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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (71163)	8/18/2000 11:20:37 AM
From: Big Dog	Respond to of 95453

Some gas that won't make it to market... From Frost: According to industry sources, production at ExxonMobil's (NYSE: XOM; Not Rated; Price: $83-13/16) new Hoover/Diana development was shut in late Wednesday due to a gravel pack failure in one of the subsea wells. The sand production reportedly "sanded up" the flow line and production facility forcing the shut-in. The Hoover/Diana spar, dubbed a Deep Draft Caisson Vessel (DDCV) by Exxon, is located in 4800 feet of water at Atwater Valley Block 26, and, according to ExxonMobil, is the world's deepest water drilling and production facility. First production from the five horizontal subsea completions at Diana was brought on this summer at rates of 140 MMcfd of gas and 18,000 bopd. Exxon had intended to ramp production up to 325 MMcfd of gas and 100,000 bopd. Estimated gross recoverable reserves at Hoover/Diana are thought to exceed 300 MMboe. The development project has a total cost of approximately $1.1 billion, and Exxon has a 66.7% working interest along with partner BP Amoco (NYSE: BP; Not Rated; Price: $56-7/16), who holds the remaining 33.3%. The duration of the shut-in is not clear at this time, but sources indicate the production could be off-line for several weeks. In addition, the subsea well that failed, located about 15 miles from the spar, will have to be completely worked over in order to be placed back on production, an operation that could take several months before full production at Diana is restored. This event could serve as a stark reminder to independents and investors that become complacent about the high-risk, high-cost environment of the ultra-deepwater.

To: Tomas who wrote (71163)	8/18/2000 1:34:13 PM
From: russet	Read Replies (2) \| Respond to of 95453

Scotibank's Commodity Price Index eases in July Fri 18 Aug 00 News Release Ms. Patricia Mohr reports After climbing in June, Scotiabank's Commodity Price Index report, which measures price trends in Canada's major exports, declined by 1.8 per cent in July. The All-Items Index remains 8.6 per cent above a year earlier and 23.9 per cent above the October, 1998, low. "While pulp prices continued to gain strength in July, the Forest Products Index declined as United States lumber and oriented strandboard prices moved lower," said Patricia Mohr, vice-president and commodities specialist, Scotia Economics. "Also in July, a moderate rebound in the Metal and Mineral Index was more than offset by seasonal weakness in the Agricultural Index and a temporary dip in oil and natural gas prices." Ms. Mohr continued, "Going into the fall investment season, oil and gas holds the greatest promise for investors within the resource industries." West Texas Intermediate crude oil prices edged down to $27 (U.S.) to $28 (U.S.) per barrel in the second half of July, following Saudi Arabia's announcement that it would boost output by about 500,000 barrels per day throughout July and August to move prices closer to the mid-$20 (U.S.) level. However, WTI prices still averaged $30 (U.S.) per barrel during July and have bounced back to about $32 (U.S.) in mid-August. "While Saudi Arabia increased output by 130,000 barrels per day in July -- which accounted for a large part of the 310,000-barrel-per-day increase by OPEC -- the Kingdom's initial sales for September appear be to limited," said Mr. Mohr. "Control of OPEC policy now rests largely in the hands of Saudi Arabia. Most OPEC countries are currently producing close to capacity, with Saudi Arabia holding 75 per cent of unused capability." According to the report, U.S. inventories of crude oil have also plunged to the lowest level for August in 24 years. Though OPEC has boosted output in small steps this year, increases have been skewed toward heavier, sourer grades rather than the lighter gasoline-rich grades needed during the peak U.S. summer driving season. "U.S. refiners have not been able to take full advantage of rising OPEC output because of the limited availability of hydro-cracking capacity to process heavier grades and tighter product specifications requiring a narrower set of feedstocks," said Mr. Mohr. "In fact, Saudi Arabia itself may not be discounting its formula prices sufficiently to encourage much additional buying." Mr. Mohr continued: "Given the transportation costs and quality differentials, the $25 (U.S.) target for the OPEC basket of crudes -- referred to by the Saudi oil minister -- implies a higher price of $27 (U.S.) for WTI. WTI is a much lighter crude oil than the OPEC basket and will likely average $29 (U.S.) this year and $27 (U.S.) to $28 (U.S.) in 2001, up from only $19.24 (U.S.) in 1999." In addition to low-crude oil stocks, the recent emphasis on gasoline production by refineries in the United States has resulted in an 18-per-cent year-over-year plunge in U.S. middle distillate stocks, including home heating oil. Though U.S. refineries will shift production toward home heating oil in September, it will be a challenge to replenish stocks before the winter heating season. This will reinforce strong natural gas prices this winter, because some Canadian term export prices are tied to home heating oil prices in the U.S. northeast. Major international oil companies are beginning to shift focus from cost reduction to production growth. However, it will take some time for additional supplies to be generated. While natural gas prices edged down in the United States in July, prices have also rebounded strongly in August alongside rising crude oil and are likely to move higher through the fourth quarter. U.S. gas-fired merchant power capacity continues to be expanded and U.S. gas-in-storage is about 15 per cent below a year earlier. Alberta natural gas producers will enjoy prices which are double 1997-1998 levels. Scotia Economics, part of the Scotiabank Group, provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.