Diamond

The three owners of the Capline crude oil pipeline system said they will conduct a study to determine potential future operations, as well as a possible connection to the proposed Diamond Pipeline.

Diamond Offshore Drilling Inc. said Tuesday that its semisubmersible Ocean Lexington drilling unit, which parted its moorings during Hurricane Lili last week, has been towed back to its original, pre-storm location and is preparing to recommence operations. The company said that a top-side inspection and an underwater examination of the lower hulls has determined that the rig is undamaged. The company reported late last week that Lili detached Ocean Lexington from its moorings and blew the drilling rig 45 miles before it grounded in 35 feet of water offshore Louisiana (see Daily GPI, Oct. 7).

PG&E Corp. and Ultramar Diamond Shamrock Corp. (UDS)announced yesterday they had signed a letter of intent to enterinto what is probably the largest energy purchase alliance to datein the industry, representing about $2 billion in electricity,natural gas and steam purchases over a seven-year period. UDS isone of the largest independent refiners in the U.S., with sevenrefineries in the U.S. and Canada processing 650,000 barrels perday, 6,400 branded retail gasoline/convenience stores, and a largehome heating oil business in the Northeast.