AAA noted average December self-serve regular gasoline prices were $1.29/gal, up 17¢ from a year ago and the highest since 1990.
But, API countered that any requirements for higher stocks would raise product prices even more and "potentially could even lead to shortages."
"The reason that product prices have gone up is that crude oil prices have risen due to strong economic growth and increased energy demand in much of the world, particularly the U.S., Europe, and Asia," API said.
"For oil companies to increase gasoline inventories, as AAA is urging, would require diverting supplies from the marketplace to storage. Reducing the current supply of gasoline available to motorists, given the current level of demand, would mean higher prices, not the lower ones that AAA wants."
U.S. Department of Interior has sent out nine more royalty underpayment bills totaling $273.6 million, alleging companies underpaid federal royalties in California from January 1980 through September 1983.
Latest bills are in addition to $107.3 million that Interior billed 10 companies last October and $4.49 million it billed Texaco last September.
Alleged underpayments total $385.4 million. Companies involved are ARCO, Koch, Marathon, Mobil, Oryx, Oxy USA, Phillips, Shell, Texaco, and Unocal. Interior has been urged to issue rules basing royalties on market value of crude rather than posted prices (OGJ, Oct. 28, 1996, p. 19).
Operator-service company alliances continue to proliferate. Santa Fe Energy Resources and Reading & Bates Development Corp. have agreed to a 50-50 drilling venture in Gulf of Mexico intermediate water depths.
The Houston companies will explore five Flex trend prospects in 400-1,900 ft of water on acreage operator Santa Fe acquired in sales 157 and 161 (OGJ, May 6, 1996, p. 40; Oct. 7, 1996, p. 40). Second quarter 1997 drilling is planned.
Total Offshore Production Systems, a Reading & Bates unit, will design, construct, and install facilities if commercial discoveries are found.
In 1996, Conoco and Reading & Bates joined forces to drill on Conoco interest blocks in the ultradeepwater gulf (OGJ, Nov. 11, 1996, p. 36).
Two gas gathering pipeline systems in the eastern Gulf of Mexico are merging to meet anticipated increasing production from that region and enhance operating synergies.
Dauphin Island Gathering Partners, operator of the Dauphin Island Gathering System (DIGS), and Main Pass Gathering Co., operator of the Main Pass Gathering System, have agreed to combine their systems.
Combined system will have a total capacity to gather 1.155 bcfd of gas ultimately. DIGS has a maximum design capacity of 355 MMcfd of gas.
An expansion will provide an additional 500 MMcfd of capacity.
Main Pass system has a design capacity of 300 MMcfd.
It appears that larger U.S. gas producers have increased their role in gas exploration, while smaller producers have concentrated on managing mature fields, Natural Gas Supply Association says.
NGSA's conclusions were drawn from an analysis of EIA reserve replacement data compiled during the past decade. NGSA found that the top 30 gas producers accounted for 79% of discoveries in 1995 vs. 44% in 1986. In 1986, smaller producers accounted for 36% of total gas reserve revisions. By 1995, this segment accounted for 78% of total revisions.
NGSA speculated one reason for the change is smaller companies may be exiting the exploration business due to large capital requirements and technological sophistication necessary to find new gas reserves.
By contrast, NGSA said, smaller producers "can use their lower operating cost structure in conjunction with enhanced recovery techniques to extend the life of existing gas fields...increasing reserves through revisions."
Enron Corp.'s planned merger with Oregon's Portland General Corp. electric utility will serve the public interest, the companies claim, in disclosing the merger now has the backing of 13 environmental, natural resource, and public interest groups. Enron says the groups have collectively approved a memorandum of understanding and are urging Oregon's utility commission to approve the merger plan. A mid-March decision is expected.
Enron says the agreement "formalizes the companies' long-standing commitments," and provides the groups with assurances they sought to be able to support the merger. If it's completed, Enron and Portland General, among other things, will acquire renewable resources, secure conservation funding, and investigate and propose residential/low-income rates.
Habitat restoration projects on the Deschutes, Clackamas, and Sandy rivers, where Portland General has hydroelectric generation, will also be funded.
Calgary's Alliance Pipeline has 38 signed requests to ship 1.498 bcfd on its proposed 1.3 bcfd British Columbia-Chicago gas pipeline (OGJ, Dec. 2, 1996, Newsletter). It says eight more requests are still under negotiation for another 165 MMcfd. The Alliance pipeline group originally planned 1.25 bcfd capacity on its proposed 36-in., 1,900-mile line.
Alliance now says it will either have to apply to expand the line by adding compression or prorate shippers based on the original proposed total volume. Alliance recently filed a preliminary submission with Canada's National Energy Board, saying it intends to apply this July for a certificate of convenience and necessity.
Responding to pollution concerns, India's supreme court has ordered 292 industries that burn coke or coal within the Taj Mahal area closed by Dec. 31, 1997, if they fail to obtain natural gas connections or do not have alternative sites selected outside the area within 3 months.
Actions evolve from reforms begun several years ago to clean pollution and modernize India's refining sector (OGJ, Mar. 14, 1994, p. 29).
Meantime, a $20 million natural gas supply system has gone on stream for use by Indian Oil Corp.'s (IOC) Mathura refinery as part of a program launched in 1995 to control pollution in the Taj Mahal area.
IOC and Indonesia's Petronas are studying feasibility of a joint venture to set up an export refinery on India's east coast.
An IOC official said the proposed refinery would have an output of at least 123,000 b/d, most of which would be exported to markets in Bangladesh, Myanmar, Thailand, and Sri Lanka.
As part of continuing deregulation of its oil industry, Japan has liberalized sales of "entrusted" oil products.
MITI and the Agency of Natural Resources and Energy will now permit full internal sales of oil products that Japanese oil firms refine on behalf of foreign customers. Entrusted products account for 5-6% of Japan's oil processing capacity, equivalent to roughly 5 million b/d.
Refineries in China, South Korea, Taiwan, and Singapore are responsible for the bulk of entrusted refining. Previously, Japanese oil firms could sell only 50% of entrusted oil products within Japan.
Oil from a Russian crude tanker that sank in the Sea of Japan has hit the Japanese coast, affecting the main island of Honshu.
On Jan. 2, the Nakhodka tanker broke apart in heavy storms and most of the 19,000-metric ton cargo of heavy fuel oil was lost.
Cargo was destined for power stations on Russia's Kamchatka peninsula. Lloyd's of London reported last week a full-scale cleanup is under way; a 100 km stretch of the coastline has been affected. Tugs and helicopters were deployed to aid in cleanup; however, bad weather has hampered operations.
Russia's oil sector continues to cope with the effects of privatization (OGJ, Sept. 9, 1996, p. 29).
But considerably more refining sector investment will be required.
Companies will need to invest almost $8 billion in refinery projects by 2000 to meet reconstruction and modernization objectives, says Mikhail Rudin, a senior engineering adviser with Raytheon Engineers & Constructors, Houston.
Citing a recent state fuel and energy plan, Rudin says the refining sector needs investments of as much as $7-7.5 billion by 2000, including $3-3.3 billion in hard currency.
More than 60 refinery projects are in various stages of planning or implementation, including six crude units, five fluid catalytic cracking units, four hydrocrackers, nine catalytic reformers, and six hydrotreaters.
Required investments will enable Russia to increase heavy ends conversion to 73% from 62%, upgrade motor fuels and lube oils quality, and significantly decrease air and water pollution.
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