MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, APRIL 21, 1998 (5)
SERVICE SECTOR
America ECO Corp. (ECX/TSE) announced that its Separation and Recovery Systems, Inc. (SRS)Joint Venture SRS-ECO LTD., received a three year contract for resource recovery at the Total Refinery near Marseilles France. The multi-year contract was awarded following a technology demonstration conducted from September through to February, 1998. SRS indicated, that the contract, which is over seven figures, is precluded from announcing the specific amount due to Total Petroleum's policies.
The transaction included the sale of SAREX Process equipment by Separation and Recovery Systems, Inc. to the Joint Venture SRS-ECO. The SAREX process is cutting edge technology utilized in refinery and chemical plants for the recovery of valuable oil resources and for the remediation of contaminated industrial sites. The SRS SAREX Process is field proven over the past ten years, and has been utilized in the United States, Mexico, Australia, Taiwan, and South Africa.
Michael E. McGinnis, Chairman, President & CEO of American Eco, stated, "American Eco is pleased that Total has recognized the impact of the SRS technology demonstration through the award of a long term contract which meets their need for the new world standards for environmental compliance."
Computer Modelling Group Ltd. (CPU/TSE) announced it has signed multi-year licensing agreements with organizations in Japan and the People's Republic of China (PRC) to supply its world leading reservoir software and related support services.
The three-year agreement with Tuha Petroleum Exploration and Development Bureau in Xinjiang Province of PRC licenses the Bureau to use CMG's advanced oil and gas reservoir modelling software and provides training and participation at the Company's Annual Technical Advisory Symposium.
The Company also announced an agreement with a natural gas importer in Japan to use CMG software in the assessment of an underground natural gas storage reservoir in that country. Under the three year license agreement, the gas company will develop simulation studies to help determine the storage properties of the reservoir and how best to retrieve the natural gas from storage.
Frank L. Meyer, CMG President and CEO, described both agreements as "important milestones" for the Company and its growth as a publicly traded company, "more significant even than the $1.1 million value of the two agreements."
Mr. Meyer said "we believe the choice of CMG software in both cases was based on quality and our leadership in technology," adding that both licensing agreements followed extensive review processes. He said there was little doubt a new sales office for the Asia region helped win both of the landmark agreements. It was among four new sales offices opened in the past year. The offices are expected to assist with the growing demand for reservoir simulation software and contribute to further international agreements. CMG now has six offices in major petroleum producing regions of the world: Calgary, Houston, Beijing, PRC; Caracas, Venezuela; London, England and Sao Paulo, Brazil.
Computer Modelling Group Ltd. is a leading developer and marketer of software and support services for reservoir simulation used by oil and gas companies worldwide to optimize recovery from existing reserves.
J & L Capital Venture Corp. (JLX/TSE) reported the following update to the press release dated March 26, 1998, in which it announced a "Letter of Intent" for the purchase of certain assets of Cancoil.
Construction of Cancoil's new Hybrid Coiled Tubing System is now in its seventh week and is projected to be on schedule.
Cancoil's two unit system offers the most diverse range of Coiled Tubing services & drilling applications available to the industry today. Cancoil's design is focused on mobility and flexibility. The Coiled Tubing Unit will be coupled with a combination dual pumper (fluid / cryogenic nitrogen) unit capable of rigging up on the wellsite in minutes. Conventional applications (cleanouts, unloading a well, acid work) are easily addressable because of the quick mobilization time.
Cancoil is introducing a new generation state of the art Underbalanced Directional Drilling Bottom Hole Assembly that is revolutionary in design. The tool is nine meters in length and is capable of providing inclination and direction telemetry as well as gamma ray. The in-hole inherent risk during an underbalanced direction drilling job will be substantially less in stuck pipe situations when disconnecting the drilling tools is required, the electronics will be pulled out of the BHA leaving only "dumb" iron in the hole. This feature substantially reduces the clients exposure to tools lost in hole.
Underbalanced production logging and perforating will be another active service for Cancoil. The logging tools run off the same monocable wireline hardware as the directional drilling tools. The monocable wireline powers all the tools (drilling / logging) and the data telemetry is conveyed up the same wireline. Cancoil's unique feature is that no additional equipment callouts are necessary, it doesn't matter what type of activity (drilling, logging, cleanouts) is being conducted, as all the tools are inclusive to the rig.
Cancoil will be running a 20 meter lightweight derrick which is capable of running up to 1000 m of 5 1/2" jointed casing for drilling shallow wells. The unique derrick also operates at angles up to 45 degrees for slant well applications. Cancoil's unique rig design allows for increased reel capacities. Cancoil will be running 1" (4000 m in length) to 2 7/8" (1200 m in length) Coiled Tubing. The combination of the derrick and large capacity reel on one carrier allows the Coiled Tubing Unit to be more versatile, greatly enhancing the overall utilization of the equipment.
The Coiled Tubing Unit will have the ability to mobilize to any coiled tubing application in minutes, including directional drilling and logging. The rig is self-contained ready for mobilization at a moments notice.
Aker Maritime Hydraulics of Calgary was awarded the Cancoil manufacturing contract and have published a News Release in their internal global newsletter the "MariTimes" on March 5, 1998. Maritime Hydraulics is a multi-billion, multi national Norwegian Oil & Gas equipment manufacturer.
The Company has generated support in the industry with the new technology. "Letters of Intent" for the use of the rig upon its completion have been acquired from Oil & Gas companies. Cancoil has entered discussions with International Oil & Gas Companies requiring additional Coiled Tubing Units and combination dual pumper units.
PIPELINES
TCPL Pulls Plug On Viking Voyageur
A US$1.24-billion natural gas pipeline project owned by TransCanada PipeLines Ltd. has fallen victim to an oversupply of pipeline capacity from Alberta to the Chicago market.
Gary Davis, a spokesman for TCPL, said yesterday Viking Voyageur likely won't proceed because partners haven't been able to secure commitments from shippers to use the line.
The project which was to begin service in late 1999, would have carried 1.4 billion cubic feet of gas daily along a 1,100-km route from Emerson, Man., through Minnesota and Wisconsin to Joliet, Ill.
Viking Voyageur was intended to compete with the $3.7-billion Alliance Pipeline, scheduled to be built by late 2000.
But with strong shipping commitments to Alliance and other pipeline expansion coming on stream by November 1998, the market is saturated, said Davis. "Something was going to have to give because the supply for all this is just not there," he said.
Natural gas producers have been lobbying vociferously for pipeline expansion to move backed-up supply to the U.S. market.
By November 1998, TCPL will have expanded another of its projects by 900 million cubic feet a day and, with a similar expansion by Northern Border pipeline into Chicago, most of the immediate shortfall will have been addressed before Alliance starts up, some analysts say.
Northern States Power Co., which has a 40% stake in Viking Voyageur, has said it is reviewing its options for the project and TCPL, which also owns 40%, is doing the same. The third partner, with 20%, is Nicor Inc. A decision is imminent, said Davis.
"All along it was pretty clear you were going to see only one major project come out of Alberta into the U.S.," he said.
The decision isn't surprising, said Winfried Fruehauf, Toronto analyst with Levesque Beaubien Geoffrion Inc. The project had received strong backing from business, gas distribution companies and state energy agencies in Minnesota and Wisconsin, but not customers.
Pipeline Clears Final Hurdle
Provincial regulators have approved a new $475-million oilsands pipeline which will see Suncor Energy as its first customer.
IPL Energy's 530-kilometre Wild Rose pipeline will have a capacity of 570,000 barrels per day of oilsands product. The line will begin north from Fort McMurray and extend southward to Hardisty, a hub linked with pipelines heading to Eastern Canada and the American Midwest.
Constructed and owned by Wild Rose Pipe Line Inc., a wholly owned subsidiary of IPL Energy Inc., the line will be initially operated by Suncor.
As more shippers use the line, Calgary-based IPL Energy will become the operator.
Suncor first proposed the pipeline but IPL assumed costs for the project.
IPL Energy president Brian F. MacNeill said regulatory approval of the pipeline clears the way for rapid completion of the project to provide transportation for expanding volumes of synthetic oil production.
"Pipe for the 30-inch diameter line has been pre-ordered with an anticipated in service date by the end of the first quarter of 1999," MacNeill said in a news release. The construction workforce is estimated between 750 and 1,000.
MacNeill said a 30-year arrangement with Suncor ensures that IPL Energy receives "an acceptable return" on its investment while providing the scope for enhanced returns when additional shippers are attracted in the future. The pipeline is expected to be a "significant and continuing contribution" to IPL Energy's earnings growth for many years, he added.
Suncor president and CEO Rick George described the pipeline as a milestone for Suncor. "Working in co-operation with IPL Energy, we are opening a doorway to our growth -- a pathway for our future production to reach new markets," he said in a release.
Suncor plans to more than double its oilsands production to 210,000 barrels per day by the year 2002. George said the pipeline will ensure consistent, reliable delivery of Suncor's products to customers throughout North America.
The pipeline was originally estimated to cost $325 million, but higher pipeline and construction costs pushed project to $475 million.
"Pipeline and construction costs increased significantly since we first announced the project about a year ago," explained IPL spokesman Frank Ternan. "These increases reflect, to a large extent, the buoyancy of the oil business today."
ENERGY TRUSTS
Starcor Energy Royalty Fund (TSE/STR.UN) announced the closing of the acquisition of an additional interest in the Weyburn Unit for $8.3 million. This acquisition adds 2.78 million barrels of Established Reserves based on its January 1, 1998 independent engineering report. This is a material upward revision to the 1.78 million barrels of additional added Established Reserves previously reported in the initial news release issued December 23, 1997 and is related to an engineering reassessment of the CO(2), miscible flood project underway in the Weyburn Unit. The acquisition will add 265 BOE/day of incremental production.
This acquisition, effective April 1, 1998, which was financed from Starcor's credit facility, increases Starcor's Reserve Life Index to 14.4 years on an Established basis. Starcor Energy Royalty Fund currently has 9.2 million Units outstanding and trades on the Toronto Stock Exchange under the trading symbol (STR.UN/TSE)
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