Oil country hot line

June 1999 Vol. 220 No. 6 Hot Line Additional legislation aids Texas oil industry Building on a bill introduced by the Senate earlier this year to provide tax incentives to marginal well opera

June 1999 Vol. 220 No. 6
Hot Line

Additional legislation aids Texas oil industry

Building on a bill introduced by the Senate earlier this year to provide tax incentives to marginal well operators, Texas Senator (and co-chair of the Congressional Oil and Gas Caucus) Kay Bailey Hutchison unveiled new legislation to create incentives to preserve domestic oil production during times of low prices. The legislation comprises three components: 1) marginal well incentives; 2) alternative minimum tax relief; and 3) fairer tax treatment of exploration, lease rental and resource depletion expenses. Hutchison said, "Although the price of oil has rebounded somewhat since reaching an historic low earlier this year, we must continue to push for a tax policy that will preserve our domestic production capabilities should another downturn occur."

More deepwater GOM discoveries drilled

The Oregano prospect at Garden Banks Block 559 is Shell E&P’s third oil and gas discovery in the deepwater GOM Auger basin. Located in a 3,393-ft water depth, the discovery well was drilled to a measured depth of 19,500 ft and encountered commercial quantities of hydrocarbons. The Oregano prospect is about 8 mi south of Shell’s Auger tension leg platform and 4 mi northeast of its Macaroni subsea development. Meanwhile, Conoco and Ocean Energy discovered oil on the Magnolia prospect located on the GOM Garden Banks Block 783 in 4,700 ft of water. The discovery well was drilled to a 16,868-ft depth and encountered hydrocarbon-bearing sections of 150 to 200 net ft. Conoco will perform additional technical work to quantify the area’s reserves and evaluate options to appraise the well.

Major gas find struck in Canada

Chevron Canadian Resources has made one of the country’s most prolific gas finds in the rugged north. The well is located near Ft. Liard in the southern Northwest Territories and is expected to produce between 70 and 100 MMcfgd, with raw reserves estimated to be 400 to 600 Bcfg. Said to be one of the largest gas pools in Canadian history, the discovery comes at a time when analysts are expressing concerns that the country will not have enough production to fill newly expanded pipelines to the U.S. Production could begin by May 2000.

Oil flows from Talisman’s Ross field

First production has begun at Talisman Energy’s Ross field in the Moray Firth, north of Scotland. About 60 million bbl of oil and 20 to 30 Bcfg will be produced using Bluewater’s Bleo Holm FPSO. Production is expected to peak at around 40,000 boepd. A fourth development well is currently being drilled.

Exploration licenses awarded in Nova Scotia

A joint venture comprising Shell Canada, Mobil Canada and Chevron Canada Resources was awarded three exploration licenses offshore Nova Scotia. Chevron will operate the tracts, located in deep waters on the continental slope behind Sable Island. About $94 million will be spent within the next five years. The companies initially plan to conduct seismic surveys to determine the potential for drilling exploratory wells. For more information, see "A world of oil".

Alaskan lease sale draws $105 million

Despite a growing controversy on oil development in Alaska’s National Petroleum Reserve (NPR), a federal lease sale was held in Anchorage on May 5 for the northeast corner of the area — 75 mi west of Prudhoe Bay. About $105 million in bids were accepted for 134 tracts, with ARCO Alaska and Anadarko Petroleum winning rights to explore and produce 92 blocks. Meanwhile, ten bidding groups at Alaska’s first area-wide Cook Inlet lease sale drew $2.4 million on 46 tracts. The Director of the Department of Natural Resources Division of Oil and Gas, Ken Boyd, was pleased with the bids received for the 40-year-old basin. ARCO Alaska made the highest bid on only one tract — $307,699 — for an area off the southern Kenai Peninsula, north of Anchor Point. Unocal bid on the most acreage, winning 57,600 acres.

Industry’s consolidation trend continues

A merger between Santa Fe Energy Resources and Snyder Oil was approved in early May by the shareholders of the two firms. The company’s name will change to Santa Fe Snyder Corp. John C. Snyder will become chairman, and James L. Payne, currently chairman and CEO of Santa Fe, will become the CEO of the new company. The result of the merger is an E&P company with reserves of 315 million boe. Combined production for this year is expected to be about 105,000 boepd. Meanwhile, British oil company Lasmo acquired rival Monument Oil & Gas in a $1.14-billion deal. The combined company is Britain’s largest firm focused on oil and gas exploration.

BP Amoco relinquishes Nigerian property

BP Amoco has decided to divest its $220 million oil concessions in Nigeria. After reviewing its investments, the company was not impressed with drilling results at its five deepwater properties. Royal Dutch / Shell, Agip, Total, Chevron and Brazilian state oil company Petrobras are vying for the interests.

China introduces new oil recovery method

The China National Petroleum Corp. reported that scientists from the country’s Qinghai oil fields have developed a system to increase oil recovery rates. The new acidizing technology involves a chemical compound injected deep into the earth with dehydrated crude oil as a carrier. This technique causes a chemical reaction to produce a strong solvent to remove blockages on the inner sides of wells. The compound has no corrosive effects and can decrease crude density for smoother extraction. Output has increased by 219,600 bbl in six oil wells in which the new method was applied.

FROM THE ARCHIVE