U.S. Industry Scoreboard 3/13 (72400 Bytes)
The U.S. government is targeting petroleum projects in its efforts to keep Iran ostracized in the world community.
That can be seen in the firestorm of controversy that has erupted over Conoco's $1 billion oil and gas field development deal with Iran (see story, p. 32). Disclosure of the project drew strong criticism from Congress and the Clinton administration. Sen. Alfonse D'Amato (R-N.Y.), who recently called for a ban on trade with Iran, said he was "deeply distressed" by the announcement.
D'Amato will hold hearings this week on his bill to prevent U.S. companies or their subsidiaries from doing business with Iran. That legislation is designed to halt purchases of a big volume of Iranian oil by foreign subsidiaries of several U.S. majors that is resold outside the U.S. Congress has barred most trade with Iran since Islamic militants took over the country in 1979.
White House Press spokesman Mike McCurry said of the Conoco deal, "As a general thrust of our policy, which is designed to bring pressure to bear on Iran and get them to behave in the world community, this is not a helpful development." Deputy Energy Sec. Bill White said, "The U.S. government is not encouraging infrastructure development in Iran. The regime in Iran has taken many actions that are repugnant to U.S. policy" White said companies doing business with Iran generally are unable to get support from international banks, making the ventures more risky than usual.
In addition, Iran has accused the U.S. of trying to block it from joining an international group seeking to develop three giant oil fields in the Caspian Sea off Azerbaijan (OGJ, Jan. 30, p. 31).
Azeri state oil company Socar last year offered Iran a 5% interest carved out of its 20% stake in the $8 billion project without first consulting its western partners. Now Iran says only the U.S. members of the large group backing the project oppose its participation, citing Iran's alleged support for terrorist groups.
Iran claims the U.S. companies are being pressured by Washington to block Iran's involvement in the project., U.S. members of the group are Amoco, McDermott, Pennzoil, Ramco, and Unocal.
Among other group members are BP, Statoil, Russia's Lukoil-whose participation at first also drew opposition-and Turkey's state oil firm.
Meantime, Lukoil has clinched a venture with Socar to develop Kyapaz oil and gas field and Karabakh gas field in the Azeri Caspian. Agip reportedly is guaranteed participation in the project but still is negotiating terms.
Finland's Neste and Russia's Transneft will conduct a detailed feasibility study of a proposed $1.3 billion pipeline to transport crude oil from Russia's western Siberia, Volga-Urals, and Timan-Pechora oil fields to refineries near St. Petersburg and Helsinki.
The line would extend from Yaroslavl to the Kirishi refinery near St. Petersburg, then to the proposed Primorsk terminal near Vyborg on the Gulf of Finland and to Neste's Porvoo refinery and harbor.
The project's first stage would be a 200,000-300,000 b/d line from Kirishi to Porvoo, with capacity expandable to accommodate Primorsk terminal throughput.
A second stage calls for completing the other links to increase export capacity ultimately to 400,000 b/d. Neste wants to start the study by spring with Transneft and other prospective partners and focus on route options, technical needs, and detailed cost estimates.
Petronas soon will disclose sweetened terms for production sharing contracts to boost flagging interest in Malaysian exploration.
Wood Mackenzie, Edinburgh, says relaxed terms may not spark an exploration revival similar to one that followed a revision of terms in 1985.
That's because the bulk of Malaysia's most prospective acreage is under license, and with more than 450 exploratory wells drilled the past 25 years, it should be considered a relatively mature province. A bigger concern, says Wood Mackenzie, is Malaysia's slow progress in developing discoveries.
Petroleum companies' rush into independent power projects continues unabated (OGJ, Mar. 6, Newsletter). Exxon and Duke Power unit Duke Energy Corp., Charlotte, N.C., have signed a long term agreement to pursue power investment opportunities in China outside Hong Kong and Guangdong province. Included are grassroots and privatization projects.
British Gas describes the U.K. government's new gas bill, which outlines conditions for opening the domestic gas supply market, as a reasonable basis for competition.
CEO Cedric Brown said, "We await publication of the new licenses to ensure that there will he genuinely even handed competition."
U.S. gas demand will climb to almost 26 quadrillion BTU by 2010 from 21.7 quads in 1994, predicts AGA. It contends gas wellhead prices in 2010 will be less than $2.64/MMBTU in 1995 dollars.
DOE predicts a price 31% higher than that, but AGA said, "There never has been a competitive commodity, energy or other, that has experienced the kind of long term real price increase forecast by the government for natural gas."
The association reckons supply in 2010 will break out as 21.3 quads domestic production, 3.3 quads Canadian imports, and 0.5 quads LNG imports.
The Coalition for Gas Based Environmental Solutions says industrial, commercial, and institutional boilers in the U.S. Northeast could cut emissions of ozone precursors by an average 50-70% through seasonal switching to natural gas. It said boilers switching to gas would enable states to cut NOx emissions at a cost lower than treating flue gas from oil fired boilers.
Ingaa will lobby FERC to allow pipelines to have rates of return higher than the current ceiling of 12%. Ingaa Chairman and Enron Pres. Richard Kinder contends investors are avoiding regulated pipelines and said, "We think it's time to take a fresh look at pipelines' return on equity." He said FERC also should. allow more incentive rates to encourage more efficient operations of pipelines and allow the lines and their customers to share savings.
Alaska's second LNG export project has cleared a major hurdle.
FERC last week approved the environmental impact statement for CSX unit Yukon Pacific's proposed $14 billion Trans-Alaska Gas System and related LNG plant at Anderson Bay, near Valdez.
FERC is expected to issue its final order on the project in about a month. Included in the project are an 800 mile gas pipeline from the North Slope to Valdez, a gas conditioning plant on the slope, and a fleet of 15 LNG carriers.
The project has letters of intent from Taiwan and South Korea to buy as much as 6 million metric tons/year of the 14 million tons/year the project needs to be viable. Japanese buyers probably would take up the rest if North Slope producers agree to sell the gas and take equity stakes in the project, but the producers still are conducting a study of the project's feasibility.
Alaska currently exports LNG to Japan from Cook Inlet area fields.
The Clinton administration, in an effort to blunt attacks on the Endangered Species Act, will propose rules to exempt tracts of 5 acres or less from some of the law's more onerous provisions.
DOE's Bill White says the administration won't push its proposal for a corporation to help the oil and gas industry raise field development capital during the current congressional session. White said much work still must be done to refine the concept of the Petroleum Development Investment Management Corp., or Paddie Mac (OGJ, Feb. 20, p. 32).
API says the price difference between reformulated gasoline (RFG) and conventional gasoline is smaller than reported earlier.
A study by Computer Petroleum Corp., St. Paul, found the average retail price of RFG in Milwaukee was 10.20 more than that of conventional gasoline Dec. 31 but only 50 more by Feb. 25.
U.S. Gulf Coast propane stocks have fallen to a record low, and spot propane prices could spike this month if cold weather persists.
That's the warning from Purvin & Gertz, Houston, which warned EIA when it predicted the February stock plunge last November.
Gulf Coast stocks fell to 12.185 million bbl at the end of February as a result of record petrochemical consumption of propane, a collapse in winter water.borne imports, higher foreign propane prices that are drawing propane exports from the U.S., and colder weather in the U.S. Northeast and Midwest.
Overall U.S. propane inventories last month reflected a national stockdraw of 1.73 million bbl, slashing stocks to 24.81 million bbl, compared with a 5 Year average for February of 29.35 million bbl. Mont Belvieu propane rose to about 35.50/gal Feb. 27 from an average 32.750 in January.
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