INDUSTRY BRIEFS

Gas processing

Novagas Canada Ltd. signed a memorandum of understanding with Canadian Natural Resources Ltd. and Remington Energy Inc. to build an $80 million (Canadian), 120-MMcfd natural gas processing plant and pipeline in West Stoddart oil field, about 30 miles northwest of Fort St. John, B.C. All three are Calgary firms. The 36-mile pipeline will ship sweet gas for further processing to another Novagas plant at Taylor, B.C. The project is slated for mid-1998 completion.

Companies

Gulf Canada Resources Ltd., Calgary, will use assets gained in its $1 billion (Canadian) takeover of Stampeder Exploration Ltd., Calgary, to help create a heavy oil company in 1998. The acquisition (OGJ, Aug. 4, 1997, Newsletter) involves $739 million in equity and assumption of Stampeder's $300 million debt. The deal gives Gulf one of the largest unexplored land inventories in western Canada, adding Stampeder's 1.8 million acres to Gulf's 4 million acres.

IMC Global Inc., Northbrook, Ill., and Freeport-McMoRan Inc., New Orleans, signed a letter of intent to merge, with IMC as the surviving company, in a deal valued at about $800 million. Terms involve combining sulfur, oil, and gas interests on Main Pass Block 299 in the Gulf of Mexico into a new unit called Newco, which will then have an 83.3% interest in these operations and be debt-free. Total Newco reserves as of midyear 1997 will be 6.2 million bbl of oil and 68 million long tons of sulfur, making it North America's largest sulfur producer. It will not affect a deal between Freeport-McMoRan Resource Partners LP and McMoRan Oil & Gas Co. (OGJ, July 21, 1997, p. 48).

Petro-Canada Ltd., Calgary, will increase 1997 capital spending by $200 million to $1.15 billion (Canadian). The additional cash will be split evenly between oil exploration in the Grand Banks off Newfoundland and natural gas exploration in western Canada.

Dana Petroleum plc, London, bid $87.2 million for Seafield Resources plc. The companies have common interests in licenses off Ghana and Australia. Dana said a combined company would have greater control over exploiting these assets. Seafield's bias towards exploration is also seen as a means to squeezing more out of Dana's current and prospective producing assets in the former Soviet Union (OGJ, Oct. 30, 1995, p. 12).

Courts

U.S. Court of Federal Claims ruled in favor of Mobil Corp. and Marathon Oil Co. in a suit seeking the federal government's return of $156 million in bonus money that they paid to obtain five leases off North Carolina in 1981. Congress later passed legislation blocking access to the leases. Five other lessees settled their claims with the government earlier. The U.S. Department of Justice plans to appeal the court's judgment. A ruling on that appeal is possible as early as mid-1998.

Exploration

Vastar Resources Inc. and Enron Finance Inc., a unit of Enron Corp., formed an onshore oil and gas exploration alliance that will perform seismic studies and drill at least nine exploratory wells in the Gulf Coast, Texas Cotton Valley, and northern Rockies regions. Operator Vastar will contribute land and seismic data, while EFC will provide capital to help fund exploration efforts. Both firms would market individually any oil or gas produced as a result of the deal.

China National Offshore Oil Corp. signed an exploration contract with a unit of Kerr-McGee Corp. for Block 26/06, which covers more than 1 million acres in the South China Sea. Kerr-McGee will operate and hold a 100% interest in the block. The company also signed an agreement with Cairn Energy plc, Edinburgh, to operate and acquire a 35.5% interest in the South China Sea's Block 15/35, covering about 250,000 acres west of Liuhua oil field near Block 27/11, which operator and 50% interest holder Kerr-McGee acquired last December.

Pakistan's government granted a petroleum exploration license and concession to OMV Pakistan Exploration GmbH, a unit of Austria's OMV AG, and Pakistan state-owned entities covering the 7,200-sq km Khanpur block in Rahimyar Khan and Bahawalpur districts of Punjab, Pakistan. The venture plans to invest more than $6 million acquiring 500 line-km of seismic data and drilling one exploratory well during the initial 3-year term. OMV has spent more than $100 million in Pakistan and plans to begin production from Miano gas field in Sindh province in 1998-99. The company also is exploring another Sindh block and plans to drill an exploratory well this year.

Hunt Oil Co., Dallas, tested a large discovery of light crude in 1995 at Port au Port peninsula on Newfoundland's West Coast, said the province's energy minister, Chuck Furey. He said more tests are needed to delineate the discovery. Hunt declined comment on the recently released test results and whether any discovery is commercial.

Gulf Canada unit Clyde Expro plc acquired a farmout of an exploration venture in Romania operated by MMS Petroleum plc, London. Clyde will earn a 70% interest in a production-sharing agreement between MMS and state firm Petrom RA, covering Block VI in the eastern Carpathian mountains. Clyde will pay as much as $4 million for exploration and appraisal work on the block.

Drilling-production

Venoco LLC, Santa Barbara, Calif., acquired Platform Holly, in state waters about 1.5 miles off Santa Barbara, plus a related marine terminal and processing plant, from a unit of Mobil Oil Corp. Venoco plans to keep producing from existing wells, which currently average about 5,000 b/d of crude and 3.5 MMcfd of gas, while assessing potential to increase output. Purchase price was not disclosed.

Argentina's YPF SA dedicated a new southern production complex on Block 16 in Ecuador's Oriente basin to handle output from five area fields. The complex will process 20,000 b/d of 16-20° gravity crude initially, with field development to continue until output reaches 100,000 b/d by 1998.

Shell International Petroleum Co. Ltd. chartered the Stena Tay semisubmersible rig from Stena Drilling Ltd., Aberdeen, for 5 years with an option to extend another 5 years. The value of the full 10-year charter would be $650 million. Stena will convert the rig, formerly the Safe Gothia accommodation unit, for operation in as much as 7,500 ft of water and for drilling to 30,000 ft. The rig is due for delivery by yearend 1998. Conversion will be carried out at the Far East Levingston Shipbuilding Ltd. yard at Singapore.

Norway's Den norske stats oljeselskap AS (Statoil) chartered the Borgland Dolphin semisubmersible drilling rig from Dolphin AS, Tananger, Norway. The rig will be delivered to Statoil in third quarter 1998. The 6-year charter is worth $295 million. The rig, currently stacked at Lyngdal, Norway, will be upgraded to drill in as much as 450 m of water and equipped with a Ramrig drilling package.

Hibernia oil field's first well was spudded July 28 on the Grand Banks off Newfoundland. The initial well is about 3 weeks ahead of schedule and will take about 2 months to reach a depth of about 13,123 ft. Hibernia is slated to go on stream late in 1997. The gravity-based production platform was recently towed to the Hibernia location from a construction site in Newfoundland (OGJ, June 16, 1997, p. 29).

Abu Dhabi National Oil Co. invited bids on a $1 billion project to develop giant Habshan gas field (OGJ, Mar. 22, 1993, Newsletter). Plans include a 3.15 bcfd capacity gas processing plant. Firms expected to compete are Technip, Bechtel Corp., Fluor Daniel, Mitsubishi Corp., and Chiyoda Corp.

Global Marine Inc., Houston, is in the final phase of its $180 million conversion of the Glomar Explorer scientific research drilling vessel into a deepwater drillship (OGJ, Oct. 7, 1996, p. 47), which is slated for completion early next year. The vessel, on a 30-year lease from the U.S. Navy, will become one of only four drillships in the world capable of drilling in waters as deep as 7,500 ft and could be modified to drill in 10,000 ft of water.

Pipelines

A Chilean court gave NOVA Corp., Calgary, and partners approval to begin moving Argentine gas to Chile via the $325 million (U.S.) GasAndes pipeline (OGJ, Apr. 21, 1997, p. 61). The court lifted two injunctions after concrete retaining walls were installed to guard against mud and rock slides. The 288-mile, 24-in. line begins near Mendoza, Argentina, and ends on the outskirts of Santiago, Chile. The pipeline is delivering 60 MMcfd, with target volumes of 194 MMcfd by yearend, 212 MMcfd by 2000, and 671 MMcfd by 2016. NOVA owns 56.5%; other interests are held by Chilean companies Metrogas SA and Chilgener SA, 15% each, and by Argentina's Cia. General de Combustibles 13.5%.

Units of Shell Oil Co., Texaco Trading & Transportation Inc., and Marathon formed Odyssey Pipeline LLC to develop a 300,000-b/d oil pipeline system serving the east-central Gulf of Mexico. The project will combine Shell's existing 40-mile, 12-in. Cobia pipeline with 80 miles of new 16-20-in. line. Construction is to begin this month and wrap up late this year on 40 miles of 20-in. pipe from Main Pass Block 289 to Shell's Delta pipeline at Main Pass Block 72, establishing Main Pass 289 as a hub for future connections. Next, 40 miles of 16-in. pipeline will connect Main Pass 289 to the Texaco/Marathon Petronius project on Viosca Knoll Block 780, with work to be complete by mid-1998.

Ecuador's government approved an expansion of the Lago Agrio-Balao pipeline to 410,000 b/d to handle potential incremental new volumes of oil from fields in Ecuador's Oriente basin. Halliburton Co. unit Brown & Root is completing engineering now and will assist state-owned Petroecuador with the project. The project is slated for completion by fall 1998. Companies helping fund the project's $121 million cost include ARCO, Oryx Energy Co., YPF, Elf Aquitaine, and City Investing Co., Quito.

U.S. Federal Energy

Regulatory Commission approved the 1,864-mile, 1.3-bcfd capacity Alliance natural gas pipeline from British Columbia to the Chicago area (OGJ, July 14, 1997, p. 24), subject to completion of an environmental review. The Alliance partners, made up mostly of Canadian producers, hope to begin service by late 1999. Approvals from Canadian regulators are still pending.

FERC approved a plan to double capacity of the Northern Border pipeline system to 1.5 bcfd. The plan, which competes for some of Alliance's customers, would bring gas from Alberta's Foothills PipeLines Ltd. to Ventura, Iowa, and into the Chicago area (OGJ, Feb. 10, 1997, p. 33). The project is slated for completion by November 1998.

China's Tarim basin in the Xinjiang Uygur autonomous region now has a crude oil pipeline in service. The 476-km, 100,000-200,000-b/d line connects the city of Korla, a major production base, with Shanshan oil field. It is the first section of a much longer line planned to go to the Sichuan and Henan provinces.

Canada's National Energy Board approved an application by Amoco Canada Petroleum Ltd., Calgary, to expand a pipeline taking NGL from the extraction plants at Empress, Alta., to Interprovincial Pipe Line Inc.'s main line at Kerrobert, Sask. The new 96-mile, 10-in. line will parallel an existing 8-in. line and increase capacity by about 49,920 b/d to 116,850 b/d at an estimated cost of $23 million (Canadian). Amoco Canada filed the application on behalf of Dome Kerrobert Pipeline Ltd. and PanCanadian Kerrobert Pipeline Ltd. In-service date is set for November 1997.

Petrochemicals

Qatar Vinyl Co., a new joint venture, will build a $500 million petrochemical plant at Mesaieed, Qatar, to produce 338,000 metric tons/year of ethylene dichloride, 200,000 tons/year of vinyl chloride, and 260,000 tons/year of caustic soda, with possible expansion later to make polyvinyl chloride. The plant will use ethylene feedstock produced by 25.5% interest holder Qatar General Petroleum Co. Other partners are Qatar Petrochemical Co. 31.9%, Norway's Norsk Hydro AS 29.7%, and France's Elf Atochem SA 12.9%. Partners will contribute as much as $150 million in equity and raise the remainder in financial markets.

Petro Chain (Thailand) Ltd., a unit of Rayong Olefins Co., let a $105 million turnkey contract to South Korea's Sunyong Engineering & Construction Co. to build a condensate splitter at the Mab Ta Phut industrial complex at Rayong, about 220 km southeast of Bangkok. The plant, due to come on stream in May 1999, will process 64,000 b/d of condensate from Australia and the Middle East, rather than the Gulf of Thailand, for use in producing naphtha feedstock for Thailand's expanding petrochemical sector.

Saudi Yanbu Petrochemical Co. (Yanpet), a joint venture of Saudi Basic Industries Corp. and Mobil Corp., secured $2.3 billion in loans to undertake a major expansion at its Yanbu complex in Saudi Arabia. By 2000, Yanpet intends to build an 800,000-metric ton/year ethylene cracker, plus new units to produce as much as 535,000 tons/year of polyethylene, 410,000 tons/year of ethylene glycol, 260,000 tons/year of polypropylene, and 125,000 tons/year of pyrolysis gasoline. The project will double Yanpet's total output to 3.6 million tons/year (OGJ, May 20, 1996, p. 39).

Refining

Petroecuador completed expansion of its Esmeraldas refinery to 110,000 b/d from 90,000 b/d. Work was conducted by Spain's T?cnicas Reunidas SA for about $145 million in 30 months. The expansion entails several new or upgraded units and gives the refinery the capability to process 24.5° gravity crude.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.