INDUSTRY BRIEFS

Refining

Exxon Co. U.S.A. and Witco Corp., Greenwich, Conn., are studying a joint venture to manufacture and market white oils and related products in North America. If a JV is formed, Witco's white oil operation in Petrolia, Pa., would be relocated to Baytown, Tex., where Exxon currently produces a large portion of the feedstocks for the Petrolia plant. Project, expected to cut cost of transporting feedstocks and improve access to high-purity hydrogen, would involve construction of a plant in Baytown using some major equipment from the Petrolia plant. Study is to be completed in first half 1997.

Alternate fuels

Federal Energy Regulatory Commission approved a settlement for gas produced from coal at the Dakota Gasification Co. plant near Beulah, N.D., formerly known as the Great Plains syngas plant. FERC overruled its administrative law judge and declared the $3.70/MMBTU rate prudent. Parties to the case included the Energy Department and three buyers of the synthetic gas: Tennessee Gas Pipeline Co., Transcontinental Gas Pipe Line Corp., and ANR Pipeline Co.

Exploration

Ramco Energy plc, Aberdeen, signed a letter of intent with Georgia's Ministry of Fuel and Energy for exploration and possible development of a block in the Kehketia district of Northeast Georgia. The block covers 1,360 sq km of the Alazani Valley and foothills of the Greater Caucasus Mountains. The company plans to conduct a seismic survey in spring 1997 prior to spudding a wildcat.

Mobil Equatorial Guinea Inc. and United Meridian Corp., Houston, plan an appraisal well early in 1997 after finding oil with the 105-IQI wildcat on Block B off Equatorial Guinea. Well flowed 2,000 b/d of oil on a controlled test, limited by lack of gravel packing. Drilled to 6,272 ft TD, the well encountered oil in two Qua Iboe zones not previously seen in the area. New Jade field is 3 miles southeast of Zafiro complex, near where the partners recently disclosed a satellite discovery (OGJ, Nov. 11, p. 47).

United Meridian drilled a new fault block discovery on Block CI-11 off Cote d'Ivoire that extends Lion field. The 4-B Lion exploratory well flowed on test at a rate of 5,360 b/d of oil and 3.4 MMcfd of gas through a 1 in. choke with 650 psi flowing tubing pressure. Well was drilled to TD of 12,500 ft. UMC also said its 4-A Lion dual-completion development well encountered nearly 100 ft of net pay, including a deeper-pool discovery. Well tested at a rate of 1,335 b/d of oil and 1.7 MMcfd of gas from the lower zone Foxtrot sand, a new reservoir in the field, and is producing 3,000 b/d from the Senonian upper zone.

Snyder Oil Corp., Fort Worth, signed a farmout agreement with an undisclosed company to fund drilling of an exploratory well on Snyder's Block B 8/38 in the Gulf of Thailand. Drilling is to begin in second quarter 1997. A second well is planned on the block in third quarter 1997. Deal allows the participant to earn a 50% working interest in the concession and be assigned a 50% working interest in Block B 4/32.

Snyder will spud by yearend 21-2 Sotamo wildcat on Block XXI in the Tamtsag basin of northeastern Mongolia. Snyder plans to drill four wells in the basin in 1997. So far, Snyder has drilled four wildcats in Mongolia, two of which resulted in oil discoveries. On Dec. 12, it trucked its first Mongolian crude cargo to the Chinese border, where oil was sold to a China National Petroleum Corp. unit. Snyder expects to begin regular oil sales from its 10-million acre Tamtsag basin concession when its two initial discoveries are placed on production in spring 1997.

Australia's Hardman Resources NL is seeking joint venture partners to test the Shafr al Khanjar prospect off Mauritania. Hardman says Mobil Oil Corp., which pulled out of Mauritania following civil unrest 5 years ago, speculated potential reserves in identified prospects in the area could total 266-956 million bbl. Hardman's license is the first to be granted since Mauritania revised its oil legislation with support from the World Bank.

Lubes

Star Enterprise, a joint venture of Saudi Aramco and Texaco Inc. units, plans to construct a 15,000 b/d lubricant base oils complex at its 235,000 b/d Port Arthur, Tex., refinery. Construction will begin in second quarter 1997, with completion slated for second half 1998. Complex will produce Group II and III base oils for Texaco Lubricants Co.

Total and Petroleum Authority of Thailand (PTT) formed a 30-70 partnership to build a 60 million l./year, $11.4 million lubricants blending plant at Sri Racha oil terminal near PTT's lube base plant. Plant, to come on stream in mid-1998, will be operated by PTT. Total will provide additives needed for its own brand of lubricants, already widely marketed in Asia. PTT and Total Lubricants Thailand will market the finished product.

Drilling-production

Gulf Canada Resources Ltd. and Talisman Energy Inc., Calgary, disclosed additional testing of 2 Sumpal, operated by Gulf unit Asamera (Overseas) Ltd. in Sumatra's Corridor Block production sharing contract area, confirming a major gas find with more than 2,624 ft of gas column (OGJ, Nov. 4, p. 44). Preliminary proved, probable, and possible gas reserves are 8.2 tcf. Estimates include possible reserves from Tetangga, first thought to be a separate structure, now indicated by seismic to be a Sumpal extension. Latest 2 Sumpal tests yielded a combined flow rate of 32 MMcfd of gas from three zones at 6,890-8,418 ft.

St. Mary Land & Exploration Co., Denver, will drill eight wells in the Cotton Valley formation and five wells in the Travis Peak formation in Box Church field, Limestone County, Tex., starting in 1997. Wells will be drilled at rate of about one per month until field is fully developed. Company reported 1996 net reserve additions of 26.4 bcf from Box Church field alone were equal to 35% of the company's total proved reserves of 75.7 bcf as of yearend 1995.

Elf Petroleum Nigeria Ltd. is awaiting approval by Nigerian National Petroleum Corp. for a 30-month development drilling program in Ofon field, about 50 km off Nigeria (OGJ, Aug. 21, 1995, p. 33). Elf plans to use the Perro Negro 2 jack up to predrill the first wells and will complete installation of fixed offshore facilities by yearend 1997. Production is to begin in early 1998 and reach 55,000 b/d in 1999.

Petroleo Brasileiro SA (Petrobras) and Oceaneering Multiflex, a unit of Oceaneering International Inc., Houston, signed a cooperation agreement to develop a series of new products for drilling, completion, and production applications in 3,900-6,560 ft of water for use in Petrobras' program to extend its ultradeepwater development projects during the next several years (OGJ, Nov. 11, p. 38). First new product slated for development is a high collapse-resistant pipe, first to be used early in 1997 in production of a pilot well in 5,576 ft of water.

Pipelines

El Paso Energy Corp. and CNG International Corp. (CNG) will own and operate Australian pipeline assets formerly held by Tenneco Energy. El Paso acquired the pipelines when it completed its $4 billion purchase of Tenneco Energy Dec. 12. El Paso and CNG each will own 30% of the newly formed Epic Energy Pty. Ltd., while four Australian investors each will own 10%. Pipeline assets include the newly completed 470-mile Southwest Queensland pipeline from Ballera to Wallumbilla and the 488-mile Moomba-Adelaide pipeline in South Australia.

Amoco Corp. and Shell Oil Co. units joined Sonat Inc., Birmingham, Ala., in plans to build and operate Destin natural gas pipeline project in the Gulf of Mexico (see map, OGJ, Aug. 5, p. 21). The $390 million, 210-mile, 36-in., 1 bcfd capacity system will originate at Main Pass Block 260 and extend 76 miles north to Pascagoula, Miss., where a new gas processing plant will be built. Pipeline will then extend another 134 miles north and connect with five interstate pipelines in Mississippi. Each company with hold a one-third interest in the pipeline, which Sonat will operate. Shell and Amoco will jointly own the processing plant and supply gas to it. Pending approval, construction would begin late in 1997, with service to start in mid-1998.

Alberta Energy and Utilities Board approved a 5-year toll agreement between producers and NOVA Gas Transmission Ltd., Calgary, that splits the benefits of cost efficiencies between NOVA and shippers on its system (OGJ, Aug. 12, p. 41). Deal is expected to produce higher profits and lower tolls in 1997 and reduce the need for new pipeline construction.

TransCanada PipeLines Ltd., Calgary, let a contract worth about $40 million (Canadian) to O.J. Pipelines Corp., Calgary, to lay a 31.7-mile, 42-in. pipeline in northwestern Ontario and conduct hydrostatic testing of two valve sections. Work begins Jan. 6, 1997, with an expected in-service date of Apr. 1, 1997.

Canada's National Energy Board scheduled a Jan. 27, 1997, hearing on an application by Interprovincial Pipe Line Inc. (IPL), Edmonton, to reactivate its Line 8 oil products pipeline in Ontario. The 130-mile, 20-in. pipeline connects IPL's Sarnia terminal with Millgrove Junction, north of Hamilton, Ont. Line 8, part of IPL's older system operations, was deactivated in November 1995. Company seeks reactivation to improve system efficiency.

Power

El Paso Energy and partners Fauji Foundation of Pakistan and Asian Development Bank (ADB) will build a $170 million, 151-MW gas-fired combined cycle power plant at Kabirwala, Punjab Province, Pakistan. Construction will begin in January 1997, with start-up slated for November 1998. El Paso holds a 42% interest in the plant, ADB 45%, and Fauji 13%. Gas will be supplied by Pakistan's state-owned Oil & Gas Development Corp., while Pakistan's Water and Power Development Authority will purchase power under a 30-year contract for residential, commercial, and industrial markets.

Petrochemicals

NOVA Chemicals Ltd., Sarnia, Ont., began a $120 million (Canadian) project to upgrade its Sarnia styrene plant. Project, slated for completion by September 1998, will increase styrene monomer capacity by about 350 million lb/ year to about 950 million lb/year.

Gas processing

Novagas Clearinghouse Ltd., Calgary, signed agreements with natural gas shippers in northeastern British Columbia that will allow construction of a $40 million (Canadian) deep-cut processing plant near Taylor, B.C. Plant, slated for completion in April 1998, would produce 12,000 b/d of natural gas liquids.

Mesa Inc., Irving, Tex., formed a gas processing alliance with Colorado Interstate Gas Co.(CIG), Colorado Springs, and Mapco Inc., Tulsa. Accord has a primary term through December 2009 involving initial volumes of about 8.5 bcf/year of gas previously processed at Mapco's now-closed Bivins plant, about 20 miles north of Amarillo. Mesa will process the gas at its Fain plant in Texas' West Panhandle field. Liquids and helium will be distributed among the three parties, with CIG retaining residue gas.

Companies

Clyde Petroleum plc, Ledbury, U.K., rejected a $712 million takeover bid by Gulf Canada Resources Ltd., Calgary (OGJ, Dec. 23, p. 38). Clyde said Gulf's offer is unsolicited, wholly unacceptable, and fails to take account of the record and prospects of Clyde and the quality of its business and portfolio. Gulf claims the offer represents a premium of almost 25% over the highest Clyde share price during the past 3 years.

Norsk Hydro AS and Petro-Canada signed a long-term cooperation agreement with an exchange of assets. Petro-Canada will receive from Hydro a 9% interest in Veslefrikk and a 7.5% interest in Njord fields off Norway. In return, Hydro will receive a 5% interest in Hibernia field off Newfoundland, plus 15% in Terra Nova field and 30% of another Grand Banks license. Hydro also will pay about $65 million of Petro-Canada's share of costs in Hibernia and Terra Nova developments (see story, p. 31).

PanCanadian Petroleum Ltd., Calgary, plans to sell a package of producing and non-producing properties in western Canada, including 33.6 bcf of proved and probable gas reserves and about 6.8 million bbl of liquids. CIBC Wood Gundy Securities Inc. is exclusive sale agent. Proceeds will fund part of PanCanadian's planned $900-920 million (Canadian) 1997 capital spending program, including $500 million for development and $300 million for exploration in western and eastern Canada. Another $80 million is earmarked for international E&D. Planned spending is up a little more than $100 million from 1996, reflecting an aggressive program to boost reserves.

Camco Products & Services Co., a unit of Camco International Inc., Houston, acquired the artificial lift business line, including gas lift systems and associated controls, from Halliburton Co. Camco will continue manufacturing equipment in Garland, Tex., and Maracaibo.

Gas marketing

Texaco Inc. unit Texaco Natural Gas (TNG) agreed to provide Municipal Gas Authority of Georgia (MGAG) firm gas supplies of 20.535 MMcfd gas for the next 10 years. MGAG made advance payments totaling $112.9 million for 75 bcf. TNG will deliver the supplies into the pipeline systems of Southern Natural Gas Co. and Tennessee Gas Pipeline Co. in volumes of 10 MMcfd and 10.535 MMcfd, respectively.