Looking ahead

Wyoming producers to receive severance tax break. The State House and Senate have passed a bill on severance taxes that would give Wyoming oil producers a break during times of low oil prices. However, at press time, House members still needed to agree with changes made to the bill by senators. Industry tax breaks would amount to about $12 million, under the current low prices.

Royalty owners feel impact of oil price collapse. Julia Short, a 71-year-old royalty owner from Norman, Oklahoma, spoke in front of a congressional subcommittee on behalf of the National Association of Royalty Owners (NARO). She told members of the House Ways and Means Oversight Subcommittee that with current oil prices so low, the wells she has an interest in are being plugged and abandoned, and new wells are not being drilled. She said her income had dropped by 40% last year, and that there are about 200,000 other Oklahomans — along with 4.5 million royalty owners nationally — who depend on investments and assets in oil and gas royalties for financial security. Short asked committee members why the U.S. government subsidizes and enriches hostile foreign countries via higher oil imports, at the expense of its own producers and royalty owners.

U.S. companies invest in Bangladesh. Unocal plans a $700 million, integrated energy project in Bangladesh, part of several investments the company is making in the country. The Western Region Integrated project includes developing the Shahabajpur gas field in southern Bhola and laying a 93-mi pipeline to southern Khulna in the southwest, to feed a 350-MW power plant. Gas reserves in the field are estimated to be about 350 Bcf. Meanwhile, Occidental found gas after drilling an exploratory well on Bangladesh’s Block 12, in the Bibiyana field. The company is supplying 100 MMcfgd to the national gas grid from its Sylhet field in Block 13.

Internet system to save Texas producers money. The U.S. Department of Energy will help fund a pilot project in Texas that allows oil and gas producers to submit drilling permit applications over the Internet. Producers should save between $200 and $400 in application fees, as paper forms would no longer have to be processed. Annually, producers could save up to $6 million. In addition, producers filing electronically could be notified in just hours as to whether they received approval, rather than waiting for days or weeks. The Energy Department is providing $700,000 to the Texas Railroad Commission to operate the program. The commission will match the federal funding. Testing of the new system will begin in about seven months, with the system coming online by the end of 2001.

Kazakh consortium slates first Caspian well. The Offshore Kazakhstan International Operating Company (OKIOC), a consortium of nine international oil companies, plans to begin drilling for oil in the Caspian in May or June of this year. The group had expected to drill its first test well in 1998, but was delayed due to technical problems. About $450 million will be spent over the first six years of operation. Major oil companies will be scrutinizing OKIOC’s progress, after two consortia exploring in the Azeri sector of the Caspian closed, unable to find viable quantities of hydrocarbons.

Elf, Agip sign deal with Iran, U.S. concerned. France’s Elf Aquitaine and Italy’s Agip signed a $540 million energy deal with Iran’s state-run National Iranian Oil Co. for the Dorood oil and gas field. Highly criticized by the U.S. State Department, the deal is expected to increase Iran’s output by 100,000 bopd. The U.S. continued an embargo on American trade with Iran in 1995, on the grounds that the country sponsors terrorism and spreads dangerous technology. A 1996 law stated that the U.S. could sanction companies that invest more than $20 million in Iran or $40 million in Libya. The act known as ILSA (Iran-Libya Sanctions Act) expires in 2001.

Noble to develop Amistad gas field. EDC Ecuador Ltd., a subsidiary of Noble Affiliates, plans to develop Amistad gas field in the Gulf of Guayaquil, offshore Ecuador. A contract for a drilling / production platform will be awarded in July of this year, to be installed in early 2000. Prior to installation, the company will drill the first of four directional wells in the field. The initial plan includes production facilities that will be capable of processing 100 MMcfgd and a 40-mi pipeline in El Oro, in southern Ecuador. Gross recoverable gas reserves from the area to be developed are estimated at about 345 Bcf.

Total and Shell compete for China LNG project. French companies Total and Gaz de France have teamed up to bid for China’s first liquefied natural gas project. Royal Dutch / Shell also announced a similar interest. The project comprises an LNG import terminal, a power station and a 249-mi pipeline. The project is in the province of Guangdong, and would be the first such installation in China. The China National Offshore Oil Corp. will lead other Chinese companies to take a majority share. Western companies will get about 30% of the stake.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company