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• U.S. Industry Scoreboard 4/14 [70945 bytes]

In London trading Apr. 9, Brent for May delivery closed at $17.75/bbl, down from more than $20/bbl late in March.

"Crude oil prices have gone down as we thought they would but maybe slightly sooner than we'd anticipated," said Julian Lee, analyst at Centre for Global Energy Studies (CGES), London. CGES says prices have fallen further than market fundamentals justify, predicting OPEC's crude basket marker price will average more than $18/bbl in the second quarter.

If traders are pessimistic about the market, there's little comfort to be found in API's latest weekly stock figures showing sluggish demand.

U.S. gasoline stocks fell only 1.22 million bbl in the week ended Apr. 4.

Distillate stocks fell by 1.04 million bbl. Meanwhile, U.S. oil production rose 632,000 b/d to 7.67 million b/d.

Greenpeace has stepped up its actions against BP, staging a building assault and rooftop protest at BP's Aberdeen offices.

Twenty activists scaled the building Apr. 9 to install an array of solar panels-which were purchased from BP-on the roof and erect a banner reading "BP, solar not oil." Greenpeace wants BP to switch its West of Shetland oil investment to BP's solar panel production division, claiming BP has invested more than $800 million to develop Foinaven field and "only" $96 million in BP Solar during its 10-year existence.

In another skirmish, Greenpeace failed to prevent exploration license awards to companies in the latest bid round (see story, p. 30).

FERC Chairman Elizabeth "Betsy" Moler is President Clinton's choice to succeed DOE Deputy Energy Sec. Charles Curtis, who has submitted his resignation. Curtis served in the position since August 1995 and as Undersecretary of Energy since February 1994.

Energy Sec. Federico Pe?a said because of Moler's utility expertise, "she will be a tremendous resource to help determine how our nation faces some of the most fundamental changes in how electricity is delivered...nationwide."

Quick Senate approval of her nomination is expected.

The debate over emissions and the environment in the U.S. is heating up, with word that Midwest coal-burning utilities may be handed the "tab" refiners once thought they'd be stuck with to control ozone-forming emissions that pollute eastern U.S. areas.

Ozone Transport Assessment Group (OTAG) data show use of even much-cleaner gasoline would have relatively little effect on migrating ozone.

OTAG, set to meet this week in Atlanta, is in the final stages of deciding what measures to recommend to U.S. EPA, expected by June.

The group has targeted sharp cuts in ozone precursor NOx emissions as a primary control strategy (OGJ, Jan. 6, 1997, p. 18). The OTAG region consists of 37 states east of the Rocky Mountains and the District of Columbia.

OTAG-commissioned studies show reformulated gasoline would reduce NOx emissions by 450-890 tons/day, depending on the severity of the formulation.

That translates to reducing the OTAG region ozone concentration by about 2-4 ppb, says Marlin Gottschalk, chairman of the OTAG subcommittee that studied fuels. By contrast, NOx controls on utilities can achieve reductions as high as 40-50 ppb, according to OTAG modeling.

OTAG's findings haven't drawn significant challenges over accuracy but are unleashing a firestorm of controversy.

Four states have offered legislation requiring in-depth review of OTAG data before measures are incorporated in upcoming state implementation plans to ensure compliance with the federal Clean Air Act amendments (CAAA) of 1990 (OGJ, Jan. 6, 1997, p. 18).

And the U.S. Court of Appeals for the D.C. Circuit, ruling on a case brought by Virginia, says EPA lacks authority to compel states to adopt low-emissions vehicle programs.

EPA believes controlling NOx in areas that currently meet CAAA standards is the only way some severe nonattainment areas can be brought into compliance. Observers think the ruling may set a precedent, limiting the agency's ability to make OTAG recommendations mandatory and constraining EPA from finding OTAG region-wide solutions to pollution problems.

Meantime, regional opposition is growing to deregulation of electric power sales, which critics say will give the edge to less-expensive, so-called "dirty" power, generated by coal-burning Midwest utilities.

Amid disclosure last week of a flurry of natural gas pipeline projects to serve expanding U.S. markets (see stories, p. 28) there is considerable U.S. coal/power-generation action, including a $500 million power project-called Red Hills-in Northeast Mississippi being advanced by a Phillips unit.

Phillips Coal and North American Coal, both of Dallas, plan to build a 3.2-million ton/year lignite coal mine to fuel a 440-MW coal-fired independent power plant to be built near Ackerman, Miss.

Phillips and North American are currently in the permitting phase, and an environmental impact statement is being prepared.

Phillips has a 75% interest in the mine and owns 140 million tons of lignite reserves in the area, enough to supply the plant for more than 40 years.

North American, owner of the remaining mine interest, will be operator.

Project construction will begin in 1998, with start-up slated in 2000.

Houston's CRSS will wholly own and operate the power plant, which will provide electricity to the Tennessee Valley Authority's power grid.

On May 30, DOE and Sierra Pacific Power will dedicate the nation's third advanced coal-gasification combined-cycle power plant.

The $335 million Reno plant is due to begin test operations late in April.

And a coal futures contract may soon augment Nymex's energy commodity trading. A coal contract could come later this year but more likely in 1998, Nymex officials say, as competition for that fuel source grows.

While plans have been disclosed to build the largest North American LNG complex at Kitimat, B.C. (see story, p. 26), comes some hopeful news for Nigeria LNG's export plant on Bonny Island. The company has begun talks with Portugal's Transgas over delivery of 17.5 bcf/year of Nigerian LNG.

But a deal with Transgas could not compensate for the cancellation last year of a contract to supply 122.5 bcf/year of LNG to Italian utility ENEL (OGJ, Dec. 30, 1996, p. 28). Nigeria LNG is suing ENEL for breach of contract.

On the oil and gas E&D front, Nigeria plans to divest its 57% stake in the petroleum sector between now and 2001 to free up revenue for use elsewhere in the country. That word comes from Finance Minister Anthony Ani.

Such a move would give joint-venture companies a chance to boost their stakeholdings, but local entrepreneurs may be offered fiscal incentives to encourage their participation on an equity basis.

It is believed the Bonny LNG project would not be affected, but it's unclear what effect Nigeria's actions may have on the Escravos gas project and a gas liquids scheme (OGJ, Nov. 4, 1996, p. 44).

Nigeria's action comes on the heels of reports earlier this year that petroleum development might be slowed or delayed because of budgetary snags with JV companies. Nigerian National Petroleum Co. and outside companies have been at odds over the 1997 operating budget for JV operations.

In February, talks broke down after producers rejected NNPC's proposed $2.05 billion program. Nigeria maintains an investment of $3 billion is needed to keep exploration, appraisal, and development work moving.

Last year, JVs operated without a budget for almost 7 months.

According to wire service reports, Omani officials say the proposed Oman-India gas pipeline project is not feasible due to technical problems, too much risk, and the high cost, now put at $10 billion.

Oman has already spent $70 million just on feasibility studies (OGJ, July 5, 1993, p. 22). India says the project is still alive but in abeyance.

There's some upside to be found in the downside of Japanese downstream restructuring.

Cosmo Oil is providing financial aid-including low-interest loans and direct grants-to affiliated service station operators who need to restructure. Cosmo plans to disburse $24-32 million/year in aid to affiliated operators if they're judged to have sound management or have good profitability prospects.

Funds will be raised by selling idle land and other assets.

Cosmo has 6,000 affiliated stations; 30 closed in fiscal 1996, and 200 more are expected to fold this year.

Operators with money-losing stations will be eligible for grants to close down and demolish their sites and for severance pay subsidies.