INDUSTRY BRIEFS

Coalbed methane

Oil Co. of Australia (OCA), Brisbane, a unit of Boral Energy Resources Ltd., Sydney, will acquire from Conoco Australia Ltd. Coalbed Methane Permit PL94 in southeast Queensland's Bowen basin. OCA will operate the permit, which contains 30 wells that supply 3.8 MMcfd of gas to a 50-km spur to the Queensland government's natural gas pipeline. OCA says output may rise to as much as 25.5 MMcfd.

LNG

Atlantic Richfield Indonesia Inc. and BG Exploration & Production signed an agreement to supply gas to the proposed Tangguh liquefied natural gas export project in Irian Jaya, Indonesia (OGJ, Sept. 15, 1997, p. 30). Supplies will come from the Wiriagar, Berau, and Muturi production-sharing contracts with state firm Pertamina. ARCO Indonesia will take on overall operatorship of the three field developments. ARCO is operator of Berau and Wiriagar, while BG E&P is operator of Muturi. ARCO and BG drilled another successful well, Vorwata-4, which flowed on test 36 MMcfd from Jurassic sandstone.

Exploration

Shell Exploration BV acquired a 60% interest in the production-sharing contract for Temir block in western Kazakhstan from Veba Oel Kazachstan GmbH. Veba will hold the remaining 40%. Shell will assume operatorship of the license and will lead second-phase exploration on a license originally awarded to Elf Aquitaine SA in 1993. Veba took a share in the license in 1995, and Elf sold its share to Veba in February 1997.

Pakistan
granted two exploration licenses to a joint venture of MS UMC Pakistan Corp., a subsidiary of United Meridian Corp. and Pakistan's Government Holdings. The licenses are for Pasni South block, covering 7,400 sq km off southwestern Pakistan, and Ormara block, covering 5,945 sq km in the Mekran and Lasbela districts, Balochistan province. UMC Pakistan is operator of the blocks and will make all exploration expenditures.

South Africa's
Energy Africa Ltd. and Soekor (Pty.) Ltd. signed a technical cooperation agreement covering Blocks 3B and 4B in deep water off the country's west coast. The agreement gives Energy Africa the right for 1 year to evaluate exploration potential of the blocks. Planned work includes reprocessing of seismic data and an integrated technical and economic evaluation. If results are encouraging, Energy Africa intends to negotiate with Soekor for a sublease of the blocks before commencing full-scale exploration.

Refining

Shell Eastern Petroleum (Pte.) Ltd. will cut staff by 25% at its 405,000 b/d Pulau Bukom refinery in Singapore. It cited intense regional competition, difficult market conditions, and the probability of higher costs as reasons for the cutback. The refinery currently has a staff of 1,000.

OMV AG
plans to acquire a 10% stake in Karachi's Pak-Arab Refinery Co. Ltd. (Parco) from Abu Dhabi based International Petroleum Investment Corp. (IPIC). Parco, which owns and operates a 1,215 km pipeline from Karachi to Mehmood Kot near Multan, also intends to build a 90,000 b/d conversion refinery at Mehmood Kot by 2000. The refinery will be financed by export credits and Parco's internal sources. The estimated project cost is $886 million, which will be financed with an 80-20 debt-to-equity ratio.

Pipelines

ANG Pipeline Co., a subsidiary of TransCanada PipeLines Ltd., Calgary, is seeking customers for a proposed natural gas pipeline across British Columbia. The 561-km, 20-in. Kootenay Pacific Pipeline will extend from Yahk, B.C., to Huntingdon/Sumas, B.C. Open season will close at the end of January. ANG plans to file an application with Canada's National Energy Board in third quarter 1998 and begin construction in May 1999. Completion of the 550 MMcfd high-pressure line is scheduled for 2000. It will parallel existing rights-of-way over 75% of the route. Estimated cost is $530 million (Canadian).

Daehan Oil Pipeline Corp.
(Dopco), South Korea's state oil distribution company, commissioned a 593-mile crude oil line and oil storage terminal at Songnam, near Seoul. Dopco invested about $890 million in the projects during 7 years. The terminal has capacity to store 1.97 million bbl of petroleum products and load 186,000 b/d of oil. The pipeline will transport products from five refineries, including those of Yukong Ltd. and Hyundai Oil Refining Co.

Petroleos Mexicanos let contract for engineering, procurement, and installation of a subsea pipeline in Mexico's Campeche Sound to Commisa, a joint venture of Halliburton Co. unit Brown & Root Energy Services and Mexican contractor Grupo R. The 85-km, 36-in. pipeline will run from Cantarell offshore producing complex to Atasta pumping station near Ciudad del Carmen. The contract is valued at $140 million. Commisa let contract to London's European Marine Contractors Ltd., a joint venture of Brown & Root and Italy's Saipem SpA, for pipelaying. Completion is expected late in spring 1998.

China
completed a 534-mile natural gas pipeline from Shaanxi province to Beijing. The $475 million line will transport gas from Changqing field in northwestern China's Ordos basin. Shipments are expected to total 10.6 bcf in 1998. The line eventually will deliver 212 bcf/year.

Germany's
Ruhrgas AG and Russia's Gazprom received approval from the U.N. Framework Convention on Climate Change for a project to reduce CO2 emissions from Russia's gas transmission grid. The first phase of the project will involve application of compressor optimization software, developed by Ruhrgas, on six parallel 800-km pipelines taking gas from Siberia to western Europe. Ruhrgas reckons the pilot project will save 75 million cu m/year of fuel gas, leading to a reduction in CO2 emissions of 150,000 metric tons/year and a cost saving of $5 million/year.

Six companies
will build and operate pipelines to carry natural gas liquids and condensate from Sture crude oil terminal and Kollsnes gas treatment plant to Statoil's refinery at Mongstad, Norway. Here the partnership will build a plant for converting 20,000 b/d of Troll and Oseberg NGL and condensate to propane, butane, and naphtha. Project completion is slated for October 1999. Total cost is about 1.2 billion kroner. The partnership is called Vestprosess DA and comprises operator Statoil 58%, Saga Petroleum AS 17%, Mobil Development Co. Norway 10%, Norske Shell AS 8%, Total Norge AS 5%, and Norske Conoco AS 2%.

Companies

Belco Oil & Gas Corp., New York, agreed to acquire Coda Energy Inc., Dallas, for $324 million plus warrants. Belco will purchase for $149 million all of Coda's outstanding stock from an affiliate of Enron Capital & Trade Resources Corp., Houston, which owns 95% of Coda's common stock, and from certain members of Coda's senior management. Belco will assume about $175 million of Coda's debt and issue 3-year warrants to purchase 1.667 million shares of stock for $27.50/share.

India's Oil & Natural Gas Corp.
(ONGC) will exceed its target for oil production by about 16,000 b/d this year says ONGC Chairman B.C. Bora. Crude production is expected to reach 572,000 b/d instead of the targeted 556,000 b/d. Production in 1996 was 570,000 b/d. Bora noted that the decline in production from Neelam offshore field off India's western coast was halted following the development of a reservoir management plan. Neelam is producing 40,000 b/d, up from 32,000 b/d. The field's design capacity is 90,000 b/d.

Phillips Petroleum Co.
will acquire Pennzoil Resources Canada Ltd.'s 50% interest in the Zama/Virgo joint venture in northwestern Alberta for $104 million. Last month Phillips agreed to acquire Gulf Canada Resources Ltd.'s 50% Zama/Virgo interest for $165 million plus Phillips's 100% interest in Saskatchewan's Coleville heavy oil field. Zama/Virgo produces 7,500 b/d of oil and 70 MMcfd of gas. The deal gives Phillips a 90% working interest in the area's oil properties and 100% in the gas properties. Combined net reserves are 100 million boe of conventional oil and gas.

Blackstone Group
acquired for $135 million TrizecHahn Corp.'s 65% controlling interest in the common equity of independent refiner Clark USA Inc., St. Louis. Occidental Petroleum Corp. and Gulf Resources Corp. will retain their minority interests. Clark's total market capitalization, including publicly traded debt and privately held equity, is about $1.1 billion. Clark operates three refineries-one in Texas and two in Illinois-with a combined capacity of 308,500 b/d.

Drilling-production

Colombia's Cusiana/Cupiagua oil producing complex set a production record of more than 300,000 b/d with the start-up of two 80,000 b/d production units at the Cusiana central processing facility. Partners also completed expansion of the Oleoducto Central SA pipeline. The milestones put operator BP Exploration Co. (Colombia) Ltd., Empresa Colombiana de Petroleos, and Triton Energy Corp. closer to their production goal of 500,000 b/d in mid-1998. Production will vary between now and yearend, when all Cusiana equipment will be operational and output will be about 320,000 b/d. Completion of two additional production units in Cupiagua field will boost output to the target level.

Texaco North Sea UK Ltd.
started gas production from the Erskine gas/condensate field on Blocks 23/26b and 23/26a. Texaco says Erskine is the U.K. North Sea's first high-pressure, high-temperature gas field (OGJ, Mar. 17, 1997, p. 36). Texaco plans further development drilling, with output reaching 120 MMscfd of gas and 29,600 b/d of condensate by October 1998. Operator Texaco and BP developed the field in a 50-50 partnership.

Mobil North Sea Ltd.
awarded a 2-year contract to Reading & Bates Corp., Houston, for the second-generation semisubmersible J.W. McLean. Mobil will use the semi to drill in the U.K. North Sea. The contract is worth $105 million and will commence in second quarter 1998.

BHP Petroleum Pty. Ltd.
and Phillips Petroleum let an engineering contract to a joint venture of Fluor Daniel, Irvine, Calif., Australia's Ramhill Worley, and Oslo's Aker Group for the upstream liquids development phase of the Bayu-Undan field in the Timor Sea, 500 km northeast of Darwin, Australia. The arrangement gives the engineering group the option to award detailed engineering and engineering support contracts. Estimated cost of the project's first phase is $10 million (Australian).

Cogeneration

Amoco Power Resources Corp., Houston, and CU Power International Ltd. (Cupil), a unit of ATCO Group, Calgary, will develop a steam enhancement project at Amoco Canada Petroleum Co.'s Primrose heavy oil operation in northeastern Alberta. Each company will own a 50% interest in Primrose Power Plant J.V., while Amoco will be the sole owner of the heat-recovery steam generator. The 84-MW plant will produce about 1 million lb/hr of high-pressure steam. Completion is scheduled for October 1998. Total cost is $75 million (Canadian). Any surplus power will be sold to the area grid.

Alternate fuels

Enron Wind Corp. acquired the assets of German wind turbine manufacturer Tacke Windtechnik GmbH. Enron also announced the formation of a new German subsidiary, Enron Wind Holding GmbH.

Petrochemicals

Huntsman Corp., Salt Lake City, will close its 70 million lb/year polystyrene (PS) plant at Willow Spring, Ill., and three PS production lines at its Belpre, Ohio, plant. The closures will eliminate 150 million lb/year of capacity: 125 million lb/year of PS crystal, and 25 million lb/year of medium-impact PS. Huntsman said overcapacity and depressed prices prompted the move.

Montell Polyolefins BV
commissioned a new specialty polymers manufacturing plant at Moerdijk, Netherlands. The plant has capacity to produce 150,000 metric tons/year of Catalloy proprietary process resins. It uses propylene and ethylene feedstock from the adjacent Shell Chemicals BV complex. The new plant is Montell's third Catalloy unit. The company operates a 100,000 ton/year plant at Ferrara, Italy, and a 100,000 ton/year unit at Bayport, Tex.

Pakistan's Sapphire Chemicals Ltd.
is studying the prospect of building a $90.9 million polypropylene (PP) resin plant at Port Qasim, Pakistan. The 80,000 metric ton/year plant will be financed under a debt-to-equity ratio of 60-40. Mitsubishi owns a stake in Sapphire, which will import propylene monomer. Pakistan now imports about 60,000 tons/year of PP at an fob price of $670/ton. Before Sapphire will proceed, it wants Pakistan to guarantee import duties on PP granules will remain at 45% for 10 years. Pakistan's import duties on propylene are only 5%.

Gas storage

Progas Storage & Marketing Inc., Abilene, Tex., agreed to purchase the Blackhawk natural gas storage reservoir in Vigo County, Ind., from Hamilton Natural Gas Co., Indianapolis. Blackhawk field, with an estimated working capacity of 5-7 bcf, is an aquifer reservoir in Geneva dolomite and is near the Texas Gas Transmission pipeline and Tenneco's Midwestern Gas Transmission system. Progas estimates the field will be operational in 1998.

Power

Chevron Asiatic Ltd. let contract to Destec Energy Inc., a unit of NGC Corp., Houston, and Australian electricity utility Stanwell Corp. Ltd. to build a 766-MW independent power project near Townsville, Queensland. The plant will include two 383-MW combined-cycle, gas fired units, the first due in operation by July 2001 and the second by July 2003. The plant will be owned 50-50 by Destec and Stanwell. Chevron will provide feedstock gas via a proposed pipeline from Papua New Guinea to Queensland.