INDUSTRY BRIEFS

Government

U.S. Environmental Protection Agency issued a rule to prevent states that chose to use reformulated gasoline (RFG) from reversing that decision during the transition from Phase I to Phase II RFG standards. States seeking to opt out of Phase II, which takes effect in 2000, have until Dec. 31, 1997, to submit requests. If a state's request is accepted by Dec. 31, it can select an effective date to opt out any time before Dec. 31, 1999. States that don't request to opt out by yearend must remain in the program through 2003. The rule will establish a fixed Phase II RFG market for refiners, which must begin preparing for the tighter standards in the next few months.

Power

U.K. electricity generator Scottish Power plc, Glasgow, and electricity supplier Seaboard plc plan to build a 500-MW, combined-cycle gas turbine power plant at Shoreham Harbor on Britain's south coast. The plant is expected to cost £200 million ($320 million) and will be owned 50-50. It will be built on the site of a former coal-fired power plant. The project received planning permission in 1992, but the companies have revised the design to make the plant more efficient. The revised scheme is being considered by local authorities.

Drilling-production

An explosion on Chuc Alfa platform in Mexico's Campeche Sound may reduce Cantarell complex production by as much as 300,000 b/d. The blast caused a fire, which Petroleos Mexicanos extinguished within 30 min. No injuries were reported. Pemex has not quantified the damage. Chuc Alfa is about 75 miles northwest of Ciudad del Carmen.

Samsung Heavy Industries,
South Korea, laid the keel of a first-of-a-kind ultradeepwater drillship capable of drilling in as much as 10,000 ft of water (OGJ, July 1, 1997, p. 68). Commissioned by Conoco Inc. and Reading & Bates Corp., Houston, the DPS-3 class, 721-ft long dynamically positioned vessel will begin a 5-year, $400 million drilling program in the Gulf of Mexico when completed in December 1998.

A group
led by Hardy Oil & Gas plc, London, started oil production from PY-3 field on Block CY-OS-90/1 in India's Cauvery basin. The output, about 13,000 b/d of sweet, 48° gravity oil, is being sold to Madras Refineries Ltd. The field is the first in India put in production with a floating production system.

Enterprise Oil plc
and Marathon Oil U.K. Ltd. began producing oil from Sedgwick and West Brae fields, developed jointly but operated independently by Enterprise and Marathon, respectively. The fields lie on U.K. North Sea Blocks 16/16a and 16/7a. A single subsea well in Sedgwick was tied back to West Brae subsea manifold, which exports oil and gas to Marathon's Brae A platform for processing and export to shore. Peak output from the fields in expected to be 27,000 b/d of oil. The fields have combined reserves of 40 million bbl of oil and were developed for £100 million ($160 million).

Pipelines

Russian Energy Minister Boris Nemtsov said Russian workers are finishing repairs on the oil pipeline linking the Chechen cities of Khasavyurt and Terskaya, and "early" Caspian Sea oil will start flowing across Chechnya on Nov. 7. The entire pipeline will be operational in mid-November. The 113 km Chechen section of the pipeline, which will carry oil from Baku to the Russian Black Sea port of Novorossisk, was damaged during 21 months of fighting between Russian troops and Chechen rebels.

El Paso Energy Corp.,
Houston, is holding an open season on the expansion of its 1.9 bcfd Express 500 gas pipeline from the Louisiana Gulf Coast to the northern border of Tennessee. El Paso will wait until the open season ends on Dec. 31 to determine the size of the expansion but is targeting an increase of as much as 1 bcfd. The company is expanding Express 500 in response to increased Gulf of Mexico gas production. El Paso expects to sign agreements with shippers in April 1998.

Construction
will begin immediately on a refined products pipeline from Houston to El Paso with terminals in Midland and El Paso. Group members include Longhorn Partners Pipeline LP, Exxon Pipeline Co., and Amoco Pipeline Co. The 225,000 b/d, 18-20 in. pipeline should be operational by late 1998.

El Paso Field Services Co.,
a unit of El Paso Energy, agreed to acquire for $195 million the offshore pipeline and processing subsidiaries of Pacificorp, Portland, Ore. The pipelines include the Seahawk Shoreline and Tomcat pipeline systems and the Brazos Area and Galveston Island gathering systems. Total length of the systems is 360 miles, and total throughput is 550 MMcfd. The transaction includes the 250 MMcfd Matagorda gas processing plant and the Oyster Lake condensate stabilization unit.

Ship Shoal Pipeline Co.,
Houston, will increase the capacity of its Ship Shoal pipeline system in southern Louisiana to 400,000 b/d from 310,000 b/d. The project includes installation of new pumping equipment at the Gibson, La., terminal and laying of a 13-mile segment of 20-in. pipeline between the Gibson and St. James, La., terminals.

Kuwait and Tunisia
will soon start building a new pipeline from Sidi el Kilani field in central Tunisia to Skhira terminal, 300 km south of Tunis. Construction is scheduled to last 11 months. The pipeline will cost an estimated $12 million and have a capacity of 25,000 b/d. Enterprise Tunisienne d'Activites Petroli?res owns a 55% stake in the field, and Kuwait's state-owned Kuwait Foreign Petroleum Exploration owns 45%.

Marketing

Pilipinas Shell Petroleum Corp. postponed plans for a $70 million retail expansion program in the Philippines until next year. The news follows the collapse of the Philippine peso in international currency markets and a 1-month price freeze on petroleum products imposed by the Supreme Court in Manila. Shell had intended to open new retail sites and refurbish existing ones.

Petrochemicals

Thailand's Songkla Petroleum let contract to German contractors Krupp Uhde GmbH and Thyssen Rheinstahl Technik GmbH to design and build a refining/petrochemical complex in southern Thailand. The $2.2 billion plant will have 125,000 b/d crude distillation capacity and capacity to produce 250,000 metric tons/year of polyethylene, 210,000 tons/year of polypropylene, 25,000 tons/year of methyl tertiary butyl ether, 110,000 tons/year of butadiene, and 70,000 tons/year of benzene. The complex is scheduled for completion in 2000 and will include a 150-MW power plant.

Shell China Ltd.
and Shell China Holdings BV signed a joint venture agreement with China's Jinling Petrochemical Corp. (JPC). The venture will be owned 60% by Shell and 40% by JPC and will modernize and enlarge JPC's expandable polystyrene plant at Nanjing. Shell expects to invest $30 million to increase plant capacity from the current 10,000 metric tons/year to 28,000 tons/year by 2000. The plant, built in 1991, uses Shell technology.

Engro Chemicals Pakistan,
Asahi Glass Co., and Mitsubishi Corp. will form a joint venture to build a 100,000 metric ton/year polyvinyl chloride (PVC) plant at Port Qasim, Pakistan. The $80 million plant will be operated under the name Engro Asahi Polymer & Chemicals (Pvt.) Ltd. Engro will hold a 50% equity interest, Asahi 30%, and Mitsubishi 20%. Start-up is scheduled for December 1999. Vinyl chloride monomer (VCM) feed will be imported. Subsequent phases call for VCM production and increased PVC capacity. Project financing has been secured. Pakistan's PVC demand is currently met entirely through imports.

Refining

Thai Cement Public Co. Ltd. and Itochu Corp. formed a joint venture to build a condensate refinery at Rayong, Thailand. The plant will process 64,000 b/d of condensate and produce naphtha, kerosine, diesel oil, and solvents. Thai Cement will own 45% of the new firm and Itochu 25%. Taiwan's Tuntex Petrochemicals Co. Ltd., Bangkok Bank Public Co. Ltd., and Siam Commercial Bank Public Co. Ltd. each will own 10% stakes. The $43.3 million plant is scheduled to start up late in 1999.

Oilsands

Canadian Natural Resources Ltd. (CNR), Calgary, acquired 39,800 acres in undeveloped Alberta oilsands leases from Koch Exploration Canada Ltd. The leases are immediately south of CNR holdings in the Pelican Lake area and increase the company's holdings in the area to 87,680 acres. CNR and Amber Energy Inc. agreed to jointly acquire and expand the 150,000 b/d Utikima blended-crude oil pipeline in the area. Work will include looping with 68 miles of 20-inch line and modifying existing terminals. Completion is scheduled for May 1998.

A Calgary judge
gave creditors 3 weeks to establish claims against Solv-Ex Corp., Albuquerque. The company ran into financial problems developing an oilsands project in northern Alberta (OGJ, Oct. 13, 1997, p. 40). Geopetrol, a private Calgary investment firm, has offered to buy 75% of Solv-Ex interests.

Gas processing

ARCO and Syntroleum Corp., Tulsa, will build a 70 b/d pilot plant at ARCO's Ferndale, Wash., refinery to demonstrate Syntroleum's gas-to-liquids technology (OGJ, Aug. 4, 1997, p. 68). The plant will produce synthetic fuels, which ARCO will use to make transportation fuels. Start-up of the unit is scheduled for fourth quarter 1998.

Exploration

Texaco Inc. and Spirit Energy 76, a unit of Unocal Corp., tested a wildcat on Ladybug prospect in the Gulf of Mexico. The well was drilled as a straight hole to 8,660 ft subsea and flowed 7,266 b/d of oil and 3.7 MMcfd of gas. Ladybug is in 1,355 ft of water on Garden Banks Block 409, about 150 miles south of Lake Charles, La. Ladybug's wells will be connected to Texaco's Tick project via subsea tie-backs. Tick is on Garden Banks Block 189 in 730 ft of water.

Kazakhstan
signed a contract with Turkey's Turkiye Petrolleri AO (TPAO) covering oil exploration and development in the Baiganinskoye and Mugodzharskoye areas of Aktubinsk region in western Kazakhstan. TPAO has an "area of mutual interest agreement" with Amoco Corp., allowing Amoco to participate with TPAO in Kazakh exploration projects.

Scimitar Production International Ltd.,
a unit of Calgary's Scimitar Hydrocarbons Ltd., spudded a second Mozambique wildcat, Garabega-1. The well, targeted to 6,726 ft, is on the company's 3-million-acre Buzi-Divinhe block (see map, OGJ, Sept. 8, 1997, p. 34). Scimitar's first well there was plugged and abandoned.

Italy's Agip SpA
acquired a 25% interest in a project covering exploration and development on the Kyurdashi block in the Azeri Caspian Sea. State Oil Co. of the Azerbaijan Republic will have a 50% interest. The other 25% has yet to be offered, although Royal Dutch/Shell Group has expressed interest in taking the stake. The block is north of the Lenkoran-Deniz and Talysh-Deniz structures and has three prospects that the government said together may contain as much as 100 million metric tons of oil.

Pakistan
granted two exploration licenses to a joint venture of MS Pakistan Oil Fields Ltd. (POL) and Government Holdings, the petroleum concession arm of the Ministry of Petroleum and Natural Resources. The licenses are for Southern Sindh Block 2469-3 covering 2,619 sq km in Tharparkar District, Sindh province, and Cholistan Block 2771-1 covering 2,936 sq km in Rahim Yar District, Punjab province. The blocks were awarded through competitive bids. The venture will spend about $5.7 million to shoot a 100 line-km seismic survey and drill two exploratory wells during the initial 3-year term.

Shell U.K. Exploration & Production
disclosed an oil find straddling U.K. North Sea Blocks 22/28d, 22/23b, and 22/28a, the latter operated by Phillips Petroleum Co. U.K. Ltd. The Sedco 704 semisubmersible drilled a vertical well that cut a potentially commercial hydrocarbon pay zone in Tertiary sands. Although testing will take place later, Shell Expro said the find upgrades the reserves potential of the area following the recent 22/23b-5 well drilled by Phillips. The earlier find, dubbed Kate, flowed on test from two intervals at a combined rate of 11,500 b/d of oil and 22 MMcfd of gas.

Tullow Oil plc,
London, reported test results for its Suri-1 wildcat on Pakistan's Block B. The well was spudded in late September and reached 1,249 m TMD, cutting three gas pay zones. The first pay zone, Ranikot, flowed at a rate of 12.2 MMcfd of gas. Tullow reckons the zone is capable of producing more than 20 MMcfd. The two other pay zones, Sui Main and Sui Upper, will be tested shortly. Tullow expects to disclose these results and those for Meting-1 well on Block A in the next few weeks.

Companies

Pinnacle Resources Ltd., Calgary, acquired producing properties and about 788,000 acres of undeveloped land from Canadian Occidental Petroleum Ltd. (CanOxy) for $308 million (Canadian). The properties produce about 11,200 boed and were acquired when CanOxy bought Wascana Energy Ltd. earlier this year. In September, Pinnacle acquired $250 million worth of properties in central Alberta when it acquired HCO Energy Ltd., Calgary. The deals give Pinnacle production of about 40,000 b/d of liquids and 200 MMcfd of gas. It plans to increase production from the Wascana fields to about 20,000 boed by yearend 1998.

Chesapeake Energy Corp.,
Oklahoma City, agreed to acquire the U.S. Midcontinent and Barbados assets of DLB Oil & Gas Inc., Tulsa, in a merger involving $65 million of Chesapeake common stock and the assumption of about $85 million in liabilities. Estimated proved reserves of those assets are 27 million boe. In addition, DLB will spin off to its shareholders DLB interests in independent operator WRT Energy Inc., Oklahoma City, and Oklahoma City drilling contractor Bayard Drilling Technologies Inc.