INDUSTRY BRIEFS

Gas distribution

Brazil's privatization of Riogas, the gas distribution company serving Brazil's Rio de Janeiro interior state, and CEG, Rio de Janeiro's gas distribution company, resulted in Enron Corp., Houston, and partners submitting the winning bid of $576 million. It covers a 56.4% stake in CEG and a 75% stake in Rio- gas. CEG has a 2,200-km pipeline network and average sales of 63 MMcfd, or 22% of Brazil's gas consumption. Riogas has average sales of 56 MMcfd, or 21% of Brazil's gas consumption. Enron holds 45% of the winning group in CEG; other interests are operator Gas Natural SDG SA 33.5% and Iberdrola Investimentos Sociedade Unipessoal LDA 17.5%, both of Spain, and Argentina's Pluspetrol Energy Sociedad Anonima 4%. In Riogas, Enron units are acquiring 50% of equity and Gas Natural the remaining 25% offered.

Drilling-production

Louisiana Land & Exploration Co., New Orleans, will buy Wyoming oil and gas properties from BHP Co. Ltd., Melbourne, completing BHP's divestiture of North American and South American assets. LL&E's purchase includes BHP's interests in Madden and adjacent Long Butte fields, where participation was 6-34%, plus BHP's interest in the Lost Cabin gas plant. Overall, BHP has divested 1,800 properties in the U.S., Canada, Colombia, and Argentina, generating $310 million in cash and $103 million in net profit since 1995.

Amoco Trinidad Oil Co. and the National Gas Co. of Trinidad and Tobago (NGC) agreed on the principles of an amended contract that will form the country's largest gas supply commitment to date. Under the revised accord, Amoco will supply NGC up to 700 MMcfd, up from 275 MMcfd presently (OGJ, Feb. 23, 1997, p. 37).

CMS Nomeco Oil & Gas Co., a unit of CMS Energy Corp., Dearborn, Mich., is drilling 14 Campo Rosario offset well and will follow up with as many as three development wells in the Colon Block of Venezuela's Maracaibo basin. Expansion came after 13 Campo Rosario development well, completed at 7,680-800 ft in the Mirador formation, initially yielded 4,200 b/d. The Rosario development is expected to increase output to at least 15,000 b/d of oil by early in 1998 from 9,200 b/d. CMS Nomeco holds a 29% interest in the block via a joint venture with operator Tecpetrol de Venezuela SA, Coparex Latina de Petroleos SA, and Wascana de Venezuela SA.

Oman's MB Petroleum Services LLC paid about $4.5 million for a little more than 83% of Koolajkutato, one of Hungary's two drilling contractors. The other, Rotary, is mainly owned and controlled by state oil company MOL. Koolajkutato has suffered from losing MOL business in recent years. The other owners, apart from Oman's MB Petroleum, are local councils in Hungary.

Energy marketing

Texaco Inc. formed a new Houston-based company, Texaco Energy Services LLC, which will give Texaco a position in the emerging deregulated retail energy marketplace (OGJ, Apr. 21, 1997, p. 17). Initially, the new company will market services in western Pennsylvania's Shenango Valley, where 20,000 utility customers have their choice of energy suppliers. It eventually plans to enter unfolding markets across the U.S.

Companies

Enron Capital & Trade Resources Corp., Houston, will pay NGC Corp. $149 million for certain lignite reserves and other assets in Michigan, Colorado, New Mexico, and Texas owned by Destec Energy Inc., Houston, which NGC recently acquired (OGJ, June 9, 1997, Newsletter). The deal allows Houston-based NGC to retain mineral and royalty interests underlying East Texas lignite deposits and rights to easements for building pipelines around the Pinnacle reef play. The deal is expected to close Aug. 1.

PanCanadian Petroleum Ltd., Calgary, signed a 15-year contract with Dakota Gasification Co. (DGC), Bismarck, N.D., for DGC to supply carbon dioxide for a $1.1 billion (Canadian) enhanced oil recovery project to extend the life of Weyburn unit in southeastern Saskatchewan (OGJ, July 7, 1997, p. 23). Under the deal, PanCanadian will purchase up to 95 MMcfd of CO2 out of 240 MMcfd available from the Great Plains Synfuels plant near Beulah, N.D. DGC will build a 202-mile pipeline to ship the CO2 to Saskatchewan.

Norsk Hydro AS let a $40 million contract to Saipem U.K. Ltd., London, for transporting and installing jacket and topsides for the platform at Oseberg South, being developed as a satellite of the main Oseberg field in the Norwegian North Sea. Oseberg South has estimated oil reserves of 335 million bbl. Saipem's S7000 crane barge will carry and install the 7,800- metric ton jacket and 10,200-ton topsides. Work is due for completion in May 2000. Production is slated to begin in August 2000.

European Bank of Investment (EBI) extended Spain's Repsol a $198 million credit for financing a variety of projects, including the 230,000 b/d Cartagena-Puerto- llano oil pipeline, the 190,000-metric ton/ year Tarragona polypropylene plant, and a 68-MW cogeneration plant to supply the new Tarragona plant. The pipeline will triple crude unloading capacity in the Cartagena terminal and supply the city's refinery and the Puertollano industrial complex. The plant will allow Repsol to increase polypropylene capacity to 385,000 tons/ year, which represents 57% of Spain's installed capacity and makes it one of the top-ranking European producers of this plastic.

IPL Energy Inc., Calgary, will spend $330 million (Canadian) for a 32% interest in Noverco Inc., parent of Gaz Metropolitain Inc., Montreal. Major partners in Noverco are Hydro Quebec and Gaz de France. IPL said the Noverco purchase positions it for gas market opportunities in Atlantic Canada and the U.S. Northeast. IPL plans to build a $650 million pipeline to move 1 bcfd of gas from western Canada to the Chicago area via a link with the proposed Alliance Pipeline project (OGJ, Feb. 10, 1997, p. 34).

Kuwait Oil Co. let a 31/2 year contract to France's Total to provide technical assistance in the management of exploration, production, transportation, and export of crude oil. Total hopes the accord paves the way for a long-term partnership between the companies.

PanCanadian Petroleum paid about $465 million (Canadian) to acquire CS Resources Ltd., Calgary, with approval of both companies' boards of directors. PanCanadian will form a new heavy oil arm, and plans to carry out CS Resources' existing programs for the remainder of the year. CS Resources' first quarter 1997 output was 13,370 b/d of oil and 11.9 MMcfd of natural gas, compared with PanCanadian's output of 141,379 b/d of crude and gas liquids and 726 MMcfd of gas.

Coalbed methane

Taurus Exploration Inc., a unit of Energen Corp., Birmingham, Ala., will pay $72 million for Amoco Corp.'s Black Warrior basin coalbed methane properties, covering about 100,000 gross acres in Jefferson County, Ala. The properties have more than 260 producing wells with net proved reserves of 90 bcf and output of more than 7 bcf/year. Production qualifies through 2002 for a nonconventional fuels tax credit, currently valued at just over $1/Mcf, rising annually with inflation. The deal is expected to close in August.

Oilsands

Syncrude Canada Ltd., Fort McMurray, Alta., awarded SNC-Lavalin, Calgary, an engineering, procurement, and management contract for a $200 million (Canadian) debottlenecking and upgrading program at its Fort McMurray oilsands plant. The program will add an estimated 30,000 b/d to Syncrude's upgrading capacity. SNC-Lavalin was awarded a contract 2 years ago for a $70 million Syncrude expansion now under construction.

Imports-exports

U.S. Import-Export Bank signed an agreement with Kyrgyzstan that lays the foundation for possible financing of U.S. exports to the former Soviet republic in central Asia. The pact provides a framework for financing U.S. sales to Kyrgyzstan, where repayment is based on export revenues from the project, such as oil field developments.

Pipelines

Arakis Energy Corp., Calgary, and partners in its Sudan concession are moving ahead with plans for a $225 million, 1,500-km pipeline from the oil field development area to Port Sudan on the Red Sea coast (OGJ, June 2, 1997, p. 40). Bids are scheduled to close in September. Contracts for engineering, procurement, and construction are expected to be awarded by yearend. The group plans to let a pipe-manufacturing contract next month to avoid supply delays. Partners are Malaysia's Petronas Carigali Sdn. Bhd. and China National Petroleum Corp.

Suncor Energy Inc. and IPL Energy Inc., both of Calgary, joined forces on a $325 million oil pipeline project from the Athabasca oilsands in northern Alberta. IPL will finance and build a 342-mile pipeline; initially, Suncor will operate the project. The companies had planned separate pipelines but said economics favor a joint project. Suncor has a long-term commitment to IPL to ship oil from its oilsands plant to a pipeline terminal at Hardisty, Alta. Suncor is slated to increase production to 105,000 b/d from 80,000 b/d in 1999. Construction of the 30-in., 500,000 b/d-capacity line is planned to start late in 1997, with completion slated late in 1998.

Egypt and Jordan are considering building a 170-mile, 200 MMcfd gas pipeline across the Sinai peninsula so Egyptian gas can be supplied to Jordan. The proposed pipeline would connect the Gulf of Suez with the Gulf of Aqaba; an exact route will be decided in technical studies. Egypt has agreed to supply Jordan with 247 MMcfd of gas starting in 2001.

Longhorn Partners Pipeline LP, Dallas, plans to build a 250-mile crude oil pipeline by yearend between Crane and El Paso, Tex., with initial capacity of 80,000 b/d and potential maximum capacity of 225,000 b/d. The line will extend an existing 450-mile, 18-in., crude oil pipeline between Crane and Houston that Longhorn plans to acquire from Exxon Pipeline Co. Exxon and Amoco Pipeline Co. signed a letter of intent to join the partnership in exchange for assets and equity. Current partners are Tulsa's Williams Energy Group, Beacon Group Energy Investment Fund LP, New York, and Dallas' Axis Gas Corp.

Nova Gas Transmission Ltd. let contract to O.J. Pipelines Corp., a unit of Ocelot Energy Inc., Calgary, to build a $30 million, 100-km pipeline in southern Alberta. Construction will start this month on a 20-km, 42-in. North Creek section of western Alberta main-line loop, starting near Sundre, and an 80-km, 48-in. segment for the Gayford, Lone Pine, and Harmattan sections of central Alberta system main-line loops, ending near Rockyford. The project is slated for completion by Oct. 31.

U.K.'s Centrica plc signed an agreement with Inkoopcombinatie Elsta VOF, Terneuzen, Netherlands, for delivery of gas from U.K. via the Interconnector pipeline link. Interconnector, being built from Bacton in U.K. to Zeebrugge, Belgium, is expected to be completed in October 1998 (OGJ, June 2, 1997, p. 38). Elsta is a cogeneration project that has contracted for 1 billion cu m of gas for 8 years. The gas will be drawn from Centrica's portfolio of U.K. production and gas purchase contracts.

Refining

American Petroleum Institute and the National Petroleum Refiners Association will sponsor a workshop July 31 in Arlington, Va., on complex model reformulated gasoline mandated by the U.S. Environmental Protection Agency. The workshop will cover testing, recordkeeping, and reporting requirements. The Phase I complex model program will begin at refineries and import terminals Jan. 1.

Exploration

Apache Corp. and partners XCL Ltd., Lafayette, La., and China National Oil & Gas Exploration and Development Corp. tested 11,571 b/d of oil from five zones in D-3 appraisal on Zhao Dong Block in China. The well was drilled to 1,750 m TD, north of the 1995 D-1 discovery and east of the D-2 well that tested 11,571 b/d of oil from five zones in January 1997. After drilling C-4 wildcat, northeast of the 1994 C-1 discovery, the companies will drill the D-4 well. A development plan is being readied for submission to the Chinese government. Operator Apache and XCL each hold 50% of the contractor interest in the project.

Costa Rica extended the deadline in its exploration/exploitation bidding round (OGJ, May 12, 1997, p. 76) to Sept. 10 from July 14, 1997, and sweetened other terms. It reduced the percentage of the participation guarantee to 5% from 10% of the total investment on committed exploration programs. It also cut other minimums to 150 km/block of seismic and 750-m/block drilling instead of 1,500-m/block drilling average.

Nuevo Energy Co., Houston, believes it found a significant extension of reserves in its Point Pedernales field off California. Exploratory well A-28 flowed on test 1,173 b/d of crude and 569 Mcfd of gas. The well, operated by 80% interest holder Nuevo, cut 1,157 ft of net pay in the Monterey formation at 5,214 ft TVD.

Nuevo abandoned its 1 Gibson wildcat in Trinity County, Tex., at 18,500 ft TD after the well encountered the targeted reef structure but found reservoir rock of inadequate porosity and permeability. Operator Nuevo holds a 25% interest in the well.

Freeport-McMoRan Resource

Partners Ltd. Partnership (FRP) and McMoRan Oil & Gas Co. (MOXY), both of New Orleans, agreed to spend $200 million on a joint exploration program in the Gulf of Mexico and onshore Gulf Coast areas. FRP and MOXY will fund exploration costs 60-40, respectively, but all revenues will be shared equally. FRP also will pay $43.5 million to acquire from MCN Energy Group Inc., Detroit, MCN's 60% interest in a joint offshore exploration program the company has with MOXY, including eight gulf prospects. Agreement includes provisions to recapitalize MOXY through a stock offering.