The Zafiro field, located in water depths from 400 ft. to 1,900 ft., is a subsea development with 15 subsea wells producing into a permanently moored Floating Production Storage and Offloading (FPSO) tanker. The first 8 Phase 1 wells produce through individual 6-inch flexible flowlines, while the 7 Phase 2 wells are manifolded subsea using 3 Hinge-Over-Subsea-Template (HOST) systems. Further production increases and field improvements are still planned with the addition of water injection and gas lift, subsea multiphase pumps, and the installation of a Single Point Mooring (SPM) to facilitate oil export.

INTEC has been involved with this project from the beginning as Mobil's subsea systems interface coordinator and pipeline engineer. INTEC is part of Mobil's project team and works in close coordination with reservoir engineering, the drilling department, and facilities engineering to help resolve the complex and varied issues of field arrangement and flowline routing, installation logistics, equipment design and testing, and construction in this fast track project.

Currently, INTEC is responsible for the design, construction, and installation coordination of the water injection flowlines and tie-ins sleds, as well as for the new subsea satellite tie-in to Opalo East; the installation engineering and interface coordination for the subsea pump power cable; and the design and construction supervision of the SPM system. The installation of the water injection flowline system and the Opalo East tie-in will take place in the beginning of 1998, and the installation of the SPM system is planned for the second half of 1998. The power cable will be installed in the following year.

With the departure of Charlie Burton to Unocal, Tom Choate has agreed to manage both the Flow Assurance & Operability and Subsea efforts, on an interim basis.

Several new projects for the combined group have been recently awarded.

New projects include:

• Flow Assurance Design Manual for ARCO
• Deepwater Production System State of the Art Study and Cost Guide for Chevron, PTC
• Subsea production ESP Evaluation for Chevron, PTC
• Deepwater Tie-Back Study for Marathon, and
• A unique deepwater long-offset Feasibility and Conceptual Design Study of United Meridian.

In addition, support for Shell deepwater projects is increasing and TOPS activity has picked up. This new work added to existing work has everybody working at a healthy clip. This is a good opportunity for us to demonstrate our skill at executing contracted work while working-in unexpected projects for new and current clients.

Connie Green is INTEC's Coordinator for Project Secretaries. She has the responsibility of assigning projects to secretaries or vice versa which is quite a juggling act. Connie recognizes that her success as coordinator is directly related to the quality of the Project Secretaries and she is particularly proud of the current bevy.

Connie is a native of Colorado, however, she married a Texan, lives on some acreage outside New Caney, Texas where horses and cows roam. She and her husband, Frank, are avid anglers and find fishing to be their escape from the busy business world. After a weekend of fishing or hunting, Connie can come back to the office, refreshed and ready to focus on her work at INTEC. Those of us who know Connie are amazed that she has 6 grandchildren (there is one more on the way).

Connie approaches her work with the attitude that you can do anything you put your mind to and she gives 100% every minute she is in the office. The quality of INTEC reports reflect Connie's diligence in establishing and following procedures.

This recognition is an expression of Management's appreciation to Connie for all she has done to establish a very supportive and professional secretarial staff.

The stock market appeared to dive into a free fall recently around the 10 year anniversary of Black Tuesday, precipitated by computer trading, in addition to a superstitious nervousness about the "fateful" day. Computer software set to sell or buy when a certain degree of change in the stock index occurs was intended to protect the investor, but actually contributed to the panic.

We get in trouble when reason is abandoned, and we rely too much on programmed software. The ability to react to an event in nanoseconds leaves very little room for contemplation and the use of intuition or "gut feel". The software is undoubtedly based on somebody's reason, but it would seem very difficult to consider all possible circumstances, and therefore the outcome will be wrong or inappropriate at times.

The computer and software industry will have us buy the latest version of a program because it is purported to be better, faster, cheaper. All we have to do to enjoy the full benefits is to buy more capable hardware, which then enables us to accommodate more complex software, etc. As we grow and buy more computers, these are shipped with newer software versions, which of course are not compatible with the older versions used by the rest of the office, and thus we need to do some serious upgrading. Reason suggests that we should break out of this vicious circle and let our ability to effectively use what we already have prevail.

Only if, and to the extent we manage to use modern technology to give the new growth among our staff faster access to more and better information, particularly the past experience and collective wisdom of our organization and its senior staff, will we benefit from it. At INTEC we are working on accomplishing this through definition and documentation of processes and databases, and creation of an Intranet and other support systems. Meanwhile, we talk, contemplate, imagine and share ideas, so we avoid panic and make mistakes slower and with less serious consequences. As a result, we're confident our stock will continue to go up.

Willem Timmermans
President

MARATHON SAKHALIN; FSO
MARATHON has signed a long term contract for an FSO that will operate in the summer season offshore Sakhalin Island, and disconnect from the SALM mooring system during the winter months when the area is subjected to extensive ice conditions. INTEC assisted Marathon with preparation of the Invitation to Tender and technical review of the bids.

POGO PRODUCING COMPANY; BENCHAMUS FIELD FSO
Sandy Stevenson continues his support of POGO with the FSO for the Benchamus Field, offshore Thailand. The Benchamus Field is several miles north of the Tantawan FPSO, which has been in production since January. The pre-qualified contractors will submit their bids in October, with contract award anticipated later this year.

ABSENCE OF MAJOR OIL SPILLS FROM FPSO & FSO UNITS
INTEC continues to receive statistical data from various industry sources regarding their experience with oil spills from FPSO and FSO units. It is planned to publish the results next year in an OTC paper, or similar publication. It is already apparent that the industry has an enviable record, with few reported spills and no known major oil spills. Readers are invited to send any relevant data to Joe W. Key or Kim Wallace, along with an indication as to whether the data must be handled as confidential or proprietary data.

READING & BATES DEVELOPMENT COMPANY; LOW COST FPSO FOR GULF OF MEXICO
INTEC is conducting a study of ways to develop an inexpensive FPSO that can produce marginal fields economically in water depths up to 5,000 feet in the Gulf of Mexico. The focus of the study will be to use innovative thinking to adapt proven technology so that CAPEX costs can be reduced without inordinate risks. Kim Dyson is the project manager for this study.

ENRON INTERNATIONAL; FPSO FOR PETROBRAS
ENRON has reached agreement in principle to provide project financing for the development of two fields in Brazil. INTEC has been retained as a technical advisor during the due diligence phase of the project discussions. Gurin Hanspal and Joe W. Key recently travelled to Brazil with ENRON representatives for extensive discussions with PETROBRAS on their project execution plans. The primary role of INTEC is to advise ENRON and potential financial institutions of the technical and economic risks associated with the long term field development efforts.

CONGRATULATIONS

The following employees were recently promoted to new positions. We appreciate their hard work and congratulate them on their success:

Jayesh Antani - Supervising Engineering Specialist / Project Manager
Barbara Castellese - Accounting Supervisor
Tom Choate - Executive Engineer
Ron Davis - Senior Technical Specialist
Kim Dyson - Supervising Engineering Specialist/Project Manager
Eric Gerberding - Senior Project Engineer
Jay Hilty - Project Engineer
Ron Ledbetter - Supervising Engineering Specialist / Project Manager
Indu Mahendran - Executive Engineer
Gurminder Manku - Senior Project Engineer
Andre Nogueira - Engineering Specialist
Joe Padilla - Executive Engineer
Gilles Perry - Senior Engineer
Dave Phillips - Executive Engineer
Roger Purchase - Executive Engineer
Kim Wallace - Senior Engineer
Yi Xu - Senior Project Engineer

INTEC Welcomes the following New Employees to the Houston Office....

Nathaniel Bell	George Doig
Roy Flack	Ravi Gudimetla
Gurin Hanspal	Egon Herz
Bob Jones	Michael Jones
Basim Mekha	Carl Routh
Rajavi Shah	P. Srikumar
Xuegang Wang	Lucian West

ANNIVERSARY

For Unocal Corporation 3-D Animation

For Chevron Petroleum Technology Company., SUBPIPE Version 8.0 for Flexible Pipelines

For Texaco Exploration and Production, Inc., Gemini Project Phase I

For Westcoast Energy, Natural Gas Pipeline from Buenos Aires, Argentina to Montevideo, Uruguay, Proposal Assistance

For Sipetrol, Pipeline Cost Estimate

For Shell Offshore, Inc., Nakika System Selection Project Team Support

For Oil States Industries, Petrobras 10-inch SCR/J-lay Pipeline Project

For Shell Offshore, Inc., Gorgon Workstage 2Angus Technical Coordination

For Union Pacific Resources Company, MC-711 Conceptual Engineering and Cost Estimate

For Enron International, Technical Assistance with FPSO and Subsea System for Petrobras Project

For Conoco NG&GP, Maljamar Expansion, San Angelo District

For Transfield Worley, FPSO Consultancy Services for the Cossack Pioneer Optimization Project

For Conoco, Inc., Preliminary Engineering Study - West Natuna to Singapore Gas Pipelines

For UMC Petroleum Corporation, "Entend", Block CI-105 Feasibility Study

For Marathon Oil Company, Deepwater Development Study

For BP Exploration, Neptune Export System

For Reading & Bates, Seillean FPSO Studies

For Conoco NG&GP, Develop E&I Process Safety Information

For Conoco NG&GP, PHA Re-do / Re-validation

For Shell Offshore, Inc.,. Brutus/Glider Subsea Conceptual Design

For ARCO, Flow Assurance Design Wax/Hydrate Control Manual

For Conoco NG&GP, Maljamar Plant Expansion I&E Engineering Assistance

For Mobil Producing Nigeria ULTD, RH/PK Platforms, High-Temperature Riser and Field Joint Coating Study

For Reading & Bates, Gulf of Mexico FPSO for 5,000 ft. Water Depth Study

For Chevron Petroleum Technology, Deepwater Remote Subsea Production System "State-of-the-Art" Report and Cost Guide

For Mobil Producing Nigeria, OSO 2Y2 Installation Study

For Shell Offshore, Inc., Macaroni Technical Coordination