OGJ NEWSLETTER

During what is supposed to be the slow season for news, the petroleum industry has managed to take up the slack with headlines featuring a string of mishaps around the world.

In a note of special irony as the industry continues to shoot itself in the foot on environmental concerns, an oil spill response vessel working in Alaska's Cook Inlet last week caused a spill when it rammed a drilling rig, one of two under contract to ARCO delineating the Sunfish discovery. The Sun Tide vessel, owned by Tidewater Marine, apparently drifted into a rig support leg, rupturing a fuel tank and spilling as much as 310 bbl of diesel fuel into the inlet, according to press reports. Drilling halted as industry mounted a response, and at presstime a 2 mile long, 1 mile wide sheen was reported mostly dissipated with no effect on beaches or marine birds.

Among other mishaps the past 2 weeks:

• About 20,440 bbl of crude spilled into the Mediterranean off Southeast France after a nuclear powered submarine collided with a Shell France tanker Aug. 19. Cleanup was continuing at presstime last week, with press reports indicating no signs of beach contamination and a dwindling slick being blown out to sea.

• About 80 people in Sperry, Okla., were evacuated after a Mapco ammonia pipeline ruptured Aug. 20, causing a large ammonia cloud to settle over a 2 sq mile area. The leak was quickly contained, and the 6 in. line repaired, but cause still was unknown at presstime last week. Mapco lost about 1,800 bbl of ammonia.

• Nova last week sent crews to repair a 36 in. gas pipeline that ruptured and caught fire Aug. 23 in a remote forested region about 40 km southwest of Valleyview, Alta. At presstime, Nova reported the line fire was out, but a forest fire blanketing about 7 acres still was being fought. Cause is unknown, and Nova's lining up alternative supplies for customers.

• As much as 5,000 bbl of crude spilled near Zaragoza, Northeast Colombia, after Marxist guerrillas bombed a pipeline Aug. 21. The resulting 31 mile long slick in the Magdalena River threatened the water supply of Barranquilla, Colombia's fourth biggest city, and Ecopetrol deployed containment booms at the mouth of the river near the Caribbean port.

Even as industry makes some headway on environmental matters in California, birthplace of the modern environmental movement (see stories, pp. 21, 23, in this issue and OGJ, June 7, p. 17), it encounters fresh hostility related to the 1989 Exxon Valdez oil spill off Alaska.

Interior Sec. Bruce Babbitt helped end a weekend commercial fishermen's blockade of the Valdez Narrows last week, which prevented seven tankers from calling at the Valdez terminal. Organized to call attention to weak returns of pink salmon to Prince William Sound, which fishermen blame on the spill's effects, the blockade ended when Babbitt promised to urge Exxon to meet with protestors on pending civil suits over the spill and to provide more government support for the fisheries. Exxon refused to meet with protestors--although key North Slope producers ARCO and BP did--instead issuing a statement saying there was no link between the low salmon return and the spill, AP reported. Babbitt said, "I think it's outrageous that an American company with the size and sophistication of Exxon doesn't have the will to sit down and talk with a bunch of fishermen on this sound.

General Accounting Office contends poor management has stalled environmental restoration under Exxon's $1.125 billion Exxon Valdez oil spill settlement. Four years after the spill, no final restoration plan is in place, and too few projects have been started, GAO said. Most of the money Exxon paid has gone for administrative costs of the trustee council set up to administer the settlement fund, GAO says. Of $202 million spent the first 2 years, AP reports, less than one fourth went for restoration.

A major oil spill test burn off Newfoundland appears to be a success (OGJ, July 26, p. 28). A group of agencies and associations led by Environment Canada burned 350 bbl of crude on calm seas Aug. 12 about 40 km east of St. John's. Industry observers of the test said it likely will help make in situ burning an acceptable method for dealing with an offshore oil spill. Data on toxic emissions is a key.

U.S. gasoline demand has logged its biggest year to year monthly increase in 5 years. DOE estimates gasoline demand, excluding fuel ethanol, for the 4 weeks ended Aug. 13 was up 1.5% from a year ago to 7.64 million h/d. Year to date demand is up 1.4%, also excluding ethanol, compared with a 1.8% year to date rise for the same period in 1988. DOE has changed reporting of gasoline supply to include fuel ethanol retroactive to Jan. 1, 1993. Bargain prices are a likely factor in the gasoline demand surge. American Automobile Association notes gasoline prices for the Sept. 6 Labor Day holiday are likely to be the lowest since 1986.

It's become a cliche that natural gas is the U.S. fuel of the future, but now there are dollar estimates to support that prediction. OGJ projects gross wellhead revenues from natural gas production in the U.S. in 1993 will surpass those from oil production for the first time. The gap narrowed sharply in 1991-92 after about 2 decades of a generally two thirds/one third split in favor of oil, according to DOE calculations of average prices and annual production. The split was roughly 60-40 in 1991 and 55-45 in 1992.

But OGJ projects natural gas will account for 51.7% of gross wellhead revenues of $80.8 billion from 1993 crude and gas output. By 2003, according to OGJ projections, the historical split could be reversed, with gas accounting for 68.8% of projected gross wellhead revenues of $160.5 billion.

Canada's federal government has asked the National Energy Board to conduct a written review of federal regulations governing long term exports of synthetic crude production from oilsands. Federal Energy Minister Bobbie Sparrow says a joint government-industry effort is needed to explore ways to improve the commerciality of oilsands production. NEB asked for written submissions by Sept. 30 and is offering a discussion paper on long term oilsands exports through its Calgary headquarters.

Is the Southeast Asia refining boom about to slow down?

Pertamina now says Indonesia is likely to defer plans to build several refineries in favor of expansions at its five existing refineries.

Except for the Balongan project, grassroots plants proposed in 1990-91 have been scuttled for financial reasons. In the next fiscal year, Pertamina will boost combined installed capacity of 850,000 b/d by 78,000 b/d, including an expansion of the older Balikpapan train to 60,000 b/d from 35,000 b/d and a 15% increase at the 300,000 b/d Cilicap refinery. When Balongan starts up in September 1994, that will add 125,000 b/d to Indonesian capacity and hike exports of gasoline, kerosine, and diesel.

Malaysia will kill tax incentives for companies applying for new refining projects in the country. Existing refineries and projects previously granted refining licenses will keep their tax incentives, says Trade and Industry Ministry, citing expectations the nation will eventually be a net exporter of refined products. Four Malaysian refineries--two Shell and one each for Esso and Petronas--have combined capacity of 255,000 b/d. Tax breaks were given for six other planned refineries with total capacity of 750,000 b/d.

Japan's MITI wants to see a 6,000 km oil and gas pipeline system laid from Central Asia to the East Asian Pacific Coast, reports Tokyo daily Mainichi Shimbun. It proposes Japan join in the project with China and such Central Asian nations as Kazakhstan, Turkmenistan, and Uzbekistan to provide a secure supply outlet outside the Middle East.

MITI plans a 1-2 year study and will set up a sponsor group with Japan National Oil Corp. and major Japanese trading houses, with construction targeted for early next century.

Talks between Azerbaijan and eight foreign oil companies hoping to develop three Caspian Sea oil fields have changed tack again.

The Azeris are again pursuing joint development in favor of three separate projects, says BP, reversing a June decision to return to the original three project plan (OGJ, July 1993, Newsletter). Talks resumed mid-August in Baku and are continuing in London. Financial Times, London, reported companies are encouraged by appointment of businessman Marat Manafov to lead the Azeri delegation, which provides a single contact point for the group.

U.K. Department of Trade & Industry said a team of western advisers has been appointed to conduct negotiations on behalf of the Azeri government, with no direct role in the talks for the Azeri state oil company.

"How the fields will be operated is still up in the air, " DTI said. BP, Amoco, and Pennzoil Co. originally led teams planning to develop Chirag, Azeri, and Guneshli fields respectively (OGJ, June 21, p. 34).

Copyright 1993 Oil & Gas Journal. All Rights Reserved.