of USX Corp.

Netherland, Sewell & Associates Inc., Dallas, was incorrectly referred to in the Mar. 17, 1997, Newsletter, as Sewell & Associates, a Netherlands-based company.

Pipelines

Sudan signed a crude oil pipeline and lease agreement with Petronas Cariga* Overseas Sdn. Bhd., China National Petroleum Corp., State Petroleum Corp., and the National Oil Co. of Sudan for construction and operation of an export pipeline to move as much as 250,000 b/d from Blocks 1, 2, and 4 in the Heglig-Unity field area in Sudan to an export terminal at Port Sudan on the Red Sea (OGJ, Feb. 24, 1997, p. 37). The companies hold interests in the blocks. The 1,500-km pipeline is to be completed before yearend 1999.

U.S. District Court, Cheyenne, Wyo., will consider a request by the Wyoming Independent Petroleum Association (WIPA) for an injunction blocking the Express Pipeline (OGJ, Dec. 9, 1996, p. 24). A federal hearing was held Mar. 14 on the petition. Express finished building the 785-mile, 172,000 b/d crude oil pipeline from Hardesty, Alta., to Casper, Wyo., and is filling it with oil. WIPA alleges the U.S. Bureau of Land Management failed to consider the socioeconomic effects of the pipeline before granting it a permit to cross federal lands. A ruling is expected by month's end.

Britannia Operator Ltd., a joint venture of Chevron U.K. Ltd. and Conoco (U.K.) Ltd. that is developing North Sea Britannia field, let an $800,000 contract to Real Time Engineering Ltd., Glasgow, to develop and install pipeline integrity monitoring systems for two pipelines to export gas and condensate from Britannia field in the U.K. North Sea. Britannia, which has reserves of 2.6 tcf of gas and 140 million bbl of condensate, is slated to come on stream in fourth quarter 1998 (OGJ, Apr. 29, 1996, p. 24).

U.S. Federal Energy Regulatory Commission asserted jurisdiction over Green Canyon Gathering Co.'s proposed 133-mile gas pipeline in the Gulf of Mexico. FERC normally does not have jurisdiction over gathering lines, but it said the line was within its jurisdiction because it is in waters of less than 200 m. The system will serve the Green Canyon, Ewing Bank, and Mississippi Canyon areas.

LNG

Yemen's Parliament flashed a green light to the planned $5 billion Yemen liquefied natural gas export project backed by a Total-led group (OGJ, Jan. 27, 1997, Newsletter). Dallas' Hunt Oil is operator of the upstream portion of the project. Plans call for construction of a 5.3 million-metric ton/year complex that will ship LNG to Turkey and other potential markets beginning in 2001 (see related story, p. 28). Yemen's Marib production-sharing area will supply the gas.

Drilling-production

United Meridian Corp., Houston, completed its 2 Jade well on Block B off Equatorial Guinea, confirming the December 1996 1 Jade discovery 3 miles southeast of Zafiro field (OGJ, Dec. 30, 1996, p. 34). The confirmation, drilled less than 1 mile from 1 Jade in 1,132 ft of water, was drilled to 5,524 ft TD and flowed 5,465 b/d of 33° gravity oil through a 64/64-in. choke with 433 psi flowing tubing pressure from Jade sands in lower Qua Iboe. Field development will be through flowlines from subsea wells tied back to Zafiro Producer floating production, storage, and offloading ship.

Sable Offshore Energy Project (SOEP) partners let contract to Lloyds Register, London, to certify and conduct design appraisal for the proposed gas field development project off Nova Scotia. SOEP, consisting of units of Mobil Oil Canada, Shell Canada Ltd., Imperial Oil Ltd., and Halifax's Nova Scotia Resources Inc., plans to decide whether to proceed with the project following regulatory approvals, expected by this fall. Plans call for two-phase development, with the first slated to produce gas for sale by late 1999 (OGJ, July 29, 1996, Newsletter).

Saudi Arabian Oil Co. (Aramco) let contract for an undisclosed sum to Stolt Comex Seaway AS, Aberdeen, for installation work in Berri, Marjan, and Zuluf oil fields off Saudi Arabia. Beginning in June, Pacific Constructor construction ship will install flexible flowlines and umbilicals and tie in and commission flowlines, risers, umbilicals, and J-tubes.

Enterprise Oil plc, London, boosted its estimate of oil reserves in U.K. North Sea Nelson field, following completion of a delineation well. The well, drilled to the oil/water contact on the western edge of the field in an area previously considered to be outside the oil-bearing part of the reservoir, cut an oil column of 110 ft with a high percentage of good quality pay. Enterprise said the well added 25 million bbl of oil to its reserves estimate. Block 22/11 Nelson was brought into production in early 1994. Original reserves were estimated at 480 million bbl of oil and 85 bcf of gas (OGJ, Aug. 30, 1993, p. 60).

U.S. Minerals Management Service will reconvene its Indian gas valuation negotiated rulemaking committee at Golden, Colo., on Mar. 26 to consider concerns about the proposed rule. Producers had objected to provisions setting a "safety net" for nondedicated gas sales, a separate accounting for natural gas liquids, and a requirement to set royalties on gross proceeds if the previous contract was the subject of a settlement.

Companies

Petrofina SA, Brussels, will become sole owner of its U.S. unit Fina Inc., Dallas, after completing a stock transaction. It currently holds about 85.4% of Fina shares. Fina Inc. shareholders will get $60/share, placing total value of the transaction at about $266 million. Petrofina also will seek a listing on the New York Stock Exchange.

Pacific Enterprises, Los Angeles, and Enova Corp., San Diego, won shareholder approval of their proposed $5.2 billion gas and electric merger (OGJ, Feb. 3, 1997, p. 19). The planned union between Pacific Enterprises, parent of Southern California Gas Co., and Enova, parent of San Diego Gas & Electric Co., is one of the most difficult gas-electric mergers to date, due to complex antitrust and jurisdictional issues (see related story, p. 27). Still needed at the state level are approvals from the California Public Utility Commission and attorney general; federal approvals are needed from FERC, U.S. Justice Department, Securities & Exchange Commission, and the Nuclear Regulatory Commission. The companies hope all approvals will be made by yearend.

Hardy Oil & Gas plc, London, is to buy a 15.5% share in India's Hindustan Oil Exploration Co. Ltd. (HOEC) for $4.6 million. Hardy has an interest in PY-3 oil field, currently under development in the Cauvery basin off southeastern India, and has an office in Madras.

BG plc plans to sell an interest in its Northern Ireland gas supply venture, Phoenix Natural Gas, to a partnership of Mountain Fuel Inc., Salt Lake City, and Northern Ireland Electricity plc. This follows the recent sale of a 24.5% interest in two Northern Ireland BG units to Brooklyn Union Gas Co., New York. The latest sale is expected to involve a stake of about 24.5% for around $75 million.

Tullow Oil plc, London, will merge its Czech oil and gas interests with the assets of Czech private company MOH Investments NV. Tullow plans to form a new company, Medusa Petroleum plc, and raise as much as $12 million on London's Alternative Investment Market. Tullow will hold 25% in Medusa, which will focus on exploration and development in central and eastern Europe.

Deminex U.K. Oil & Gas Ltd. completed a swap of U.K. North Sea license interests with Shell U.K. Ltd. and Esso Exploration & Production U.K. Ltd., joint venture partners in the U.K. North Sea. Deminex acquired 15% interests each from Shell and Esso in Block 22/22b Selkirk discovery, plus 50% interests from both companies' interest in Block 15/18a. In return, Shell and Esso will split Deminex's 26.7% interest in Block 210/15a Wendy discovery and a 28.712% interest in Block 21/29b West Guillemot discovery.

Futures

New York Mercantile Exchange (Nymex) and London's International Petroleum Exchange (IPE) are discussing ways of working together. Nymex and IPE hope to create greater trading efficiency for mutual customers by operating a joint electronic trading system and enabling cross-margining.

Exports-imports

Brown & Root Ltd., London, spent $8 million to boost export capacity of oil from Kazakhstan's Tengiz field by 23,000 b/d with the existing rail network. Work involved building a rail loading facility and pipeline at the Tengizchevroil plant near the northeast shore of the Caspian Sea. Capacity of the new facility can be expanded to 40,000 b/d.

Exploration

Kerr-McGee Yemen Ltd., a unit of Kerr-McGee Corp., Oklahoma City, signed two production-sharing agreements with Yemen's Ministry of Oil and Mineral Resources and state-owned Yemen Co., establishing an exploration position as operator of East Al Hajar Block 51 and Hazar Block 50, covering about 10 million total acres. Kerr-McGee will have an 87.5% working interest in Block 51 and a 95% working interest in Block 50.

Seagull Energy Corp., Houston, completed a new fault block natural gas discovery well in the Gulf of Mexico about 62 miles southwest of Freeport, Tex., in about 78 ft of water. Brazos Block 552 OCS-G 1123 A-3 well cut 82 ft of gas pay in six zones. Tests of two zones flowed a combined 4.8 MMcfd. Operator Seagull holds a 17.5% working interest in the well; other interests are held by Samedan Oil Corp., a unit of Noble Affiliates Inc., Ardmore, Okla., 32.5%; Case-Pomeroy Oil Corp., New York, 24.35%; Mitchell Energy & Development Corp., The Woodlands, Tex., and Blazer Energy Corp., Ashland, Ky. 8.77% each; and Holly Petroleum Inc., Dallas, 8.1%.

Refining

U.S. Environmental Protection Agency denied the American Petroleum Institute's request to repeal the Phase II reformulated gasoline (RFG) emission reduction standard for nitrogen oxides. The agency said that API's petition presented no compelling new evidence or argument that would warrant revising the standard, which calls for at least a 20% cut from 1990 baseline emissions when Phase II federal RFG standards take effect on Jan. 1, 1998.

U.S. EPA proposed to amend federal RFG regulations to eliminate separate treatment for averaging the oxygen content of gasoline used in states' winter oxygenated gasoline programs. EPA no longer believes the distinction for state oxygenated gasoline is necessary and says eliminating it will reduce compliance costs for industry.

Russia's Sidenco let contract to Chevron Products Co. and ABB Lummus Global, Bloomfield, N.J., to build a 40,000 b/d hydrocracker and related units at its 600,000 b/d refinery at Angarsk, Russia. The project will remove 60,000 tons/year of sulfur and nitrogen from crude and enable production of high-quality products. The first phase will bring 20,000 b/d of capacity on stream by 2001. Sidenco will use Chevron's isocracking technology. Contract is the second for Chevron/Lummus; the first was let in 1994 for Surgutneftegas' hydrocracker project at the Kirishi refinery near St. Petersburg.

Energy Biosystems Corp. (ENBC), The Woodlands, Tex., agreed with Petro Star Inc., a unit of Arctic Slope Regional Corp., to study commercial feasibility of a diesel fuel biocatalytic desulfurization (BDS) process for Petro Star's 30,000 b/d refinery at Valdez, Alas. If feasible, Petro Star will negotiate an agreement for ENBC to build a commercial, 5,000 b/d BDS unit to reduce the sulfur content of Petro Star's diesel fuel. Conventional hydrodesulfurization is not feasible at the Valdez refinery because of its remote location, Petro Star said. The study will take about 6 months to complete.

Alternate fuels

Syntroleum Corp., Tulsa, awarded Marathon Oil Co. a nonexclusive master license agreement to use Syntroleum's process for converting natural gas into synthetic crude oil and transportation fuels. In exchange, Marathon will provide Syntroleum nonexclusive rights to proprietary technologies that may enhance the competitiveness of Syntroleum's process.

Power

Marathon Power Taschila Ltd., a unit of Marathon Power Co. Ltd., Houston, acquired a 50% interest in Power Services Ecuador Ecuapower Cia. Ltda. (Ecuapower). Major Ecuapower assets include a 96-MW power plant at Santo Domingo west of Quito and a 34-MW power plant at Santa Elena on the Pacific Coast west of Guayaquil. Marathon will operate and manage the plants. The purchase marks Marathon's entry into Latin America's independent power producer (IPP) market and makes Marathon one of the first IPPs in Ecuador.

Cogeneration

Alise Energy Australia Pty. Ltd. (Alise) advised Santos Ltd., Adelaide, that the Botany gas-fired cogeneration project may proceed in two stages, with timing of the second stage dependent on satisfactory evolution of conditions in the electricity market. Santos agreed last October with Australian Gas Light Co. and Alise to supply gas to the power the Botany plant (OGJ, Nov. 11, 1996, p. 46).