INDUSTRY BRIEFS

Government

U.S. Minerals Management Service scheduled a July 1 public meeting in Golden, Colo., on its revised rule for changing the method of calculating royalties on gas produced on federal leases. The agency also extended the comment period 30 days to July 23.

U.S. Energy Department extended until July 16 the deadline for public comment on the future of the Strategic Petroleum Reserve (see related story, p. 26). The agency asked whether it should continue to maintain the reserve and if so, what the operating parameters should be (OGJ, May 5, 1997, p. 62).

Tankers

South Korea's Samsung Heavy Industries Ltd. signed a $170 million contract to provide two oil tankers to Chevron Corp. The 310,000 dwt tankers, measuring about 1,100 ft long, 192 ft wide, and 102 ft tall, are slated for delivery late in 1999 or early in 2000. Chevron paid about $170 million for two similar tankers last year.

Spills

Japan's fishery agency said there was no significant damage to marine life in the Sea of Japan in the wake of a large oil spill caused by a Russian tanker that ran aground earlier this year (OGJ, Apr. 21, 1997, Newsletter). Some beaches still contain fuel oil from the ship, but the seawater and marine life were affected only slightly, the agency said. A sampling of seawater taken in March showed normal density in water from all areas except around Mikuni, Fukui Prefecture, where the vessel's capsized bow drifted about 200 m offshore. The agency is continuing to examine the area and plans to release a final report next spring.

Exploration

Namibia will hold its third petroleum licensing round during Oct. 1, 1998-Mar. 31, 1999. Seminars on technical, legal, and fiscal topics will be held in London and Houston prior to the round. Namibia is examining the competitiveness of its licensing terms and intends to make any changes it deems necessary before the next round.

Ramco Energy plc, Aberdeen, signed a production-sharing agreement with Georgian state oil company Saknavtobi covering Block N10 in the Kaheti district of northeastern Georgia. The block covers 525 sq miles of the Alazani Valley and Greater Caucasus Mountains foothills, an area well known for natural oil and gas seeps. Earlier wells there confirmed the existence of light, low-sulfur oil.

Angola's Sonangol awarded operatorship of Block 22 to Texaco Inc., marking the company's first deepwater exploration block off Angola. Texaco operates shallow-water Block 2-80/85, where it produces 110,000 b/d of oil. Texaco also has nonoperated interests in Blocks 16 and 20 and onshore.

Drilling-production

A gas well blowout and fire June 16 in a remote Louisiana swamp left four dead and wreckage so severe that rescue efforts were impeded. The fire still was not extinguished at presstime June 18. The SL 411-19 well, operated by Denbury Resources Inc., Dallas, is near Little Bayou Pigeon, St. Martin Parish, about 60 miles west of New Orleans and 45 min by boat to the closest town. Parker Drilling Co., Tulsa, was completing the well when the blowout occurred; the cause is unknown.A fire caused by a well blowout in Mugrachhara gas field in the Sylhet region of northeastern Bangladesh injured four people, damaged train tracks, and threatened adjacent forest last week. A well being drilled for operator Occidental Petroleum Corp. had a gas kick just before the well blew out and caught fire June 15. The well was still ablaze at presstime.

BP Exploration set a record for extended-reach drilling, reaching 22,441 ft TD in its Pompano A-18 well in the Gulf of Mexico's Viosca Knoll 989 area, claimed contractor Baker Hughes Inteq, Houston. BP reached a total displacement of 18,725 ft and a TVD of 10,437 ft. Inteq said it believes that the 133/8-in. casing string set at 14,086 ft also sets a record for the longest casing string of its size. BP now holds the record for the top five displacement wells in the gulf, the contractor said.

Total Oil Marine plc increased reserve estimates in the U.K. North Sea's Alwyn North field after testing two wells. An appraisal well flowed 18 MMcfd of gas and 1,800 b/d of condensate, proving a further extension of the reservoir. The 3/9a-11 exploratory well found a separate structure to the south and flowed 18 MMcfd of gas and 1,000 b/d of condensate. Reserves are now estimated at 1 billion bbl of oil equivalent (boe), of which 250,000 boe has been produced. Original reserves were pegged at 200 million bbl of liquids and 950 bcf of gas when the field came on stream in 1987.

Shell U.K. Exploration & Production let contract to Coflexip Stena Offshore Ltd., Aberdeen, for well intervention services using CSO Seawell multipurpose support vessel, citing significant cost savings compared with a semisubmersible drilling rig. The contract runs to March 2000 and may be extended. Shell struck the deal because of the increasing number of subsea wells it operates in the U.K. North Sea: 49 at present and projected to rise to 80-100 by 2000.

Southern Mineral Corp. (SMC), Houston, paid $2.7 million to acquire a 10% interest in southwestern Ecuador's Santa Elena concession, where cumulative output exceeds 120 million bbl of oil from shallow formations and current production is 1,500 b/d. SMC said that operator Cia. General de Combustibles SA of Argentina plans to spend $36 million during the next 3 years to rehabilitate wells in several oil fields and explore for and develop new oil and gas reserves. Plans call for 200 line miles of seismic and drilling one exploratory well this year and an undisclosed number of horizontal wells in future development.

India's Oil & Natural Gas Corp. will work over its shut-in onshore and offshore wells. As many as 48 eastern and western region wells will be rehabilitated by the end of the current 1997-98 fiscal year, with work slated for completion by 2000. ONGC plans to form a 50-50 joint venture with an undisclosed Dutch company to further explore shut-in fields in the Bombay High area. ONGC hopes to recover natural gas from the fields using advanced technology.

SOCO International plc, London, a unit of Snyder Oil Co., Fort Worth, plans to drill eight wells on its block in Mongolia in 1998 and 17 in 1999, after testing its fourth oil producer out of six wells drilled. SOCO claims its Sotamo 19-3 well is the country's first recorded free-flowing oil well. During a 16 hr test, the well flowed at a stabilized 687 b/d of 37° gravity oil through a 3/8-in. choke. SOCO plans to complete the four wells and install production facilities this summer. Oil will be trucked to China for sale to China National United Oil Corp. Plans call for a 300-km pipeline to the Mongolia-China border to be laid, beginning in 1999.

Seven Seas Petroleum Inc., Houston, will drill the 3 Segundo step-out on the Dindal block of Colombia's Emerald Mountain prospect, operated by its GHK Co. Colombia unit, to about 6,800 ft TD about 1.7 km south of the 2 El Segundo bottomhole location. Seven Seas, which produced about 167,000 bbl of oil from 1 and 2 Segundo wells without pressure drawdown, holds a 57.7% interest in Emerald Mountain prospect and the Rio Seco and Dindal blocks.

Norsk Hydro AS received a $75 million claim from Aker Maritime AS, Oslo, for extra costs incurred in construction of Njord platform. The claim relates to Hydro's demand to speed up work on the platform and for amendments to work plans after Hydro decided to commission the platform in parallel with Aker's commissioning efforts. The platform is due for delivery in July and is being built under a $500 million contract awarded in March 1995 (OGJ, Mar. 27, 1995, p. 30).

Canadian Fracmaster Ltd., Calgary, won approval from the Chinese government for a 720-well hydraulic fracturing program in certain undisclosed oil fields in China. The company will start with 10 wells in the third quarter and will increase that to 140 wells/year beginning in 1998.

Abacan Resources Corp., Calgary, postponed a debt financing plan and is reviewing financing alternatives for its offshore Nigeria oil field. The company is not comfortable with a $160 million financing program. It expects production for June to drop below the May average of 21,900 b/d. Cash flow for the balance of this year and 1998 will be substantially lower than expected. Abacan plans to seek new financing after production levels and cash flow increase.

Petrochemicals

Chevron Corp. and the Petroleum Authority of Thailand (PTT) formed a joint venture to build a $1.4 billion aromatics plant in Rayong province, southeast of Bangkok on the Gulf of Thailand. The plant, which will produce benzene and paraxylene, will be fed by the nearby Star Petroleum Refining Co. and share some of the refiner's facilities. Star is a joint venture of Chevron's Caltex unit and PTT. Chevron will take a 60% interest in the JV, PTT the remainder.

Pipelines

Nova Gas Transmission Ltd., Calgary, will not increase its unit transportation costs during the next 4 years that it plans a $1.4 billion (Canadian) expansion program. The Nova Corp. unit operates the main gas pipeline system in Alberta and is facing competition from proposed new lines that would bypass its system. Alberta currently operates under a postage stamp tolling system where there are uniform tolls throughout the province. The proposed expansion would add 2.25 bcfd capacity to the Nova system, which moved 4.4 tcf of gas in 1996. The proposal was made in Nova's annual filing to the Alberta Energy and Utilities Board.

Turkey and Ukraine agreed to build a $600 million pipeline to carry Middle East oil from the Mediterranean Sea to the Black Sea. The 500-mile, 500,000 b/d capacity pipeline will extend from Turkey's Mediterranean port of Ceyhan to the Ukraine's Black Sea port of Samsun, with crude to be used primarily to meet Ukraine demand. Ceyhan is the terminus of another pipeline from Iraq's oil fields near Kirkuk. Ukraine now depends on oil from Russia and is seeking to secure oil supplies from the Middle East.

Companies

Monterey Resources Inc. and McFarland Energy Inc., both of Bakersfield, Calif., signed a definitive merger agreement under which Monterey will acquire McFarland in a deal valued at $106 million. Both companies have production in California's supergiant Midway-Sunset heavy oil field. Monterey expects the merger will enable it to increase production from enhanced recovery operations at substantial cost savings. McFarland's Midway-Sunset output is now about 6,400 b/d of crude and 5 MMcfd of gas; Monterey's output from the field is about 39,000 b/d.

PanEnergy Corp., Houston, and Duke Power Co., Charlotte, N.C., completed their $7.7 billion merger June 18, becoming Duke Energy Corp. (OGJ, Apr. 21, 1997, p. 19). The new company has four business units. Based in Charlotte will be Duke Power, with more than 1.8 million electric customers in the Carolinas, and diversified operations, which include real estate and telecommunications groups. Houston-based offices will handle energy services, such as gas and power marketing, power plant construction, and energy transmission.

Mitchell Energy & Development Corp., The Woodlands, Tex., agreed to sell The Woodlands Corp. planned community management unit to Morgan Stanley Real Estate Fund II LP and Crescent Real Estate Equities Co. for $543 million cash. Mitchell will report a $55-60 million after-tax loss in the second quarter from the sale.

Enserch Exploration Inc., Dallas, will relocate an asset management team to Houston as part of a realignment to hone its focus on exploration outside the U.S. and on the Gulf of Mexico's Outer Continental Shelf and on deepwater joint ventures. It also is considering forming an alliance with a service company to increase output from six East Texas fields. Enserch will sell 200-250 nonstrategic properties of its total of 480 later this year, timed to coincide with expected increases in East Texas output.

Texas Utilities Co., Dallas, which wants to acquire Dallas' Enserch Corp. (OGJ, Aug. 19, 1996, p. 42), is awaiting additional government approvals before the merger can proceed. The $1.7 billion merger plan, disclosed in April 1996, initially was delayed due to a U.S. Justice Department antitrust investigation, which was closed without action in March 1997. Texas Utilities now awaits U.S. Securities and Exchange Commission approval under the Public Utility Holding Company Act and approval from the Internal Revenue Service involving an unintentional misstatement in the original IRS merger filing.

Germany's EuroGas Inc. paid $6 million for the 50% stake in the TAKT exploration joint venture in the Russian autonomous republic of Sakha held by Austria's OMV AG. State-owned Sakhaneftegas holds the other 50%. TAKT's exploratory drilling confirmed substantial gas reserves, but the requisite export pipelines make this a long-term project. OMV is focusing on projects offering short-to-medium term returns.

Gas marketing

Vastar Gas Marketing Inc., a unit of Vastar Resources Inc., Houston, will become fuel manager for the city of Richmond, Va., on Aug. 1, in an alliance with Washington Gas Energy Services Inc. and Cook Inlet Energy Supply LP. The 1-year contract calls for Vastar to manage all the city's natural gas supply requirements, as well as its associated gas assets. These include more than 3 bcf of gas storage, about 160 MMcfd of pipeline capacity, and several contracts with various gas suppliers.