MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING TUESDAY JUNE 9 1998 (4)
Petro-Canada pulls out bid coup
St John's Evening Telegram
When the world's most successful seismic vessel slipped her lines and departed St. John's harbor at the behest of Petro-Canada this weekend, officials at Husky Oil were likely looking on with covetousness and regret.
The ship - christened Geco Orion and recognized as the world record holder for the largest single seismic snapshot - headed to a parcel of offshore property called Riverhead, about 40 kilometres south of Hibernia. Its tasks include taking precise sound-wave images from the Rankin and Avondale properties and acquiring a small slice of information from the Brents Cove property which lies on the eastern edge of Terra Nova.
Brents Cove, like Riverhead, is in the hands of Petro-Canada, the lead partner in a four-partner consortium that also includes Mobil, Chevron and Norsk-Hydro.
But Brents Cove might have been Husky's to explore.
Husky spent $7 million there last year, secretly conducting three-dimensional seismic work on the property. It then bid on the property in 1997, submitting what it thought was a winning bid.
But oil exploration is a high stakes game and other oil companies in the area may have had an idea something was up.
"From air photos, we knew someone was out there," said geophysicist Rob McGory, a member of Petro-Canada's Grand Banks Asset team.
The Petro-Canada consortium bid $49.5 million - apparently only tens of thousands more than Husky - in what would turn out to be the highest bid for any parcel offered on the Jeanne d'Arc Basin in 1997.
Husky found itself the proud owners of expensive 3-D seismic work for someone else's property.
"That was $7 million they just threw out the window basically," McGory said.
Actually, Husky ended up selling what it had to Petro-Canada, but the bargain-basement price-tag was rumored to be about one-third the original cost of the work.
What it means for the crew of the Geco Orion, which is owned and operated by Geco-Prackla, an arm of Houston-based oil giant Schlumberger, is they don't have to survey the entire Brents Cove property.
But it is still important to get a large, consistent sweep of the area, McGory said. When seismic work is compared to down-hole data acquired from Hibernia's wells, geologists and geophysicists should have an excellent picture of what the world looks like four kilometres down. But they will still have to drill to determine if hydrocarbons are present, McGory said.
The Geco Orion is beginning the process of surveying a total of 1,100 square kilometres, dragging eight cables about 3.6 kilometres long behind the massive vessel. Crews will work around the clock, weather permitting, McGory said, and the mission should take about a month and a half.
The area surveyed will include parts of Brents Cove, Riverhead, and Rankin, a property lying between Hibernia and Riverhead. Rankin was awarded to a Mobil-led consortium in 1997 for a bid of $32.4 million. Riverhead, which is one of the largest single parcels on the Grand Banks, was awarded to Petro-Canada for a bid of $64.8 million in 1996.
A bid is the amount a company agrees to spend in exploration within the first four or five years.
The Geco-Orion was given an official send-off at a ceremony under the big top on the harbor apron Friday. Its world-record, single seismic snapshot covered an area of 6.4 square kilometres, or the equivalent of 700 soccer pitches, said Geco-Prakla vice-president Olivier Peylet.
Hoping for Anticosti oil find
St John's Evening Telegram
The next breakthrough - or disappointment - in the search for oil on Newfoundland's west coast will not come from Newfoundland. It will come from a 225-kilometre-long stretch of bog and rock in the Gulf of Lawrence that belongs to Quebec and is the target of two major wells this summer, the first of which was spudded last week.
But Anticosti is an island with a history of failure and false starts. Discovered by Jacques Cartier in 1593, it was first thought to be a peninsula. The island was given to Newfoundland after the fall of New France, only to be given back to Canada in 1774.
In 1872, Anticosti was sold to a Montreal firm that went bankrupt trying to settle it. Twelve years later, English businessman Francis Stockwell bought it for $101,000 - and went bust trying to develop it.
Later French millionaire Henri Menier built a model town there and tried to turn the island into a
private sports preserve. It failed and the town was later abandoned.
A pulpwood industry flourished, and was closed down. The population rose to 3,000 and plunged to about 250, where it stands today.
But Halifax-based Corridor Resources Inc. is hoping to reverse Anticosti's ill fortune and come up with a several-million barrel oilfield from the same basin that produced the small Hunt Oil-PanCanadian discovery at Port au Port No. 1 in 1995.
More than 5,000 barrels of light crude oil flowed from that well on the west coast of Newfoundland two years ago but it wasn't enough to put the well into production.
Hunt later came up empty on a 4,800-metre offshore well and a couple of smaller companies have attempted to fund slimhole wells onshore. But there are no wells under way in western Newfoundland this year and Hunt Oil is trying to find a partner to drill its Shoal Point property, Hunt Oil Canada's Wayne Moses confirmed from Calgary Tuesday.
So Anticosti is where the action is. Shell Oil began drilling the 3,100-metre Roliff well June 3 awill start the Jupiter well in August. Both are near the centre of the island.
Corridor Resources secured oil rights for the entire island in 1995, shot seismic in 1996 and 1997, and then farmed the whole prospect out to Shell, which brought in Encal as a partner.
"The seismic turned out very well for us," Corridor president Norm Miller said. "We're looking for a very good summer there."
Shell and Encal are scheduled to drill four wells and conduct additional seismic work. The stakes for Corridor remain high: the four-year-old company earns a 12 per cent royalty on the first five million barrels without spending another cent, and then shares 30 to 35 per cent of costs and benefits from any additional production.
Anticosti has been drilled seven times already, mostly in the 1960s, and traces of oil and gas were found every time, Miller said, but never in commercial quantities.
Armed with better seismic data and better interpretation methods, Miller hopes Anticosti offers up the mother lode this time.
"That's why Shell's out there, they're looking for large reserves," he said. "Shell's described it as (having) the potential for several hundred million barrels in some of their quotations and Encal is looking for what they call a high-impact play.
"But it's the exploration game with all the risks entailed with that," he said.
Oil industry rules roost
The Evening Telegram
It's the oil companies which rule the development of Newfoundland's offshore rather than provincial government, a senior labor official charged Friday.
"While the provincial government and the Canada-Newfoundland Offshore Petroleum Board (CNOPB) watch each other over who is administering the
offshore petroleum resources, the oil companies are charting the course and steering the ship," said Bill Parsons, executive director of the Newfoundland and Labrador Building and Construction Trades Council.
At a news conference, Parsons called on the government and the petroleum board to manage the resource in the best interest of the people of the province.
"We have come here today because of a grave concern in what we see as an obvious lack of vision and strategic initiative on the part of the Government of Newfoundland and Labrador an abdication of duty by the CNOPB," Parsons said.
"I know the ministers and the deputy ministers personally and I don't get any comfort from what I see as their vision of developing the province's resources," he said. "I really don't, and it scares me."
Parsons added, "We need an early retirement program at Confederation Building. Let those armchair rockers rest and bring in young, new blood with a vision for the province to advise the government on how we should develop the resource.."
It has become abundantly clear that the Department of Industry, Trade and Technology; the bull Arm Site Corporation and the CNOPB are "not cognizant of the consequences that their nearsighted actions are having on the long-term ability of this province and its people to obtain sufficient and substantial return from the exploitation of its resource," Parsons said.
Evidence of a lack of vision can be found in the management of the provincially-owned Bull Arm construction site, he said.
He said from the day the province took over the site, the government has pursued a policy of stripping the site of any assets of value and selling them "in an effort to somehow recoup its costs from subsidizing and managing the site."
"Is it the government's wish to leave the Bull Arm site as a scrap heap and not the world-class industrial site that it was previously," Parsons asked.
He said the recent sale by the site corporation of 65 km of anchor chains is further evidence of "mismanagement."
Parsons' comments followed on the heels of similar statements by Derm Cain, president of the Operating Engineers Union, Local 904 and of the Oil Development Council.
However, Judy Foote, minister of industry, trade and technology, Friday rejected the accusations.
Foote said statements that bunkhouses, mooring chains, and other equipment were being sold for next to nothing or have gone missing are false.
She said the Bull Arm Site Corporation, based on advice from experts on construction/fabrication sites, has been in the process of disposing of surplus assets.
"These assets were expected to deteriorate with time or not be used at all and their disposal will not impair the viability of the site," Foote said.
"In fact we were advised that if future operators tried to use and pay the costs of maintaining camp facilities, the Bull Arm site would not be able to compete with construction/fabrication sites on a worldwide basis."
All surplus assets have been sold for fair market value except in cases where they have been provided to worthy causes, she said. For example, she said the accommodation units have been provided to the Canada Winter Games Committee in Corner Brook.
Ranger Oil Awards Contract For UK Kyle oilfield
Norwegian offshore services company Petroleum Geo-Services ASA said on Wednesday it had been awarded a contract by Ranger Oil (UK) Ltd to produce oil at the Kyle field in the British sector of the North Sea.
The Kyle field, which was discovered in 1993, is expected to produce 33 to 43 million barrels of oil. It will be produced by PGS' Ramform Banff floating production, storage and offshore loading vessel, which has been upgraded to process 95,000 barrels per day of crude.
The Kyle field is located 12 km from Conoco's Banff field. Partners in the development include Premier Oil , Condecca Resources, Bow Valley Petroleum and Croft Oil & Gas.
PGS said the agreement was subject to final approval by the Banff field partners.
Barrels Of Joy
Petroleum Show Contains Direst Pipeline To Success
Calgary Sun
The aisles of the National Petroleum Show at the Stampede grounds are lined with phenomenal success stories of Canadian companies.
They are success stories that make the men and women who built and run these companies second to none in the world.
Indeed, many of them operate throughout the world.
Take Enerflex Systems Ltd. of Calgary.
Formed only in 1980, by John Aldred -- with Aldred as the lone employee -- the company now has 1,000 staff members. Its gas compression and power generation systems are in operation in some 30 nations.
Those countries are as diverse as Australia and Bolivia, Taiwan and Ukraine, and Norway and Oman.
Indeed, as Wayne Adams, vice-president of marketing, and Vivienne Allen, manager of public relations explained, Enerflex has been so successful it is listed on the Toronto Stock Exchange 300. In fact, it eventually took over Pamco Ltd., the company that formerly employed Aldred.
Enerflex manufactures the compressors and Pamco services them.
Then there's Calgary's Computalog Ltd.
Founded in 1972 in Swift Current, Sask., with one wellhead logging truck, it now has 180 ultra-sophisticated trucks crammed with hi-tech analysis equipment. Its directional and horizontal drilling offshoots are second to none.
Corporate marketing manager Randy Reil says Computalog's revenues climbed from $90 million in 1993, to $223 million in 1997.
With about 400 clients -- including PanCanadian, Renaissance, Talisman and Canadian Natural Resources -- the company competes against the world's multinationals in wellhead services, where an average "truck" can cost $1 million.
And the reason for the company's success?
"Not only do we do our own research to constantly upgrade our processes -- and our own manufacturing to ensure quality -- but we give customers what they need rather than tell them what they want," says Reil.
Serval Corporation's president Jay Lyons says his company was formed less than seven years ago and had revenues of about $500,000 in its first year.
Today, the integrated energy services company has revenues of $157 million. Some of Serval's growth was achieved by acquisitions, but the rest was done by building units from the bottom up.
Fortuitously -- or with foresight -- Serval is heavily involved in the natural gas business and it can manufacture a compression station, install it and, if necessary, sell the product.
"When we say we are integrated, it is not a buzzword to us," says Lyons.
"We package three or four cards together -- whether they be technological, logistical, centralized cost control, or project management. That's why we can cut a clients costs by 20 percent."
Robert Eisses of Infosat Telecommunications in Calgary holds a global Iridium satellite phone in his hand, saying his phones take off where cellphones leave off.
"You can use this phone in the North Pole and the South Pole and everywhere in-between," he says.
Although Infosat was formed just 10 years ago -- basically to manufacture satellite modem technology, going on to manage satellite networks for the oil and gas industry -- it now has 60 employees and 150 dealers throughout Canada.
It also has partnerships with Air Canada and Mobility Canada, the hookup that has such companies as Telus Mobility and B.C. Tel Mobility as alliance partners.
"Our success is based on being able to attract staff members who are the brightest and the best in satellite technology -- and customers who know it," Eisses says.
Headlines from the 1998 National Petroleum Show
From the pages of the Calgary Herald
calgaryherald.com
American Eco lands $234M oil rig contract
The Financial Post
American Eco Corp., the Houston-based project management group, said yesterday it has received a $234-million contract to build two semi-submersible drilling rigs for Petrodrill Offshore Inc., jointly owned by Brazil's Maritima Petroleo E Engineria Ltd., an affiliate of the state-owned Petrobras, and Pride International Inc. of the U.S.
The work will be shared between American Eco's Halifax subsidiary and Dominion Bridge Corp.'s Davie yard at Lauzon, Que., starting in July. The rigs are due for delivery at the end of 1999.
Dominion Bridge is now controlled by Chicago's Deere Park Equities Inc. and American Eco.
Nova/TCPL deal redefines NEB's role
The Financial Post
The deal Nova Corp. and TransCanada PipeLines Ltd. struck with producers in April to clear the way for their $17-billion merger has altered the role of the National Energy Board as industry regulator.
Ken Vollman, acting chairman of the board, said yesterday as a result of the accord, the NEB's mandate to arbitrate tolling structures and other economic issues will take a back seat as those deals are hammered out behind closed doors.
In the April agreement, a surprising departure from the adversarial relationship between shippers and pipeline companies, Nova and TCPL agreed to tone down their opposition to the Alliance pipeline project to gain the support of the producers.
Vollman said the board will focus in future on its role as safety watchdog as competition puts pressure on pipeline companies to cut costs.
"I'm not raising alarm bells, but this is a challenge we have to face," said Vollman, who spoke at an international pipeline conference.
"It might be argued that there will be increased incentives to skimp on safety and environmental issues."
He said data show the number of major incidents and ruptures have declined slightly in the past decade despite a 25% increase in federally regulated pipelines from 32,000 kilometres to 40,000 km.
Yet public confidence in pipeline safety is at historically low levels, and landowners and special interest groups are taking a more forceful stance at public hearings.
In the past decade, time spent in hearings on issues such as engineering, land and the environment has increased dramatically to 37% from 7%.
A growing concern for pipeline companies is obtaining rights of way for new systems.
"In some jurisdictions in the U.S., it has become so difficult to obtain new right of way that some companies are removing old pipe and replacing it with new larger diameter pipe to increase capacity," Vollman said.
One worker killed in Canada oil refinery fire
One worker was killed and two others injured on Tuesday in a spectacular explosion and fire at Irving Oil Ltd.'s huge Saint John refinery in the Atlantic Canadian province of New Brunswick.
The blaze, which crippled Canada's biggest oil refinery and sent flames and plumes of dense, black smoke shooting into the sky, was brought under control by early afternoon, Irving and Saint John Fire Department officials said.
"I can now confirm the fire has been extinguished," refinery manager Bob Chalmers said in a statement issued late Tuesday afternoon.
A spokeswoman for Saint John Regional Hospital earlier confirmed the death of the worker and said two other people had been treated for minor injuries at the hospital.
The explosion occurred early on Tuesday at the refinery, which has a daily crude oil processing capacity of 250,000 barrels a day, making it Canada's largest.
Irving said the blast and resulting blaze originated at the base of a flare stack on a processing unit called a hydrocracker that refines heavy crude oil into petroleum products.
"We don't know yet exactly what caused today's accident and we are not prepared to speculate on its cause at this time," Chalmers said.
Firefighters brought the blaze under control by early afternoon, but not before two schools and several residences near the refinery were evacuated.
Seven fire trucks, 28 firefighters and three fire department commanders were brought in to battle the blaze.
Irving crews also responded to the fire. Officials from the company's Saint John headquarters and refinery declined to say how the fire would affect production, shipping supply to its customers or how long repairs might take.
The refinery, which processes crude oil imported from such regions as the North Sea and Middle East, supplies Irving's own large service station network in Atlantic Canada and exports gasoline and other products to the U.S. Northeast.
TIn the wake of the blaze, the provincial government of New Brunswick began developing a contingency plan for supplying petroleum products to markets usually served by the plant. The plan could include requesting refineries in the eastern United States to supply gasoline.
However, it was not yet known if the contingency plan would be needed as it was unclear when the Irving refinery would be repaired, said Don Barnett, Assistant Deputy Minister of New Brunswick's Department of Natural Resources and Energy.
News of the refinery fire pushed up prices on Tuesday for gasoline bought and sold among companies in the U.S. Northeast, where about 10 percent of Irving's production is believed to be shipped, U.S. energy traders said.
END - END - END
|
