OGJ Newsletter

U.S. Industry Scoreboard 4/21 [69855 bytes]

Recent state/federal legislative energy action includes a new angle on marketing Alaskan gas reserves.

Alaska Gov. Tony Knowles is pushing state legislation to establish a North Slope gas commercialization team, which would identify and develop steps Alaska can take in cooperation with North Slope leaseholders, potential project sponsors, and government to make a North Slope gas project reality.

Recommendations would be due Feb. 13, 1998, for public consideration during the next state legislative session.

An Alaska department of revenue report recently evaluated such a project, including possible modifications to Alaska's tax and royalty structure to enhance project feasibility.

Knowles also recently led a delegation of energy and government officials to Sakhalin Island in the Russian Far East, seeking to explore possible oil and gas E&D joint ventures that would benefit Alaska companies.

The U.S. Senate energy committee, holding workshops on retail electricity decontrol issues, plans to examine the advantages different fuels have in electric power generation (see related stories, pp. 19 and 23).

Chairman Frank Murkowski (R-Alas.) scheduled a May 8 workshop on the effects of competition on fuel use and types of electricity generation.

Murkowski also wants the congressional joint tax committee to report on existing government incentives designed to encourage specific types of electricity generation.

Meanwhile, at a U.S. House commerce committee hearing on the subject, Rep. Dan Schaefer (R-Colo.) released a GAO report that calculated the government spends $3.5 billion/year for 61 billion kw-hr of electricity.

Economists predict retail electricity decontrol will save consumers 15-43% on their bills. If the federal government only saved 10%, it would total $350 million/year, Schaefer said.

U.S. Sen. Kay Bailey Hutchison (R-Tex.) says her first priority as the new co-chair of the congressional oil and gas caucus will be to seek tax relief for marginal wells and difficult-to-develop formations.

Hutchison also plans to work to reform federal rules that "force energy businesses to waste time and money."

The offshore drilling rig business continues to gain steam, with rising day rates seen in virtually every region for every rig type. At the same time, low surplus levels continue to shrink amid diminished newbuild capacity.

"The result is a steadily improving market for offshore drilling rigs with almost no possibility of overbuilding during the next several years," said C. Russell Luigs, chairman and CEO of Houston's Global Marine.

Luigs says Global's fleet of 26 active offshore rigs was 99.8% utilized during first quarter 1997, excluding a 53-day period when one rig was being upgraded for a deepwater contract.

Iraq's national assembly has ratified a $3.5 billion contract with Russia, enabling Moscow to develop 7-8 billion bbl of reserves in West Qurna oil field (OGJ, Apr. 14, 1997, p. 19).

West Qurna output is expected to be 600,000 b/d. Iraq expects to reap $70 billion in revenues during the 23-year project contract period.

Indonesia's Pertamina, expecting exploration activities to continue apace in 1997, is apparently making good on awarding case-by-case incentives to contractors to maintain production levels.

Pertamina expects contractors will spend $1.03 billion for exploration in 1997 vs. $586.7 million last year. Total industry E&D spending in Indonesia is expected to jump to $5.34 billion from $4.21 billion in 1996.

Caltex Pacific Indonesia has received approval of its request for financial assistance to cover a Minas field steamflood, which is expected to recover 300-400 million bbl of light oil.

Company officials maintain the project is risky and needs investment of about $630 million.

Unocal is establishing a "twin" headquarters unit in Malaysia and will transfer a third of its management committee there in September.

John Imle, Unocal president and one of the transferees, says the unit will look for Asian ventures, alliances, and acquisitions.

Asia "is clearly the most opportunity-rich area of the world for energy companies," Imle said, adding that Unocal executives need to be close to the action.

Unocal has mostly withdrawn from the downstream business and refocused its upstream business to concentrate on Asia.

The Russian government, in a move to begin improving its industries' environmental performance, awarded Arthur D. Little consulting company a $1.1 million contract to help improve the environmental performance of its chemical industry.

The 3-year contract is part of Russia's comprehensive Environmental Management Project, funded through a $110 million World Bank loan.

Specialists will analyze Russia's main industry sectors and make recommendations for improvements in environmental performance through targeted investment, technological and management changes, and more effective environmental policies and regulations.

Little will analyze the current performance of the Russian basic organic and inorganic chemicals industry and benchmark performance against international industry norms. Analysis will involve nearly 200 plants.

Japan's Ministry of Transport is trying to strengthen regulations governing oil tankers to prevent a recurrence of a major spill like the Jan. 2 oil spill by the Russian tanker Nakhodka in the Sea of Japan (OGJ, Jan. 20, 1997, p. 34).

The ministry, which has submitted proposals to the International Maritime Organization in London seeking increased inspections and sturdier hulls, wants the same double-hull IMO requirements for tankers carrying refined products that exist for crude carriers: crude oil tankers must be double-hulled if they are 20,000 dwt or over; double hulls for products tankers currently are not required for those under 30,000 dwt. The ministry says it will ask for the cooperation of South Korea, China, and Russia if another such accident occurs.

Industry continues to press the frontier on gasoline marketing, in regulatory and technological advances.

Dresser Industries is selling gasoline pumps to Japanese service stations to prepare for the expected lifting of a self-service ban there in fiscal 1997. Dresser can offer prices 20-30% below those of Japanese makers, an official at Dresser's Japanese unit says.

The Japanese gasoline pump market, worth about $161 million/year, is controlled by Tominaga Manufacturing and two other companies.

In the U.S., Shell Oil Products is field-testing the Shell Smart Pump in Sacramento, a radical new way motorists may someday use robotic technology to fill their tanks. Similar to a drive-up banking automated teller machine, Smart Pump allows a driver to pull in, select the fuel grade and payment method, and then sit back for a 2-minute fill-up. Smart Pump identifies the vehicle make and model and positions a robotic arm to open the fuel door and dispense fuel via a special, Shell-provided fuel cap.

Shell is also field-testing Shell Easy Pay, an advanced automated payment system. Customers would use a personal electronic key chain device with a tiny computer chip inside, which can be waved in front of a pump to activate fuel dispensing. A windshield-mounted device may also be offered.

Test marketing is set this summer.

Canada's Senate has approved legislation banning use of the gasoline additive MMT. Virginia-based Ethyl Corp., which produces MMT, says it will file a legal challenge on grounds the action is discriminatory under terms of the North American Free Trade Agreement.

The Natural Gas Vehicle Coalition, formed by firms promoting the use of compressed natural gas in vehicles, has established a separate council to support the development of a liquefied natural gas-powered vehicle market.

Officials say the LNG vehicle industry has expanded so much it promises to complement the growth in compressed gas vehicles.

More natural gas-to-liquids projects may be in the offing.

Noble Affiliates' unit Samedan has an agreement with Raytheon Engineers & Constructors to prepare budget estimates for assessing feasibility of a 2,500-metric ton/day methanol plant on Bioko Island, Equatorial Guinea. The plant would use gas from Alba field. Samedan has a 34.7% field working interest.