A number of supply disruptions last week may tighten U.S. oil and gasoline markets this week, just ahead of the effective date for introduction of reformulated gasoline in certain areas of the U.S. (see related story, p. 20).
TE Products Pipeline Co. LP on Dec. 21 shut down its 20 in. products pipeline in Central Louisiana near Natchitoches after the line ruptured. At presstime late last week, the size of the spill and cause of the break were unknown, although there were no reports of injury or fire. It was carrying conventional gasoline.
Valero suspended production of MTBE from the 3,500 b/d heavy oil cracker MTBE unit at its Corpus Christi, Tex., refinery and is slicing output to minimum operating levels at its 15,500 b/d stand alone MTBE unit. Valero, citing depressed MTBE margins, won't restore the cuts until market conditions improve. MTBE is the most widely used oxygenate in U.S. gasoline.
If U.S. Coast Guard rules requiring tankers to have certificates of financial responsibility (COFRs) are not eased before the Dec. 28 deadline, 20% of normal U.S. crude and refined product imports will not reach U.S. shores, warns Salomon Bros. As of mid-December, about half the tankers involved in U.S. oil trade had COFRS. While there are three guaranty schemes available, many tanker operators have not obtained the costly COFRS.
President Clinton has rejected Republican requests that he order federal agencies not to issue new regulations the first 100 days of 1995. Republican leaders wanted new rules put on hold until Congress passes a bill requiring agencies to conduct cost/benefit assessments on new rules (OGJ, Dec. 19, Newsletter).
Petroleum firms maintain a toehold in alternate energy sources.
Amoco and Enron have agreed to form a general partnership to manufacture photovoltaic (PV) modules and develop solar powered electric generation plants. The venture, Amoco/Enron Solar, will be based in Frederick, Md., and will run the business previously operated by Amoco unit Solarex the biggest U.S. manufacturer and marketer of PV modules and systems. Amoco/Enron Solar will fund a new thin film PV module factory that is expected to produce more than 10,000 kw of large area, multijunction amorphous silicon modules, with a number of sites under consideration. The idea is to attain lower PV costs through high volume production tied to sales into utility markets.
The world's biggest molten carbonate fuel cell power plant, which bums natural gas, has begun commercial demonstration operations at Unocal's Brea, Calif., research center. The 250 kw power plant, which promises virtually pollution free, gas fired electric power generation, was designed and built by a group led by M-C Power Corp. and is underwritten by DOE, Gas Research Institute, and Electric Power Research Institute, among others.
The system also is highly efficient, using 55% of natural gas fuel energy vs. 35% in a conventional gas fired power plant.
More North American oil and gas properties are changing hands, including a big chunk of prime U.S. gas properties that is about to go on the auction block. MESA, Dallas, plans to sell a substantial portion - possibly more than half - of its holdings in the massive Hugoton gas field of western Kansas and Oklahoma. MESA will use proceeds to repay part of its $1.2 billion in debt accrued acquiring reserves in the mid-1980s and paying distributions to unitholders after gas prices fell following its conversion to a master limited partnership. It expects to disclose definitive plans after Jan. 1.
In another sizable deal, Apache, Houston, will acquire DeKalb Energy, Calgary, via a merger valued at about $285 million. The deal marks Apache's return to Alberta after leaving there in the early 1980s and brings to it Canadian reserves of about 290 bcf of gas and 10 million bbl of liquids. DeKalb also has probable reserves of about 60 bcf of gas equivalent, 150,000 net undeveloped acres, and ownership in 14 gas processing plants, as well as production of 63 MMcfd of gas, 2,000 b/d of oil, and 600 b/d of NGL, all in Canada.
Canadian natural gas deliverability will be more than adequate to handle peak demand this winter for Canadian and U.S. markets, says Canadian Gas Association. A recent CGA study forecasts winter peak day firm demand for Canadian gas at 20.81 bcfd, with 8.27 bcfd for the U.S. and 12.54 bcfd for Canada. Deliverability is at least 22.71 bcfd, including underground and liquefied gas storage.
More exploration is on tap in Canada's far north.
Ottawa has opened more land in the Mackenzie River Valley for exploration. Rights for other northern areas were awarded earlier this month after a land auction (OGJ, Nov. 28, Newsletter). Five new blocks on offer cover 1,298,554 acres, some near an Imperial oil pipeline at Norman Wells, N.WT. In the earlier sale, six firms agreed to spend $22.7 million on exploration the next 4 years in the Fort Liard, N.WT., region north of gas prone areas of Northeast British Columbia. Awards covered 370,645 acres in eight parcels. Winning bidders are Ranger, Amoco Canada, Chevron Canada, Ocelot, Paramount, and Shell Canada. Ranger acquired two parcels covering about 76,600 acres on trend with
Pointed Mountain gas field and 12 miles from a gas pipeline.
Mexico will get a new world class methanol plant near the U.S. border.
Mexican Methanol Corp. SA de CV (Meximet) plans to build a 2,500 ton/day methanol plant at Matamoros, just south of Brownsville, Tex. Meximet, a company owned by Mexican, U.S., and European investors, will be managed and operated by Offshore Gas Developments Ltd., San Marino, Calif. The plant will use a low pressure synthesis process and is to be on stream in mid-1997. Pemex will supply natural gas feedstock, and product will be sold mainly on the U.S. Gulf Coast, chiefly as feedstock for MTBE manufacture.
Petrochemical consolidation continues in Japan.
Sumitomo, Nippon Zeon, Tokuyama, and Tokuyama unit Sun Arrow Chemical will merge their PVC businesses July 1, 1995, to create Shin Dai-Ichi Vinyl Corp, Japan's biggest PVC producer. Idea is to boost competitiveness after profits were squeezed in the face of a strong yen and sluggish domestic demand. The new company, with start-up capitalization of $70 million, will operate five plants with combined capacity of 430,000 metric tons/year of PVC.
Another Venezuelan Orinoco belt heavy oil upgrading megaproject is in the offing (see related story, p. 24).
Mobil and Lagoven have signed a letter of intent to determine feasibility of developing and upgrading 100,000 b/d of extra heavy crude from the area south of Monagas and Anzoategui in the Orinoco belt. Study will focus on defining technology, markets, financing, and contract terms. If determined economically feasible, Mobil and Lagoven will sign an association agreement to be submitted to Venezuela's congress in fourth quarter 1995.
Slovakia's state owned refining/marketing company Slovnaft AS has secured a $30 million loan from European Bank for Reconstruction & Development to expand and upgrade its service station chain, the first such loan the bank has made to former eastern Czechoslovakia.
A 3 year program will see Slovnaft upgrade site appearance, layout, and brand recognition along western company lines. Slovnaft sales totaled $766 million in 1993, and its fairly complex refinery processed 84,000 b/d of crude last year. The company is owned 80% by Bratislava, hut that will fall to 64.2% in early 1995 after an expected public share offering.
Russia's biggest oil and gas companies have joined forces to set up an internal security service to help combat organized crime increasingly targeted at petroleum operations, reports Moscow daily Kommersant.
Gazprom, Lukoil, Sidanko, Yukos, Rosneft, and Transneft are participating in the effort and hope to cooperate with security services of foreign firms, notably Amoco, Texaco, and Conoco.
Kommersant reports Russian organized crime this year clearly shifted its focus from banking to oil and gas, with a dramatic increase in assassination attempts against major players in the oil and gas business.
Russia and Greece are studying feasibility of laying a crude oil pipeline to Greece via Bulgaria. The crude line would extend from the Bulgarian port of Burgas, where Russian tankers coming from Black Sea port of Novorosiisk would offload Russian crude, to the Greek port of Alexandroupolis for further transshipment to northern Europe. The idea is to bypass the Bosporus and Dardanelles straits, where environmental concerns are growing over heavy tanker traffic and fears of oil spills. The disclosure came at the signing last week of an agreement calling for Russia to deliver at least 84 bcf/year of natural gas to Greece that followed a protocol signed in September. The gas deal is valued at $1.5 billion/year, and deliveries are slated to begin at yearend 1995.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
Issue date: 12/26/94
