OGJ NEWSLETTER

Safety concerns in the North Sea have again taken center stage in oil industry news.

Another gas blowout has plagued Saga on Norwegian North Sea Block 2/4 the second year in a row. Its 2/4-16 well blew out at 16,386 ft during a routine drill pipe repair operation with the Treasure Saga semisubmersible. Shear rams stopped the gas flow after 4-5 min. At presstime last week Saga was pumping heavy mud through kill lines to reduce pressures to zero from about 3,600 psi before reentering the well. Saga, which spudded the well in May, spent most of last year trying to control the 2/4-14 well about 2,600 ft away. Saga was deepening the well, declared dry after penetrating the main reservoir on the block, to 16,892 ft to gather more data when it encountered high pressure from an unexpected source at 16,386 ft.

Meanwhile, investigation still has not yielded a clue as to what caused Sleipner A platform to sink off Stavanger (OGJ, Sept. 2, p. 30). Statoil and platform builder Norwegian Contractors are gathering data for explanation of sudden inflow of water into a concrete leg that sank the platform.

Cost estimates still are not available for changes needed to Statpipe and Zeepipe delivery systems to accommodate alternatives to Sleipner gas. That will entail added compression on Statpipe and a new riser platform for Zeepipe to ensure gas is available for a Zeepipe start-up by October 1993 target.

U.K. Offshore Operators Association members have renewed their commitment to spend whatever is necessary to continue to ensure North Sea safety. Ukooa Dir. Gen. Harold Hughes told the Offshore Europe '91 conference in Aberdeen last week industry has spent or committed 1 billion in the wake of the Piper Alpha accident prior to publication of the Cullen report on Piper Alpha.

Elf has installed the 23,000 metric ton jacket for Piper B platform in 475 ft of water on Block 15/17 about 110 miles northeast of Aberdeen. It installed the jacket over a subsea template through which eight of 24 production wells have been drilled. Piper B topsides will be installed in November, with production start-up planned for June 1992.

Scottish Enterprise estimates capital outlays on the U.K. continental shelf will peak at a record 43 billion in 1992 and jump to a record of almost 52 billion by 1995, the company says.

Several cooperation agreements and contracts also were announced at the Offshore Europe conference:

Schlumberger Exploration, Reservoir Services (U.K.), and Seaway (U.K.) formed a joint venture to offer a fully integrated subsea intervention system.
Kvaerner Rosenberg and BEL Valves signed a cooperation agreement covering work in the subsea market, beginning with a subsea tree Kvaerner will develop with BEL technology.
Twenty-eight small and midsized Scottish companies formed Scottish Subsea Technology Group to bid for R&D funds, tender jointly on major projects, and establish a lobby.

SPE's president-elect sees a continuing need for decentralization in oil and gas companies to survive in today's market.

Roger Abel, Conoco vice-president and general manager E&P U.S.S.R., told the conference, "Centrally planned companies, like centrally planned economies, are too inflexible to operate successfully in a world of volatile prices and unrelenting social and economic upheaval ... We also face the dual pressures of a market demanding more quality and product value in an operating environment that is increasingly competitive. We must have continuous improvement to maintain acceptable levels of profitability." Abel, who foresees a continuing contraction in the industry's number of employees and the way employees carry out work, likens future company organization to a shamrock: one leaf representing a company's core professionals, the second and third leaves experienced contractors and flexible employees.

Argentina's upstream privatization program has taken another key step. For the first time, exploration and development rights will be offered together on blocks targeted for privatization. YPF Pres. Jose Estenssoro says private investors will be offered three undisclosed blocks in the Austral basin this week. YPF has identified 246 prospects on the blocks. Bids deadline is 90 days from date of announcement, expected Sept. 9.

An analysis of the Persian Gulf crisis by France's Hydrocarbon Directorate has underscored fragility of the world refining sector. It found a too small cushion between world capacity of 75.8 million b/d and demand and excessively high utilization rates. Refineries also are poorly adapted to yield lighter products in a crisis, concludes the directorate, which advocates tackling those problems via talks with IEA and within the EC.

Exports of Kuwaiti crude to Japan may resume shortly.

Cosmo Oil is negotiating a 30,000 b/d, 3 month contract beginning in October with Kuwait Petroleum Corp., reports Nikkan Kogyo Shimbun, a Tokyo industrial daily.

Even OPEC nations aren't immune to economic woes many developing nations face. Indonesia has deferred about $28 billion in Pertamina projects in response to President Soeharto's appeal that state owned companies reassess spending plans in light of the country's mounting balance of payments crunch.

New timetables, as yet unspecified, are planned for an export refinery at Sorong, Irian Jaya, a refinery planned for the domestic market, and planned expansion of a methanol plant at Bunyu, East Kalimantan. Because they are to be financed with nonrecourse foreign loans, projects remaining on schedule include an LNG plant at Bontang, East Kalimantan, a Cilacap aromatics complex, and an upgrade of the Musi refinery in South Sumatra.

Indonesia continues efforts to promote a transnational Asia-Pacific gas grid. It is pressing other Asean treaty countries to develop a $10 billion gas grid linking it, Malaysia, Brunei, Thailand, Singapore, and Philippines. Proved gas reserves among the six countries are estimated at 155 tcf. Indonesian Energy Minister Kartasasmita notes Pertamina and Malaysia's Petronas won't get into a price war on LNG because projected Far East demand will continue to outstrip the region's supplies.

Qatar has put out a tender to 13 companies to bid for 7- 10 LNG carriers to move cargoes from giant North field (OGJ, Sept. 2, Newsletter), including Hyundai, Mitsubishi, Mitsui, Kawasaki, Hitachi, Sumitomo, Germany's HDW, and Finland's Masa Tard Inc.

Western Gas Marketing Ltd. has signed agreements and received producer approvals covering supply of a combined 62 MMcfd for new cogeneration projects in Ontario and New York.

Western will supply a unit of Long Lake Energy Corp. 44 MMcfd beginning in November 1994 to fuel a 250,000 kw plant slated for eastern Ontario with power sold to Ontario Hydro. It means $1.3 billion (Canadian) in producer revenues during the 20 year contract. Western also has a 15 year contract to sell 18 MMcfd to Hadson Power Partners for a 79,000 kw cogen plant slated at Rensselaer, N.Y., expected to earn 750 producers $280 million.

The cogen developers cite a novel scheme that combines fixed pricing to expedite financing with market price tests, thereby broadening each producer's market portfolio.

A war of words is heating again over California's gas market among competing interstate pipelines (see story, p. 20).

Altamont, backing a system to move Canadian gas from the Alberta border to Wyoming to link with Kern River's Wyoming-southern California line, says FERC should stand firm on its finding of discriminatory and anticompetitive practices regarding PG&E/PGT's proposed Alberta-northern California expansion.

FERC said PG&E/PGT discriminates by charging an extra fee for shippers seeking delivery to northern California and restricting competition by banning crossover--allowing shippers to use PG&E/PGT's existing system to serve that market. PGT is contesting the finding, and Altamont wants PG&E/PGT construction delayed until May 1992 from the scheduled October start.