Industry Briefs

Government

U.S. Minerals Management Service issued a final rule authorizing delegation of federal royalty management functions to state governments. The rule also allows states to receive and process production and royalty reports, correct report errors, perform automated verification, and issue subpoenas and orders to lessees. MMS also developed new well naming and numbering standards to simplify and clarify identification and data storage. MMS said the changes may reduce industry's data processing costs by 10-15%.

Courts

A Texas state district judge approved a settlement offer by Chevron U.S.A. Inc. in a suit in which Chevron and seven other major oil companies were accused by Texas and some private royalty owners of underpaying oil royalties dating to 1986-87. Attorneys for the plaintiffs said Chevron agreed to pay $17.5 million up front and base future royalty payments, estimated to be at least $100,000/year, on a valuation formula.

Environment

American Petroleum Institute and 10 associations representing other industries have asked the District of Columbia Circuit Court of Appeals to expedite their petition to block the Environmental Protection Agency's new smog and soot rule. The groups said, "Virtually every major industry in this country has filed or will file a petition challenging this rule, and states are expected to challenge the rule or participate in the review proceeding."

U.S. Environmental Protection Agency
will allow foreign refiners to supply U.S. reformulated gasoline (RFG) based on their own 1990 baseline data, rather than on an industry-average baseline. The rule makes it easier for foreign refiners to meet U.S. RFG requirements. EPA's initial requirement that non-U.S. refiners use a statutory baseline came under fire from the World Trade Organization, which found it violated free trade laws (OGJ, May 2, 1994, p. 54).

EPA
will require eight U.S. areas to meet a higher per-gallon oxygen standard for winter RFG beginning Sept. 29. The affected areas are: Philadelphia-Wilmington, Del.-Trenton, N.J.; Baltimore; Houston-Galveston-Brazoria, Tex.; Atlantic City; Dallas-Fort Worth; Norfolk-Virginia Beach-Newport News, Va.; Richmond, Va.; and Washington, D.C. The rule raises the per-gallon minimum oxygen standard to 1.6 wt % from 1.5 wt % because gasoline samples in some markets failed to meet the 2 wt % oxygen concentration required under EPA's averaging system.

Norway's Statoil
launched a program to reduce CO2 emissions from its installations by at least 30% in 10 years. Without the program, Statoil operations would be expected to increase CO2 emissions to 8 million metric tons/year from 5.5 million tons/year by 2000. Statoil and license partners each will contribute about half the 600 million kroner ($85 million) budget. Work will include development of a gas turbine featuring CO2 removal and deposition. The first unit could be installed at Karst gas treatment north of Stavanger in 2005.

Drilling-production

Total SA took a 20% interest in the production-sharing contract (PSC) for Absheron block in the Caspian Sea off Azerbaijan. Remaining interests are operator Chevron Corp. 30% and State Oil Co. of Azerbaijan Republic 50%. The Absheron permit, formerly called Tagiyev, covers 400 sq km in 250-650 m of water. The tract lies 40 km southwest of Azeri-Chirag-Gunesh* fields, under development by Azerbaijan International Operating Co. (OGJ, Aug. 25, 1997, p. 42). Work obligations include a 3D seismic survey, and exploratory drilling is slated for late 1999.

Texaco Inc.
started injecting CO2 into the Central Vacuum Unit of its Vacuum field in Buckeye, N.M. Injection of 260 bcf of CO2 and other gases alternately with 150 million bbl of water will extend unit life by more than 20 years and recover an additional 20 million bbl of oil and 23 bcf of gas, says Texaco. The injection will stimulate production from 68 wells. Six injection wells are operating, and 45 more are planned. Each will inject an average 3 MMcfd. Total expenditures are estimated at $350 million, including construction of distribution and gathering lines and a gas processing plant.

Enterprise Oil plc,
London, successfully removed a World War II bomb found alongside its Nelson platform in the U.K. North Sea (OGJ, Sept. 1, 1997, p. 32). Nelson production was halted on Aug. 30 so the Bergen Viking construction vessel could use a remotely operated vehicle to maneuver the bomb onto a specially made sled. The bomb was towed 5 km from the pipeline and detonated. Nelson resumed production late on Aug. 31 and was expected to reach normal production of 140,000 b/d in 2 days.

BHP Petroleum (Algeria) Inc.
disclosed an oil strike on Algeria's Block 402a. The Rhourde Oulad Djemaa-1 new-pool wildcat was drilled to a Triassic sandstone target at 3,980 m. The well flowed 5,526 b/d of 43° gravity oil through an 80/64-in choke with a flowing wellhead pressure of 540 psi. The strike is 10.5 km northeast of BHP's BSFN-1 strike, made in May. To determine whether the two finds are linked, BHP will soon spud BSFN-2 appraisal well, 3.5 km northeast of BSFN-1. BHP has a 45% interest in a PSC in the area.

British Gas Tunisia Ltd.
disclosed results of a second appraisal well in Hasdrubal gas condensate find on its Amilcar block off Tunisia. The Hasdrubal-3 well flowed 21 MMcfd of gas from a single drill stem test. BG is operator of Miskar gas field on the same block, which produces 165 MMcfd of gas-equal to 80% of Tunisia's demand.

China
upgraded its offshore oil reserves by about 1.1 billion bbl to 10.7 billion bbl. China's offshore gas reserves have reached 11.2 tcf, according to a senior official with China National Offshore Oil Corp. (Cnooc). China is operating 19 offshore oil and gas fields with output of about 301,000 b/d of oil and 250 MMcfd of gas. Cnooc says it has inked 126 Sino-foreign offshore oil development agreements worth $5.4 billion.

BHP Petroleum Ltd.
proposed that U.K. Ravenspurn North offshore field partner BP Exploration Operating Co. Ltd. take over operatorship. The plan is subject to partner and government approval and is part of an effort to maximize the value of its asset base. Ravenspurn North is near BP-operated Cleeton and Ravenspurn South gas fields. BHP reckons one operator running all three fields could reduce the combined offshore workforce and improve operating efficiency, extending field life.

Talisman Energy Inc.
will increase its 1997 capital spending program by $170 million to more than $1 billion (Canadian). The additional spending will be used for new projects and asset acquisitions that could increase current production of more than 200,000 boed by more than 9,000 boed in 1998. Talisman plans to spend $380 million in Canada, $280 million in Indonesia, $235 million in the North Sea, and $50 million in other areas. Total exploration and development spending will be $945 million, with $65 million allocated for acquisitions and other expenses.

Petrochemicals

Mitsui Petrochemical Industries Ltd. will invest $133 million to build a wholly owned high-density polyethylene plant in Singapore. Capacity will be 300,000 metric tons/year. Production is scheduled to start in 2001. Feed will come from Mobil Oil Singapore Pty. Ltd.'s Jurong cracker; products will be exported to Southeast Asia and China. Mitsui is part of a joint venture planning a $310 million purified terephthalic acid plant in India. Interests are Itochu Corp. 35% and a group of Indian polyester producers 60%. The 350,000 ton/year plant is to start up in 1999.

Amoco Chemical Co.
let a contract to a combine of Fluor Daniel Inc., Irvine, Calif., and France's Technip for construction of a 250,000 metric ton/year polypropylene unit at Amoco's Chocolate Bayou plant south of Houston. Fluor Daniel will perform basic and detailed engineering of general installation and utilities, final detailed engineering of processing units, equipment supply, and construction. Technip will perform basic engineering and some detailed studies of the processing units and specification of critical equipment. Both firms will perform optimization when the plant starts up in 1999.

Companies

Caltex Australia Ltd. is negotiating to acquire from Pioneer International, Sydney, a 50% stake in Ampol Refineries Ltd. Pioneer says Ampol's poor returns are decreasing its overall profits. Pioneer has invested $560 million (Australian) in Ampol and lent it another $125 million. Ampol operates two refineries, at Kurnell and Lytton, Australia, with a combined capacity of 215,000 b/d. Pioneer hopes to receive more than $700 million for its Ampol stake. Caltex and Ampol are 50-50 partners in Australia's largest retail marketer, Australian Petroleum.

Energy Equity Corp.
(EEC), Perth, will spend $48 million (Australian) to expand its Queensland power assets. EEC plans to increase the capacity of its Barcaldine power station in central Queensland to 55 MW from 37 MW by adding a steam turbine to make it a combined-cycle plant. Other plans include investing $27 million on further development of Gilmore gas field and construction of a 163-km gas pipeline and connecting lines. The expansions are expected to start up by mid-1999.

Exxon Corp.
increased its stake in the Japanese oil firm General Sekiyu KK to 50.1% from 49%. Exxon subsidiary Esso Eastern Inc. increased its share of General Sekiyu to 48.6% from 47.5%; Esso Sekiyu KK, a wholly owned subsidiary of Esso Eastern, owns another 1.5%. General Sekiyu and Exxon this year ended an agreement that blocked Exxon from holding more than 50% of the Japanese firm.

Pipelines

TransMaritime Gas Transmission Ltd., Halifax, N.S., filed an application with Canada's National Energy Board to build a $629 million (Canadian) pipeline in Nova Scotia and New Brunswick. The line will transport gas from the proposed development off Sable Island to markets in Canada's maritime provinces, central Canada, and the U.S. The line also connects to the TransCanada PipeLines grid. (OGJ, Aug. 25, 1997, p. 29). The 642-km line is slated to begin near Goldboro, N.S., head northwest through New Brunswick, and terminate near Edmundston, N.B. Included will be an 80-km St. John River Valley extension, which will connect to the main pipeline near the Quebec/New Brunswick border.

Interconnector (U.K.) Ltd.,
the combine that is building a gas export pipeline from the U.K. to Belgium, let a £10 million ($16 million) contract to AMEC Process & Energy Ltd., London. The contract requires AMEC to design, build, install, and commission mechanical and electrical instrumentation at the pipeline's Bacton terminal at Norfolk, U.K. Completion is scheduled in June 1998, with pipeline operation due to begin Oct. 1, 1998.

Pemex Exploration & Production
(South Region) awarded a third pipeline maintenance planning contract to Nova Gas International Ltd. (NGI), Calgary (OGJ, June 24, 1996, p. 16). The 18-month, $6-million contract covers work on gas and condensate pipelines in Tabasco and Campeche states. NGI will perform risk analysis, pipeline integrity and rehabilitation work, modernization and maintenance planning, corrosion control, environmental protection, emergency response planning, and maintenance personnel training.

BHP Petroleum
and Westcoast Energy Inc., Vancouver, B.C., received a pipeline permit from Australia's Victoria state allowing transmission of gas from the Bass Strait through eastern Victoria to New South Wales. Partners can now apply for a construction permit for the proposed $300 million (Australian) 740-km line. Construction is likely to begin in first quarter 1998. Partners are forging agreements with landowners and aboriginal groups along the Victorian section of the route.

Columbia Gulf Transmission Co.,
Houston, will hold a 30-day open season for additional capacity on its mainline system. Columbia wants to increase its capacity to transport gas being brought into production on the Louisiana coast. The open season will take place within 60 days.

Refining

Amoco Corp. and Haldor Tops e AS are collaborating on commercializing Tops e's new fixed-bed alkylation (FBA) process (OGJ, Apr. 1, 1996, p. 69). The companies will develop a process design for Amoco's 57,000 b/d Yorktown, Va., refinery and perform pilot verification tests at Amoco's Naperville, Ill., research center. Scheduled to last 6-8 months, the tests are designed to verify the economic, operational, and safety features of FBA. Following testing, Amoco will decide whether to commercialize the process at Yorktown.

Turkmenistan's
Ministry of Oil and Gas let a $200 million turnkey contract to Technip for design and construction of a Millisecond catalytic cracker (MSCC) at the 116,500 b/d Turkmenbashi refinery on the Caspian Sea. The 34,500 b/d UOP-licensed unit will convert distillates to gasoline. Start-up is scheduled for 2000. Technip will provide basic and detailed engineering, equipment, construction, and start-up services.

Mazovian Refinery & Petrochemical Works SA,
Plock, Poland, let a $25 million lump-sum contract to Technip subsidiary Technipetrol SpA, Rome, for services relating to construction of an 8,300 b/d isomerization unit and revamping of a 10,100 b/d reformer at the Gdansk refinery. Both units will use UOP technology. The contract includes basic and detailed engineering, procurement, commissioning and start-up services, construction assistance, and training services.

Pacific Northwest Ship & Cargo Services Inc.,
Vancouver, B.C., says a complete refinery has been dismantled and loaded for shipment to the Persian Gulf (OGJ, Sept. 1, 1997, p. 42). The mothballed Shellburn Refinery, Burnaby, B.C., was loaded aboard the Saudi heavy-lift vessel Ibn al Roomi in the Port of Vancouver for shipment to Fal Oil, U.A.E. Last year, Pacific Northwest shipped another idled refinery from Taylor, B.C., to U.A.E.