INDUSTRY BRIEFS

Refining

Japan's Marubeni Corp. and Mitsui & Co. are leading a $1.5 billion Japanese venture with Petroleos Brasileiro SA to build a 200,000 b/d in Brazil. It would be the country's largest and located probably in northern or northeastern Brazil. Construction is to begin in 1997, with commercial operation slated for 2001. Products will be sold locally. Other project partners are Itochu Corp., Mitsubishi Corp., Sumitomo Corp., and Tonen Corp.

Chevron U.S.A. Inc. brought its Perth Amboy, N.J., refinery into compliance with federal Clean Air Act standards for sulfur oxide emissions, cutting them by about 200 tons/year. It also paid almost $700,000 in penalties for violating the emission rules. In November 1993, the U.S. Environmental Protection Agency ordered Chevron to test crude heaters at the refinery to ensure they were in compliance with SOx emissions rules. Chevron challenged that order in court but later adjusted pollution abatement equipment, thus enabling the plant to come into compliance. It later dropped its suit against EPA.

Pipelines

U.K. Health & Safety Commission unveiled new rules for pipeline safety to take effect Apr. 11. The rules follow legislative reforms recommended by the Cullen report on pipeline safety stemming from the 1988 Piper Alpha platform blast. They include provisions to maintain safety standards as the U.K. gas market is opened to competition.

Pacific Gas Transmission Co. (PGT) asked the U.S. Federal Energy Regulatory Commission to approve a negotiated settlement to gradually equalize costs for all shippers. It would level costs during an 8 year phase-in for shippers using the original PGT line and those using a new line that doubled capacity in 1993. Shippers on the new line have been paying about 60% more than shippers with capacity on the original line. The Canadian Association of Petroleum Producers estimated the settlement could save Canadian gas producers as much as $54 million (Canadian)/year. PGT hopes to have the new toll structure in place by Nov. 1.

Shell U.K. Exploration & Production let contract to Coflexip Stena Offshore Ltd., Aberdeen, to replace a water injection pipeline between Tern and Eider platforms in the northern North Sea. The 16 in. replacement pipeline will have a plastic liner to keep costs down by avoiding use of exotic steels for water injection pipelines. The Stena Apache reelship will lay the 16 km pipeline in July.

Norske Shell AS let a $375,000 contract to Morrison McLean Associates (MMA), Aberdeen, to develop a virtual reality model of its Troll gas field export pipeline in the Norwegian North Sea. MMA's simulation will be coupled with remotely operated vehicle technology to enable Shell to monitor pipeline sections in as much as 200 m of water. MMA said the system will allow inspections in hazardous environments without endangering personnel, cut the length of time required for inspections, and allow data to be stored and retrieved easily.

Valero Transmission Co., San Antonio, placed in service pipeline connections at Waha hub in West Texas that increase flexibility for shippers moving gas from west to east. New interconnects include a 100 MMcfd delivery point into Oasis Pipe Line Co., 150 MMcfd of incremental receipt capacity from Transwestern Pipeline Co., and 35 MMcfd of incremental receipt capacity at Mobil's Waha gas plant. With the additions, Waha can receive as much as 2.3 bcfd of gas from 15 points and deliver 1.3 bcfd at seven points.

Marketing

Norsk Hydro AS agreed to buy the Swedish gasoline station network of Burmah Castrol plc, Swindon, U.K., for $36 million. Hydro has 220 retail stations in Sweden and 8% of the market. The purchase is expected to boost Hydro's market share in Sweden to 11%.

Drilling-production

Aker Omega Inc., Houston, completed a concept screening study for operator Texaco Inc. and Marathon Oil Co. of development options for Petronius field in 1,750 ft of water on Viosca Knoll Block 786 in the Gulf of Mexico (OGJ, Mar. 18, p. 34). The short list of preferred development options includes a subsea production system tied back to a new shallow water platform, converted and newbuild semisubmersible floating production systems, tension leg platforms, and spar platforms. A compliant tower for the field was studied separately.

Conoco (U.K.) Ltd. started development drilling in MacCulloch field on U.K. North Sea Block 15/24b. MacCulloch will be developed with a 60,000 b/d capacity oil production ship tied back to the Piper B platform operated by Elf U.K. plc. Conoco estimates MacCulloch reserves at 58 million bbl of oil. Sedco Drillstar semisubmersible spudded the first of three extended reach production wells. More production and water injection wells are to be drilled after field start-up in December. Field partners are operator Conoco 60% and Lasmo North Sea plc 40%.

Shell Offshore Inc. let a 1 year contract with two 1 year extension options to Pool Energy Services Co., Houston, for a minimum area, self-erecting platform drilling rig to be used at an undisclosed location in the Gulf of Mexico. Pool will remove Rig 18 from cold stack status for the job and modify the unit at an expected cost of about $7 million to include installing a top drive drilling system. The unit will be the largest Pool rig marketed in the gulf when it begins working for Shell about mid-1996.

Oryx Energy Co., Dallas, chose a new multipurpose, 650 hp electric platform rig owned by Pool Energy Services Co., Houston, for operations on the Gulf of Mexico's first oil and gas production spar, to be installed in about 2,000 ft of water on Viosca Knoll Block 826. Pool's Rig 10, which can be used for workover and sidetrack operations, is scheduled to operate on Oryx's Neptune spar for 6-9 months, starting in fall 1996.

K2 Energy Corp., Calgary, plans to develop an abandoned oil field at Cut Bank, Mont., to add 1,500 b/d of crude to its production. It will spend $5.2 million (Canadian) to drill 18 infill wells and work over 15 of 113 original wells on the property, which it bought out of receivership. Texaco Inc. found the field in 1930. K2 plans to halve well spacing to 20 acres. The field holds an estimated 90 million bbl of original oil in place, with about 16 million bbl recovered to date. K2 hopes to recover 3-8 million bbl.

Canadian Fracmaster Ltd. agreed to purchase all of Norcen Energy Resources Ltd.'s 25% interest in Vakh Fracmaster Services, doubling its interest in the Russian oil joint venture. The remaining 50% interest is owned by Tomskneft, a subsidiary of Eastern Oil Co., a vertically integrated Russian oil company. Vakh Fracmaster Services, in western Siberia's Tomsk region, produces incremental oil using Fracmaster's well stimulation technology and provides well treatments on a fee for service basis. Current production is more than 12,000 b/d. Canadian Fracmaster and Norcen are Calgary companies.

Chevron Canada Resources agreed in principle to purchase Norcen's interests in Hebron, Ben Nevis, and West Ben Nevis oil fields and other properties off eastern Canada. Chevron will increase its interest in Hebron field to 32% from 11% and in Ben Nevis to 17% from zero. Hebron and Ben Nevis, discovered in the early 1980s, are about 35 km southeast of the proposed Hibernia oil field platform and 350 km east-southeast of St. John's, Newf. Chevron also holds a 27% interest in the Hibernia project. The properties also are immediately north of Terra Nova field, which is to begin producing in 2001.

Minerals Management Service published guidelines it will use to consider producers' applications that claim extraordinary processing costs for gas produced from federal and Indian leases. MMS will consider several factors in evaluating the applications, including composition of the gas stream, complexity of gas plant design, and unit costs incurred to recover methane.

Spills

High winds and choppy seas hampered cleanup of at least 5,000 bbl of intermediate fuel oil spilled at the mouth of Galveston Bay Mar. 18 by a barge that ran aground carrying 17,000 bbl of fuel oil. Cleanup crews by midweek had finished lightering the remaining cargo and moved the Buffalo 292 barge to drydock for inspection. Skimmers at presstime were recovering tar balls of weathered fuel oil from an 11 by 1/2 mile slick about 30 miles offshore. A small amount of spilled material came ashore at Big Reef Nature Preserve on the east end of Galveston Island.

Exploration

Phillips Petroleum Co. and partners 1 Alexandrite subsalt wildcat in the Gulf of Mexico is a dry hole. The $11 million well was drilled to 17,851 ft on Ship Shoal South Addition Block 337 (see map, OGJ, Mar. 18, p. 34). Operator Phillips 37.5%, Anadarko Petroleum Corp. 37.5%, and Amoco Corp. 25% will evaluate data from the well and decide whether to drill a second well on the structure, which is near their Mahogany subsalt oil field development. Meantime, operator Anadarko and Phillips 50-50 are drilling a wildcat on the Monazite prospect on Vermilion South Addition Blocks 357, 375, and 376.

Apache Corp. calculated an absolute open flow of 48 MMcfd from a shallow discovery about 80 miles north of Fort St. John in Northeast British Columbia. A test on choke was limited to 6.5 MMcfd by production equipment. Apache holds a 100% working interest in the Lapp A-5-L/94-H-7 well, drilled on acreage obtained through a May 1995 merger. The discovery is expected to go on line in early April, and additional drilling is pending evaluation of seismic data. Production is from 23 ft of net pay in Triassic Halfway at about 4,000 ft. Flowing tubing pressure during the test declined only slightly to 900 psi.

U.K. Department

of Trade & Industry (DTI) awarded 22 licenses covering 74 onshore blocks to 13 companies in its seventh landward licensing round. The round opened in July 1995 and attracted 29 applications for 105 blocks from 17 companies. Most of the licenses are for exploration in the East Midlands/Lincolnshire basin, where a number of small oil and gas discoveries are on production. Other licenses focus on less familiar areas, including South Wales, Yorkshire, Humberside, Hampshire, Oxfordshire, and Wiltshire. One fourth of the applications are for extracting gas from coal. Ten obligation wells are planned as a result of the license awards.

Taxes

U.S. Internal Revenue Service issued a final rule to implement the change in the point of collection for diesel fuel excise taxes, which took effect Jan. 1, 1994. The rule does not change the treatment of kerosine, leaving it untaxed and with no requirement that it be dyed (OGJ, Mar. 25, Newsletter).

Companies

Tarragon Oil & Gas Ltd. made a $125 million (Canadian) offer for Strike Energy Inc., both of Calgary. Strike produces about 3,000 b/d of oil equivalent and has begun development of a major heavy oil property in Bolney field, northeast of Lloydminster, Sask. Bolney has reserves of about 100 million bbl and will cost an estimated $100 million to develop. Tarragon produces about 11,000 b/d of crude and 130 MMcfd of gas. It is offering one share for each 3.68 Strike shares, an offer equal to about $3.40/share.

Petro-Canada, Calgary, approved a proposal to increase foreign ownership in the company to a maximum 50% from a current ceiling of 25%. Voting control by shareholders would remain limited to 25% for non-Canadian residents. The proposal would create a new type of share, a variable voting share, to be held by nonresidents of Canada. All shareholders would hold common shares until the percentage of foreign ownership rises to more than 25%. Shares held by nonresidents would then be converted to the new share type, and voting power would be prorated to keep 75% of voting control in Canada. The proposal must be ratified by shareholders at an annual meeting in Calgary Apr. 30.

Shell Offshore Inc. agreed to buy Benton Oil & Gas of Louisiana from Benton Oil & Gas Co., Carpinteria, Calif., for $35.4 million. The deal includes Benton's Louisiana oil and gas leases. In conjunction with the sale, Benton will repay $35 million of 13% senior unsecured notes held by John Hancock Mutual Life Insurance Co., along with prepayment premiums of $11.1 million.

Territorial Resources Inc., Houston, signed a letter of intent to increase to 13.2% from 1.1% its interest in the SOCO Tamtsag Mongolia Inc. (STMI) unit of Snyder Oil Corp., Fort Worth, owner and operator of a 2.8 million acre concession in Mongolia's Tamtsag basin (OGJ, Mar. 4, p. 31). Well testing is to resume in April on the tract, where STMI and partners last November logged 55 ft of apparently productive oil sands and 144 ft of possible oil and gas sands.

Gas technology

U.S. Department of Energy and the International Energy Agency invited parties with gas technologies to list them on an Internet home page. DOE and IEA sponsor the International Center for Gas Technology Information, which established the page at http://www.gasinfo.dk/gasinfo.

Petrochemicals

South Korea's Tongyang Nylon is seeking a partner in Pakistan for a joint venture polypropylene plant it proposes to build there. The plant, which Tongyang wants to build near a refinery, would have capacity of 40,000 metric tons/year of polypropylene granules. Pakistan imported 68,000 tons of polypropylene in fiscal 1994-95.