MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, FEBRUARY 3, 1998 (7)
INTERNATIONAL, con't
COUNTRIES
COLUMBIA
Colombia's '97 Oil Output At 650,000 bpd
Colombia's crude oil output averaged just over 650,000 barrels per day (bpd) in 1997, an increase of about 24,000 bpd over the previous year, the state oil company Ecopetrol said Friday.
It said Ecopetrol accounted for an average of 120,000 barrels of daily production, up 5,000 barrels compared to 1996.
Joint output by Ecopetrol and private companies working with it under association contracts averaged of 517,000 bpd compared to 495,000 bpd in 1996, the company said.
It said flagging output from the Cao Limn field operated by Occidental Petroleum Crop (OXY - news) dropped 192,000 bpd over levels reached in 1996, to an average of 160,500 bpd.
That drop came against an increase in production from the Cusiana and Cupiagua fields, operated by British Petroleum (UK & Ireland: BP.L), which rose from an average of 174,000 bpd in 1996 to 220,000 bpd in 1997, Ecopetrol said.
It said crude oil production was targeted to rise to an average of 900,000 bpd in 1998 and that natural gas output was seen hitting 672 million cubic feet per day against 577 million in 1997.
MEXICO
Seven Firms Apply For Mexico Natural Gas Project
Seven national and international firms have submitted applications in a bidding process to distribute natural gas in the Mexican industrial center of Monterrey, the Energy Ministry said on Thursday. The applicants, from France, Spain, Canada, the United States and Mexico, are grouped in three consortia and Mexico's energy regulatory commission (CRE) will announce the final winner by March 19.
The winning firm must pay Mexico's Federal Electricity Commission (CFE) 1.553 billion pesos, the market value of Monterrey's natural gas system including value added tax, Mexico's energy ministry said in a statement. However that amount will be adjusted in accordance with inflation on the payment date, it added.
Bufete Industrial Constructions (Mexico)(BUF.MX)(GBI - news), Gaz de France International (France) (GDFPp.PA), Hydroquebec International (Canada), and MEG International (Canada) together form one of the three consortia, the statement said.
The second comprises Enova International (United States) (ENA - news), and Spain's Union FENOSA Desarollo y Accion Exterior (UNF.MC), while the third is made up of Spain's Gas Natural SDG (CTG.MC) and the Mexican firm Repsol (REP.MC).
INDIA
Oil Hunt: Need For Massive Technology Input
The euphoria generated by the discovery of oil in the Bombay High in 1974 by the Oil and Natural Gas Corporation (ONGC) led almost everybody to believe that India would become self-sufficient in oil and dispense with its dependence on imports. Twenty- four years later, the country remains far from achieving self- sufficiency. The decline in oil production is attributed to reservoir problems in the Bombay High and Neelam oilfields in Bombay Offshore, the ageing of the oil- fields and production from joint venture projects not having risen to targeted levels. Only 16 per cent of the country's total sedimentary area could be adequately explored during the past four decades. The remaining area has not been explored or 'very poorly scouted' for quite a few reasons including the extension of the sedimentary zone over 1.78 million square kilometres lying in offshore areas and another 1.36 million sq. km sunk into water depths of more than 200 metres.
The exploration density is also low with only 20 wells drilled in 10,000 sq. km as against the world average of more than 100. Such a scenario does not encourage hopes about achieving self- sufficiency. If, however, the country's indomitable optimists do not believe that such hopes should be ruled out, their optimism rests upon the new technology which should be pressed into service. How good are these hopes?
India's oil explorers and technologists should have been looking forward for an answer to this question during the Second Conference and Exposition on Petroleum Geophyusics (SPG 1998) organised by the Society of Petroleum Geophysicists in Chennai recently.
The complexities of oil exploration could be reduced for purposes of general comprehension by stating that there has first to be a discovery about oil availability through seismic surveys followed by exploratory drilling both in the onshore and off-shore areas. Preliminary operations which have to be carried out in the exploration areas even if it is possible to induct wholly new technology start with the preparation of surface geological and land use map using aerial photographs and landsat imageries.
Land use maps help in planning and implementation of siesmic surveys in logistically difficult terrain. There has to be an identification of prospective trends based on extrapolation from known areas having seismic control to unknown areas where evidence from magnetic data are favourable. Based on such integrated study, Oil India has identified two prospecive areas around Jaipur-Deomali and Jairampur in Rajasthan.
Drilling by the ONGC in the Cauvery basin confirmed the presence of gas reserves through what is known as amplitude variation with offset. The prime objective of this study is to confirm the seismic ingredient with the drilling results and subsequent delineation of the field.
A novel seismic acquisition technique applied by Shell India Production Development to accelerate the early reaching to oil in its 11,000 sq km onshore concession in Rajasrthan obviates the need to deploy a time-consuming and expensive operation requiring a two dimensional seismic crew. Exploration costs could be cut down with the acquisition of a 3400 km gravity profiling grid. The grid defined a tertiary basin and laid the basis to plan ten months of two dimensional seismic acquisition. The results were quite significant. 'A steeply dipping, complicated reservoir sequence at high angles to the coarse 2D grid was imaged in three dimensions. Interesting amplitude features identified on 2D data as potentially structurally conformable were confirmed on the 3D data', says Mr. R. G. McElroy of Shell India Production Development B.V.Sigma Delta is among the new technologies which the ONGC is pressing into its operations for seismic data acquisition. Apart from the other advantages which it offers is the stepping up of energy availability for data acquisition. This technology takes the place of the Instantaneous Floating Point (IFP) Amplifier which had been incorporated commercially in seismic equipment.The Sigma Data technology tends to address the lower end value of the signal amplitude for seismic explortion in a more effectve way for enhancing the dynamic range of the data. The technology offers improved performance in amplitude, frequency and phase of the signal.
A surprise which awaited the ONGC in North Cambay basin is the discovery of oil in a structurally lower well, Langnaj-M . The well drilled earlier at Langhnaj-J had only produced water. The analysis of Repeat Formation Data gave a clue to the presence of a hydrodynamic mechanism of oil entrapment in the area. The electrolag correlation between the two wells sugested a good lateral continuity of the sands. An important aspect of the Bassein offshore oilfields still awaiting detailed study relates to the porosity within what are known as paelogene carbonates having a major relevance to extractable oil. Among other problems which remain a challenge to oil exploration technologists is the noise environment impeding seismic data recording and acquisition. The steps required to analyse the problem are the carrying out of noise analysis. The technology now being developed should hopefully insulate data recording from noise disturbance. 'Matching filter' is the technology used for evaluating seismic data differences in recording resulting from noise intrusion.
An agony which the ONGC has had to live with along with the rest of the country is the one brought about by the decline in reservoir levels in the Bombay High. The current problem with the reservoirs is increasing water cut which affects optimum use. The result of this is there is a large volume of unswept oil. The ONGC will have to explore the hopes held out by the current reservoir technology to restore the health of the sick wells in the Bombay High.
Among still unexplored areas is the thrust fold belt of the Himalayan foothills. The Sundar Nagar region in this region exhibts a number of thrusts, faults and folds which makes predictions regarding hydrocarbon reserves difficult. The seismic response in the areas is found to be poor due to geometical complexities. The 'homogeneous body' enclosed within one of the seismically explored zones does not have a consistent velocity density contrast to generate any significant reflection. How very promising the Himalayan foothills really is will depend upon exacting further seismic study and analysis. A hopeful finding which has emerged so far would seem to be the similarity of a 'residual anomaly' in magnitude to that of the Humble salt dome anomaly near Houston in Texas-Lousiana coastal basin.
Technology has gone far enough to enlarge the frontiers of oil exploration seismic science. It would seem that it has still to very far for making exploratory drilling guided by the seismic studies more sure- footed.
SERVICE SECTOR
Independents Disappearing In Consolidating Service Sector
Independent ownership in the service sector of the oil patch is steadily disappearing with consolidation, but opinions differ on whether this is good or bad for the industry.
Producers are concerned about rising costs, while service firms on the acquisition trail are interested in economies of scale and being big enough for the world stage.
"It's not a function of good or bad," said Roger Soucy, president of the Petroleum Services Association of Canada (PSAC). "It's where businesses are going these days. That kind of thing is going to happen."
The Canadian oil patch is vibrant and dynamic enough to withstand the possible disadvantages associated with consolidation, he said.
"We're going to see more high activity levels and more consolidation. As long as everybody stays busy, it won't change anything very dramatic. There will be little effect on the bulk of the field," Soucy predicted.
Merger and acquisition activity has spread into the service sector and as smaller "mom and pop" operations are swallowed by larger companies, the large number of mergers is causing concern.
"I don't want to start a war," said David Manning, president of the Canadian Association of Petroleum Producers (CAPP). "But the major concern about consolidation raises concerns about costs. And costs have risen. We're concerned, especially for our smaller members."
Mergers and acquisitions are a fact of life in the industry and have already taken place in the upstream and downstream sectors, he noted.
"You see consolidation in all elements of the food chain. It stems from being light on our feet in a price-taker marketplace," Manning said.
Smaller producers have some fairly large concerns as well, said George Fink, chairman of the Small Explorers and Producers Association of Canada. He is also president of Comstate Resources Ltd.
"My feeling is we certainly like to see competition. We get a little concerned if one sector gets too strong. Being smaller, it has a bearing on the number of wells we can participate in. It hurts more on the operations side," Fink said.
Because smaller producers run on lower profit margins, it affects how much they can afford for everything service rigs to oil field hauling, he said. "There is definitely a ripple effect," Fink said. "As an industry we are interested in keeping an open marketplace, where competition keeps everything in line."
Consolidation in the drilling industry is "inevitable" for companies to compete in the global marketplace, said Dale Tremblay, chief financial officer at Precision Drilling Corporation, by far the dominant Canadian drilling contractor.
Precision became Canada's largest driller, with more than 40% of all drilling rigs in the country, through an aggressive acquisitions program that included gobbling up Kenting Energy Services Inc., Lynx Energy Services Corp. and Brelco Drilling Ltd. in 1997.
The major factor driving consolidation is technology, Tremblay said. He compared what's happening in the service sector to the shakedowns which have occurred in nearly every other major industry.
"Technology allows us to be able to run a lot more units from a centralized location. When I can keep track of what each one of them is doing anywhere in the world, 24 hours a day, you better believe my business is going to change," Tremblay said.
"It's pure economics. In order to deliver the technology the industry demands at a competitive price, I need to amortize my cost to deliver that product cost-effectively," he said.
Precision didn't "invent" consolidation, it just has to play the takeover game if it hopes to achieve the economies of scale it needs to operate in the global marketplace, Tremblay said. "My sense is that our industry is one of the last ones this has happened to. We (Precision Drilling) appear to be big in Canada, but on the world stage, we're a small player in the big picture. Our only master plan is to be big enough to be a global competitor. Nothing more," he said.
Precision and Ensign Resource Services Corp. control roughly 60% of the Canadian market for drilling rigs. The fear among some producers is that the concentration of so much assets in so few hands could allow a relatively small number of players to dictate terms and prices.
"That's not true," said Glenn Dagenais, Ensign's chief financial officer. "We're a long ways from being a monopolized industry. I don't see anything anywhere close to being uncompetitive. There is still lots of competition out there."
Dagenais said he feels consolidation is good for the industry because it raises standards and brings a consistent level of service through the province, which is what his customers want.
CANADIAN FRACMASTER LTD. announced that it has completed the acquisitions of the assets and businesses of Western Acidizing Services Co., Inc. of Levelland, Texas and Coleman Cementing, Inc. of El Dorado, Arkansas.
Western Acidizing Services Co., Inc. provides oilfield stimulation services to the petroleum industry from an operating base in Levelland, Texas. Coleman Cementing, Inc. provides oilfield stimulation and cementing services to customers in Southern Arkansas and Northern Louisiana. These two acquisitions will enhance Fracmaster's ongoing expansion in the United States by increasing Fracmaster's existing operating capabilities in West Texas and introducing Fracmaster's services to new markets in Northern Louisiana and Southern Arkansas.
All employees of Western Acidizing Services Co., Inc. and Coleman Cementing Inc. will remain with Fracmaster.
In connection with the previously announced (December 8, 1997) acquisition of the 50% of American Fracmaster the Company did not already own, and the acquisition of the business and assets of Western Acidizing Services Co., Inc., Canadian Fracmaster Ltd. has agreed to issue in part payment of the purchase price up to 874,959 shares in 1998 and 1999. The issuance of the shares relates primarily to the former acquisition using share valuations in effect at that time.
The Company remains very positive about the potential of the U.S. pumping services market and is now better-positioned to participate in current and future increasing activity levels.
BONUS RESOURCE SERVICES CORP. onus Resource Services Corp. announced that it has reached an agreement to purchase the assets of Canuck Well Servicing Ltd. (Canuck).
The assets purchased include 13 service rigs and associated equipment operating mainly in North Central Alberta from bases in Nisku and Slave Lake. The all cash transaction is set to close January 30, 1998 with an effective date of February 1, 1998. This acquisition complements Bonus' existing position in the Slave Lake/Red Earth region.
This is the tenth acquisition completed by Bonus since October, 1996 and reinforces Bonus' dominance in the consolidation of service rig operations across Western Canada.
Additionally, Bonus confirms that its previously announced acquisition o Superior Well Servicing PTY Ltd. of Brisbane, Australia has been completed upon receiving final approval from the Australian Foreign Investment Review Board.
The addition of these service rigs brings Bonus' current fleet to 154 service rigs and seven swabbing units in Canada, as well as seven service rigs operating through its subsidiary in Australia. Bonus is the largest service rig operator in Western Canada trading under the symbol BOU on the Toronto Stock Exchange.
PALMETTO RESOURCES has provided a corporate update which can be found at; Message 3324546 |
