INDUSTRY BRIEFS

Petrochemicals

Phillips Petroleum Co.and Qatar General Petroleum Corp. (QGPC) agreed to construct a petrochemical complex at Mesaieed, Qatar, at a cost of $750 million, Phillips' first Middle Eastern petrochemical venture. QGPC will have a 51% interest, Phillips the remainder. The complex will use Phillips' proprietary polyethylene and hexene-1 manufacturing and catalyst technology. Plant capacities will be 1.1 billion lb/year of ethylene, 1 billion lb/year of high-density and linear low-density polyethylene, and 100 million lb/year of hexene-1. Construction is to begin in 1998, with initial production slated late in 2000.

Formosa Plastics Group
(FPG), Taiwan, will invest $800 million in a second U.S. petrochemical complex, reported Taipei daily China Times. The plant will produce 816,000 metric tons/year of ethylene vs. 714,000 tons/year of ethylene produced at FPG's first U.S. plant at Point Comfort, Tex. Location was not disclosed. FPG's total world ethylene output will reach 3 million tons/year by 1999 when two new naphtha crackers in Taiwan begin operation.

PT Trans-Pacific Petrochemical Indotoma
(TPPI), an Indonesian joint-venture company, received commitments from seven international banks to underwrite and arrange financing for $950 million of the $2-3 billion project cost of its olefins/aromatics complex near Tuban, Java (OGJ, Feb. 10, 1997, p. 32). Stone & Webster Engineering Corp., Houston, and JGC Corp. will handle engineering, procurement, and construction. Completion is set for mid-1999. The complex will produce 3 million metric tons/year of olefins, aromatics, and other products.

Cogeneration

Enron Global Power & Pipelines LLC identified a proposed 116-MW, natural gas-fired cogeneration power plant at Nowa Sarzyna, Poland, as a designated development project. In April, Enron unit Elektrocieplownia Nowa Sarzyna Sp. z.o.o. (ENS) signed a 20-year power purchase agreement with the Polish Power Grid Co. for plant development. The plant, to be located at Organika Sarzyna Chemical Works' complex, has a capital cost of $120 million. ENS will provide steam to the complex and to Nowa Sarzyna. Enron owns 97.5% and JAC (Poland) Ltd., Warsaw, the remainder. Construction is slated to begin in fall 1997.

Companies

Shell Oil Co. formed Shell Continental Cos., new umbrella name for a group of regional U.S. onshore exploration and production operating companies. Previously known as Continental division of Shell Western E&P Inc., whose parent is the Shell Exploration & Production Co. unit, the group consists of Shell TGC Resources Co. (Texas Gulf Coast), Shell CO2 Co., Shell Louisiana Co., Shell Northstar Resources Co. (northern Rockies and Williston basin), Shell Noreast Co. (Michigan and north central states), Shell Alaska Resources Co., and Shell Technology Venture Inc.

Enron Corp.
submitted a formal merger proposal to Enron Global Power & Pipelines LLC's (EGPP) board of directors' oversight committee, seeking to merge the companies in a transaction valued at $400 million. EGPP is publicly traded and majority-owned by Enron. The deal calls for each stockholder to receive Enron shares based on a price of $32/share. EGPP has 12.5 million shares in the public market, and Enron holds 13.5 million shares.

Magnum Hunter Resources Inc.,
Irving, Tex., closed the $133 million net purchase from Burlington Resources Inc., Houston, of about 1,900 oil and gas wells in 25 West Texas and 21 Southeast New Mexico field areas. The properties produce about 26.7 MMcfd of gas and 2,500 b/d of oil. Reserves are 15.3 million bbl of oil and 99.9 bcf of gas. Magnum's Gruy Petroleum Management Co. unit is operator of about 66% of the wells.

National-Oilwell Inc., Houston, and Dreco Energy Services Ltd., Edmonton, signed a definitive agreement to merge the companies into a new company with a market capitalization of more than $1 billion. Terms call for the exchange of Dreco common stock for National-Oilwell common stock in a pooling of interests transaction. National-Oilwell would issue about 9.4 million shares of its common, valued at $366 million. At closing, Dreco shareholders could receive either National-Oilwell common stock or Dreco exchangeable shares.

Bonus Resources Service Corp.,
Calgary, made a $54.5 million offer for Beta Well Service Inc., also of Calgary. The planned acquisition, recommended by the Beta board, would increase the Bonus service rig fleet to 131 units from 78.

Gas processing

Bangladesh let a $17 million turnkey engineering, procurement, and construction contract to Kvaerner Process Systems Asia Pacific Sdn. Bhd., Kuala Lumpur, for first-phase work for the Lakatura gas plant project at Sylhet, Bangladesh. Project is scheduled for completion in June 1998. Lakatura, a grassroots gas processing complex, will be designed to dehydrate and extract a single NGL and condensate stream from gas produced from Jalalabad field (OGJ, Jan. 27, 1997, p. 39). Phase one capacity will be 125 MMcfd; phase two will be 250 MMcfd, including possible LPG production.

Exploration

Kerr-McGee China is drilling one of two exploratory wells planned this year in China's Bohai Gulf on blocks adjacent to 04/36 contract area, where its CFD 2-2-1 appraisal flowed on test 4,100 b/d of light oil at 11,230-293 ft. The well was drilled to 13,120 ft TD in 45 ft of water. Kerr-McGee plans a second appraisal on 04/36, where it has a 45% interest. Other interests are held by Murphy Pacific Rim Ltd., a unit of Murphy Oil Corp., El Dorado, Ark., 45%; and Sino-American Energy Corp., a unit of Pendaries Petroleum Ltd., Toronto, 10%.

Canadian
companies submitted bids totaling $35 million for exploration rights on seven of 11 parcels offered in Canada's central Mackenzie Valley. Seven licenses were issued for two 4-year terms. Successful bidders were: AEC West, a unit of Alberta Energy Co. Ltd., Ranger Oil Ltd., Murphy Oil Co. Ltd., Cascade Oil & Gas Ltd., International Frontier Resources, Grand River Resources Inc., and Canadian Abraxas Petroleum Ltd., all of Calgary.

PanCanadian Petroleum Ltd.,
Calgary, received a new exploration license off Nova Scotia, 15 miles west of Sable Island. The company plans to spend at least $2.3 million the next 5 years. The license may be extended a further 4 years by drilling one well. PanCanadian operates the Cohasset-Panuke offshore oil fields near Sable Island.

Marathon International Petroleum Hibernia Ltd.
will spud a wildcat well in Porcupine basin Block 35/30 off western Ireland late in May. Jack Bates semisubmersible will drill the well to a total measured depth of more than 13,000 ft in 2,310 ft of water. License partners, each holding one-third interests, are operator Marathon, Occidental of Ireland Inc., and Phillips Petroleum U.K. Ltd. Marathon is operator of Ireland's only two producing fields, Kinsale Head and Ballycotton (OGJ, June 5, 1995, p. 17).

BG Exploration & Production Ltd.
announced an oil discovery on U.K. North Sea Block 13/24b. BG said the 13/24b-3 wildcat tested 32° gravity oil at a maximum flow rate of more than 2,600 b/d, on a 40/64 in. choke. The company plans to drill an appraisal. License interests are operator BG 50%, Amerada Hess Ltd. 30%, and Rigel Petroleum (NI) Ltd. 20%.

A group
led by Elf Nigeria Ltd. may spend $90 million to drill three wells off Nigeria after new information was disclosed about past drilling. Elf and partners Exxon Corp. and Chevron Corp. are drilling on oil prospecting licenses (OPL) 222 and 223. Wells are named Ine, Okpok, and Anwa. Drilling comes after officials reported that wells drilled in 1996 by Mobil Corp. and Agip SpA-Adaka 1, Aboi 1, and Aboi 2-were not dry holes but, in fact, discoveries.

Minerals Management Service
identified proposals, alternatives, and mitigating measures to be analyzed in an environmental impact statement (EIS) covering four proposed federal lease sales in the western Gulf of Mexico in the 1997-2002 leasing program. The multi-sale draft and final EIS will be prepared in lieu of a separate draft and final EIS for each sale. The planning area contains about 25.7 million unleased acres off Texas and Louisiana 9-220 miles from shore in 26-9,842 ft of water. The draft EIS is to be published in October 1997.

Spills

Unified Command Center, Houma, La., continues cleanup from a broken segment of a 42-mile, 16-in. buried oil pipeline, part of the 155-mile Eugene Island Pipeline System operated by Texaco Pipeline Inc. The segment originates at Caillou Island, Terrebonne Parish, La., and connects with Texaco's Houma station. Forty-seven Gulf of Mexico platforms normally produce into the pipeline; throughput averages 170,000 b/d. Where possible, production was being re-routed; other production was shut in. A 40-ft section was excavated, containing a rupture 34-in. long and 2-in. wide. Cause of the May 16 incident is under investigation. Texaco calculates about 5,000 bbl spilled. More than 2,100 bbl had been recovered by May 20. Repairs were expected to be completed last week.

Drilling-production

Libya and Tunisia, through the Libyan and Tunisian Joint Exploration, Exploitation & Petroleum Services Co. (Joint Oil) awarded a production-sharing contract (PSC) to Nimr Petroleum Co. Ltd., Saudi Arabia, and partner Petronas Carigali Sdn. Bhd., Malaysia, covering the 3,000 sq km 7th November offshore concession in the Gulf of Gabes. Half the block is in Libyan waters and half in Tunisian waters. It's located north of Libya's Bouri field and east of Tunisia's Miskar gas field. Joint Oil, established in 1989, is a joint venture of Libya's National Oil Corp. and Tunisia's ETAP. The PSC is the first to be ratified by Libya since U.S. investment sanctions took effect in 1996 (OGJ, May 5, 1997, p. 37).

An investigation
is under way after a May 20 explosion and fire on the Bay Jimmy, a production/storage posted barge, in inland waters of Bay Batiste, about 9 miles south of Port Sulphur, La. U.S. Coast Guard said the explosion on the platform, operated by Samson Resources Co., Tulsa, apparently occurred during welding. Four workers were injured. Five wells were shut in, and work was being done to re-start production. Three of six 500-bbl storage tanks that were damaged caused a spill of less than 50 bbl, which was contained, Samson said. Cleanup is under way. The fire was put out the same day.

Enterprise Oil plc,
London, an interest owner in a Basilicata region concession operated by Agip SpA in Italy's southern Apennines oil play, disclosed the concession holds oil reserves of 10-20 million bbl (OGJ, Feb. 3, 1997, p. 32). The disclosure has yet to be confirmed by Italy's state-owned ENI. Agip, ENI's upstream unit, is pressing a 35-well drilling program in the region and plans output of 83,000 b/d of oil and 92 MMcfd of gas in 2000. Current production is 7,190 b/d of oil and 7.9 MMcfd of gas.

Refining

Oman Oil Co. (OOC) withdrew from a joint venture with Hindustan Petroleum Corp. (HPCL) for a 120,000 b/d refinery in India's Maharashtra state. HPCL is seeking another JV partner. Indian officials said OOC decided to review its interest in the project in view of its commitments. Gas Authority of India Ltd. and OOC formed a joint group to expedite a feasibility study covering the project and identify various financing sources.

Pipelines

Enron International announced financial close of capitalization of the transportation segment of Bolivia's Yacimientos Petroliferos Fiscales Bolivianos and formation of capitalizing company Transredes SA. Last December, Bolivia named Enron and Shell International Gas Ltd. winning bidders in the capitalization (OGJ, Dec. 16, 1996, Newsletter). Each now receives 25% interest in Bolivia's transportation assets, including 1,655 miles of natural gas and 1,438 miles of liquids pipelines, plus ownership in the planned Bolivia-Brazil gas pipeline project. Transredes will invest $263.5 million during 8 years to upgrade the existing system and build the new pipeline.

Canadian Energy Pipeline Association
(CEPA), Calgary, submitted to the National Energy Board a manual of recommended practices for managing pipeline stress corrosion cracking that addresses inspections, data collection, prevention, mitigation, repair, and risk assessment. The manual was part of a CEPA commitment to NEB made during its 1995-96 inquiry into stress corrosion cracking on Canada's pipeline system (OGJ, Jan. 6, 1997, p. 25).

Texas Eastern Transmission Corp.
in 1998 plans to boost gas throughput capacity by 250 MMcfd through its Lebanon lateral pipeline in Indiana and Ohio. The $31 million expansion will provide more capacity for the company's Spectrum project to move as much as 500 MMcfd of gas from Chicago to East Coast markets. The project will involve installing an additional 17,000 hp at two compressor stations.

CMS Gas Transmission & Storage Co.,
international gas pipeline unit of CMS Energy Corp., Dearborn, Mich., will acquire 100% of the 260-mile Western Australia Natural Gas (WANG) pipeline, near Perth and other assets from operator Wapet, a company owned by Chevron, Texaco, Mobil, and Shell. Included are 30 bcf of gas reserves, two production licenses, and an associated gas storage complex currently in pre-operational testing.

Power

Taiwan Power Co. let a $160 million contract to ABB Power Generation Ltd., Baden, Switzerland, to expand the Tung Hsaio power plant 100 km southwest of Taipei. ABB will build a 320-MW, gas-fired, combined-cycle plant, known as Unit 6. Completion is slated by July 2000. The expansion will boost total electric power generation capacity to 1,700 MW.