December 1999
News & Resources

Oil country hot line

December 1999 Vol. 220 No. 12  Hot Line  Alaskan governor assents to merger Alaskan Gov. Tony Knowles reversed his opposition and urged the Federal Trade Commission (FTC) to allow the BP Amoco

December 1999 Vol. 220 No. 12 
Hot Line 

Alaskan governor assents to merger

Alaskan Gov. Tony Knowles reversed his opposition and urged the Federal Trade Commission (FTC) to allow the BP Amoco / ARCO merger. On Nov. 1, BP Amoco filed papers that would have required FTC to decide the merger within 20 days. Knowles opposed that action, and the merger, unless BP Amoco resumed negotiating with him. Within days, a 10-point deal was struck, whereby BP Amoco will sell 13% of its North Slope production and divest a similar stake in the Trans-Alaska pipeline. The firm said it achieved the $2-billion savings expected from the Amoco merger. Another $1 billion in savings is projected from the ARCO merger.

Australian sector buzzes with activity

Several significant events occurred recently offshore Australia. Initial oil production from Woodside Energy’s FPSO Northern Endeavour began at Laminaria and Corallina fields, offshore Northern Territory. Meanwhile, BHP Petroleum and MODEC christened the FPSO Buffalo Venture at Jurong Shipyard in Singapore. The converted tanker subsequently was towed to Buffalo field, in the Timor Sea offshore Western Australia. Also in the Timor Sea, Phillips Petroleum said it will proceed with a liquids development phase at Bayu-Undan gas / condensate field. First output from this site in Area A of the Timor Gap Zone of Cooperation will be in late 2003. Finally, two sizeable discoveries were hit offshore Western Australia. Apache’s North Gypsy 1 tested 5,940 bopd from a 63-ft interval, while Mobil’s latest well in permit WA-267-P, Orthrus 1, encountered 173 net ft of gas pay.

Two Indonesian deepwater finds struck

Unocal Corp. hit two oil-and-gas discoveries on its Bangka and Aton prospects in the Kutei deepwater basin. Nine miles north of West Seno field, Bangka 2 was drilled to a 9,752-ft TD in 3,191 ft of water and encountered 367 net ft of liquid-rich gas pay. A follow-up, Bangka 4, found 38 net ft of oil and gas pay. Meanwhile, 5 mi southeast of Bangka 2, Aton 3 was drilled to an 8,645-ft TD in 3,826 ft of water. It found 80 ft of oil and gas pay. The Aton 1 follow-up also struck 59 ft of net pay in two zones. Since June, Unocal has drilled 12 deepwater wells in Kutei, at an average cost of $4.6 million per well and average drilling time of 14.2 days.

Environment may benefit from U.S. offshore

A bipartisan bill approved by the U.S. House Resources Committee would dedicate more than 60% of federal royalties from offshore E&P to environmental projects. Funds would be used to buy land, preserve wildlife and conserve coastlines. The measure would set aside $3 billion of the $4.8 billion paid to the government annually by oil companies. Coastal states-California, Texas, Louisiana, Alaska, Mississippi, Alabama and Florida-would get the largest portion, but all states would share in the funds. The bill was co-authored by Committee Chairman Don Young (R-Alaska) and ranking Democrat George Miller (California).

UK technology cooperative established

In October, 16 operators on the UK Continental Shelf (UKCS) formed a new company, Industry Technology Facilitator (ITF). Its objective is to promote UKCS innovation and technology. ITF will foster communication between technology suppliers and users, to ensure that the entire industry works on technologies necessary to extend UKCS output. With a core staff of only seven, ITF will establish joint industry projects connecting industry needs, technology providers, and public and private sector funding. A committee of industry representatives will advise ITF on its focus which, intially, will be on wells, facilities and subsurface technology.

Croatia begins offshore production

Ivana, Croatia’s largest offshore gas field (300 Bcfg), went onstream last month at an initial 14.1 MMcfgd. That rate will increase to 24.7 MMcfgd within two months and should improve further, to 63.6 MMcfgd by 2001 after addition of four satellite platforms. The $190-million central platform-the country’s biggest industrial project-is funded by a partnership between Croatia’s INA and Italy’s AGIP.

Chevron records Argentine discovery

Chevron is pleased with its recent acquisition of Petrolera Argentina San Jorge (PASJ). The company announced a significant discovery at its El Latigo Este well in Rio Negro Norte Block. The well tested 3,880 bpd of 39° API oil from several Upper Jurassic zones in the Punta Rosada formation, from depths between 7,115 and 7,886 ft. This is the seventh find in the last year near Loma Negra field, discovered in 1997. PASJ currently produces 78,000 bopd and 40 MMcfgd.

Beijing will double gas usage

Due to Chinese efforts to curb air pollution, Beijing’s natural gas usage should double this winter, to 240 MMcfgd from 114 MMcfgd a year ago. Beijing ranks third among major world cities for worst air pollution, caused mainly by coal burning and vehicle exhaust. Officials are encouraging residents to use gas instead of coal for heating and cooking, and they plan to connect thousands of households with gas supplies. In addition, China’s largest, gas-powered, thermal energy plant has been completed. Beijing also will put 2,800 gas-powered buses into operation late this month.

Ukraine swaps bombers for gas...really!

To reduce its multi-million-dollar natural gas debt, Ukraine last month sent two long-range bombers – a Tu-160 "Blackjack" and a Tu-95MS "Bear" – to Russia. Nine additional bombers – seven Tu-160s and two Tu-95s – were due to be delivered early this month. Russia claims that Ukraine owes it $1.8 billion for natural gas deliveries that date back over the last two years. In an October deal, Russia agreed to reduce Kiev’s debt by $275 million in exchange for the planes. Not coincidentally, Ukraine was facing a deadline to destroy the aircraft, per its START-1 nuclear disarmament treaty obligations.WO

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