TAIWAN'S CPC PUSHES EXPANSION CAMPAIGN

Taiwan's oil industry is stepping up operations.

Last year state owned Chinese Petroleum Corp. (CPC), Taipei, increased gas production by 13.1 MMcfd and signed three contracts for joint exploration ventures on acreage in East Kalimantan, Indonesia, Argentina, and off Viet Nam.

CPC opened an LNG receiving terminal in Southwest Taiwan and resumed construction on a naphtha cracking plant, replacing two older ones at its Kaohsiung refinery. Work on the plant had been held up for more than 2 years because of protests from local environmentalists, said Y.S. Chen, CPC chairman.

Taiwan is undergoing a demand shift to higher quality products such as low sulfur fuels and unleaded gasoline. To meet the government's environmental requirements, CPC will increase capacity for those products by building several plants in the coming years, said Y.S. Kuan, CPC president in the company's 1990 annual report.

CPC has signed letters of intent with BHP Petroleum Pty. Ltd. subsidiary Pacific Resources Inc., Honolulu, and Malaysia's state owned Petroliam Nasional Bhd. to study the feasibility of building refineries in Southeast Asia. In addition, planning on a third refinery in Taiwan is under way.

UPSTREAM EFFORTS

CPC's onshore exploration and production program focused on development drilling of Panchanghsi and Hsinying gas fields and Chuhuangkeng oil and gas field.

Geologic and geophysical surveys were conducted in the western plain and foothill belt where the company completed geologic surveys that covered 515 sq km. It ran 564 km of seismic surveys.

Six wildcats were drilled during 1990, four of them completed. Gas flow was rated at 1.61 MMcfd at one. Production figures for the other three were not disclosed.

Two development wells at Chuhuangkeng were spudded last year, designated Nos, 137 and 138. CPC says well No 138 has gas reserves estimated at 280 million cu m, most of it in the Muu-Shan strata, which has an estimated 2.8 billion cu m CPC spudded a 3,700 m well during 1990 to that zone and hopes the project will produce 9.9 billion cu m/year of gas and about 2,500 bbl/year of condensate.

Taiwan's onshore gas production last year was 3.27 million cu m/day from its 89 producing wells. All gas is used domestically. Onshore production of condensate amounted to 527.423 bbl in 1990.

The main onshore producing areas continue to be Chinshui, Chuhuangkeng, Tiehchenshan, and Chingtsaohu. Other hydrocarbon bearing structures have been found at Chiting, Paishatun, Yungoshan, Paoshan. Kuantzulin, Shinying, and Chiashen.

CPC processes its gas at three plants near Tiehchenshan, Chingtsaohu. and Chinshui producing fields, CPC operates a carbon dioxide removal plant in Chuhuangkeng field.

Offshore, CPC continues to aim at development of CBK oil and gas field 25 km off Hsinchu and a structure designated CFC off Kaohsiung. Seismic surveys and drilling operations were conducted offshore during 1990, but results aren't disclosed. Five wildcats were drilled offshore last year. with four completed. One of them flowed 325,000 cu m/day and about 100 b/d of condensate.

CBK. which went on production in 1986, now has nine producing wells with a capacity of 500,000 cu m/day. CBK consists of one production platform. two well protector platforms, four seabed wells, gathering lines, and 25 km of trunk line.

Offshore seismic data covering 3,681 km during 1990 are being evaluated, the company reports.

Offshore production in 1990 was 170.7 million cu m of gas and 619,766 bbl of condensate.

CPC's offshore petroleum exploration division has drilled 113 wells since 1972, working alone or with joint venture foreign partners,

JOINT VENTURES

CPC has worked with foreign joint venture partners the past 20 years.

Affiliate Overseas Petroleum & Investment Corp. (OPIC) last year obtained interests in three new areas: the Sanga Sanga block in East Kalimantan, Block 115 off Viet Nam, and Block CNO-10 in Northwest Argentina.

Through competitive bidding in 1990, OPIC acquired Huffington Corp., Houston, whose assets included a 16.67% interest in Sanga Sanga. The 6,114 sq km onshore block holds proved gas reserves of 266.2 billion cu m and 184 million bbl of crude oil and condensate.

OPIC signed a farmout agreement with International Petroleum Ltd. and Swedish Exploration Consortium AB in May 1990 for the block off Viet Nam. Then in October 1990 it joined with Union Pacific Petroleum Co. to develop hydrocarbons in Argentina's Santa Barbara area.

OPIC dropped out of two ventures last year. It no longer operates the Northwest Leyte onshore concession in Philippines or the Ngowe permit off Gabon. It cited unfavorable geology as the reason for dropping them.

Meantime, it continues to operate the PPL-59 concession off Papua New Guinea, Etosha in Namibia, and the Sarawak. Malaysia, onshore SK-12 Block and offshore SK-7 Block.

It also continues to participate in exploration joint ventures that include the VIC/P20 permit off Australia, Alombe permit onshore Gabon, Blocks' 16 and 17 in Ecuador, Warim block in Irian Jaya, Indonesia, and 100 prospects in the U.S.

CPC-OPIC conducts exploration joint ventures on 14 blocks in 11 countries.

LNG IMPORTS

Capacity of Taiwan's LNG terminal at Yungan, Kaohsiung, which began operation in March last year receiving 1.5 million metric tons/year from Indonesia, will be expanded to 4.5 million metric tons/year. Completion is scheduled for June 1995.

The expansion will add three underground storage tanks with 130,000 cu m capacity each, along with piping, compression, and pumping facilities. LNG is earmarked for consumer use and industrial purposes including fuel for power plants and refineries.

A 24-30 in., 350 km gas trunk line is under construction. It will link Yungan terminal with Hsinchu to the north and Pingtung and Talin power plant to the south.

The line is being buried along the Sun Yat-Sen Memorial Freeway, There are to be 15 control stations and 30 valve stations and block valve stations installed along the line.

CPC last year signed a 20 year LNG supply agreement with Indonesia's Pertamina.

DOWNSTREAM PROJECT

CPC is expanding its Nankan refinery in Taoyuan with the addition of a 20,000 b/sd reforming unit and a 25,000 b/sd diesel oil hydrodesulfurization unit and related facilities. The project is to be complete by 1994.

The plant processes 20% of the nation's oil production, supplying 40% of northern Taiwan's products demand. Remaining products supply comes from the Kaohsiung refinery and imports.

The Kaohsiung refinery, in Tsoying, is one of Asia's most integrated facilities, CPC said.

The plant is equipped with six topping units with a combined capacity of 470,000 b/sd, five vacuum distillation units with 84,000 b/sd capacity, and other units for distillates hydrotreating, catalytic reforming, FCC, sulfur recovery, alkylation, coking, and manufacture of hydrogen, asphalt, solvents, and sulfuric acid.

PETROCHEMICALS

CPC sees continued growth in Taiwanese petrochemical operations.

It is building a naphtha cracking plant to replace two units built in 1968 and 1975. The construction project at the Kaohsiung refinery calls for nominal ethylene capacity of 400,000 metric tons/year. It was scheduled for completion last year.

Meantime, Formosa Plastics Corp. has proposed construction of another naphtha cracking plant, adding 450,000 metric tons/year of ethylene capacity to Taiwan's petrochemical supply. No timetable for building the unit is disclosed.

Elsewhere, CPC is proceeding with plans to boost aromatics production to meet Taiwan's synthetic fiber industry's demand for paraxylene.

Plans involve building a 75,000 b/sd naphtha fractionating plant, 12,000 b/sd aromatics unit, and 200,000 metric ton/year xylene separation unit-all at Linyuan. Also called for is a 30,000 b/sd reforming unit at Talinpu.

All four projects are to be complete in 1992.

CPC is building a terminal at Taichung Harbor to help handle storage and movement of petrochemicals.

OIL IMPORTS

Imports of crude and products increased during 1990.

Taiwan imported 155 million bbl of crude oil, up 0.92% from the year before. It imported 50 million bbl of products, an increase of 16.54% from 1989. All deals are conducted through direct purchase under long term contracts.

The nation experienced a temporary crude shortage at one point during 1990 when its Middle East supplies declined following Iraq's blitz of Kuwait. CPC delegates turned to other Persian Gulf countries in mid-August last year for oil supply increases to make up for the cutoff from Kuwait.

During the gulf crisis, Taiwan negotiated supply deals for crude oil purchases from Iran, West African countries, and Australia. Onshore inventories were kept at maximum levels, and tankers were used for floating storage volumes of as much as 5 million bbl. Taiwan also purchased 7 million bbl of crude oil futures options during the gulf crisis.

Imports of low sulfur fuel oil (LSFO) dipped to 12.3 million bbl, a decline of 35% from the year earlier. However, at times during the past 3 years LSFO imports were as much as 18.9 million bbl/year.

CPC has made a major investment in supplying LSFO island-wide. It completed two residue hydrodesulfurization plants at Kaohsiung and Taoyuan in 1990, and it expects to complete a 30,000 b/sd plant at Talin in 1993.

During the past decade, the company built a 20,000 b/sd vacuum gas oil-hydrodesulfurization plant in 1984 and added two 30,000 b/sd plants of the same type in 1986 and 1987, respectively, at Kaohsiung and Taoyuan.

ENVIRONMENTAL SAFEGUARDS

CPC has drawn up short term and midterm pollution control plans for its operations.

In the short term, 1989-91, company projects are expected to meet national environmental standards to be implemented in 1993. Focus in the short term is on the Kaohsiung refinery. Cost of meeting the standards isn't disclosed.

In the midterm, 1991-94, and at a cost of $38.7 billion (Taiwan dollars), solutions are expected for environmental problems of each CPC subsidiary.

Short term protective measures at Kaohsiung are to be taken in:

Waste water control. The Kaohsiung refinery is carrying out a turbidity improvement project, using a high speed clarifier. Tertiary treatment will be achieved when modernization of the plant's waste water management system is complete, in which active carbon is used to absorb nondegradable organics.
Air pollution control. Major work includes a shift to LNG as fuel for most furnaces and boilers, installation of flare gas recovery systems and ground flares to minimize offgas being sent to the elevated flare stack, construction of an electrostatic precipitator in the FCCU, and setup of stationary automatic air monitoring systems 24 hr/day.
In the midterm efforts will minimize waste gas, install low NOx burners, and improve the waste gas combustion system. CPC said SOx and NOx concentrations in the air will meet stricter standards by 1993.
Noise control. To reduce noise, CPC will install shelters, insulators, and silencers for heavy mechanical equipment such as compressors and furnaces. Noisy equipment is to be moved-away from neighborhoods near the plant. CPC has constructed a 20 m tall, 660 m long sound barrier, and a 60 m wide green belt to help reduce noise.
Solid wastes disposal. The company plans to construct high temperature incinerators and accessories at landfill sites to handle oily sludge, tank bottom sludge, and spent active sludge.
Groundwater remedies. At present, an "urgent measure for improving groundwater at the Kaohsiung refinery's east gate area" is under way. Sixty-one monitoring and recovery wells and 17 pumps have been installed there. After 6 months' continuous pumping last year, CPC said, the intercept wells were effective in preventing extension of contaminated groundwater. The company also installed 251 monitoring wells in other areas inside and outside the refinery to monitor groundwater quality.

Talin additions Two sets of cogeneration facilities will be installed at the Talin power plant by 1994. They will produce a combined 390 tons/hr of steam and 84,000 kw of power to be used to operate processing units.

CPC plans to build five cone roof and four floating roof oil storage tanks of 213,860 bbl capacity each at Talin. The storage units are scheduled for completion by mid-1 993.

In addition, crude oil filling facilities, oil storage facilities of 6.23 million bbl capacity, a pump station, and pipeline system are to be built on an 1,100 acre area in northern Taiwan. They are scheduled for completion in 1995. A site has not been disclosed.