![](media/image1.jpeg){width="8.75in" height="3.6055555555555556in"}U.S.
DEPARTMENT OF ENERGY

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### May 26, 2004

**Highlights / Major Developments**

**Update \-- Shell: Mars Down 2-3 Weeks**

Shell Oil said Tuesday it hopes to resume flows from its downed Mars
crude oil platform in the Gulf of Mexico in two or three weeks since it
was shut due to a leak May 22. "We're planning to implement a temporary
fix that will allow us to return within two or three weeks," said a
spokeswoman. "In the meantime we will be working on the

permanent fix which will take longer." The outage has shut in 150,000
b/d of crude oil and 170 MMcf/d of natural gas production. A three-week
outage of the platform would result in a loss of more than 3 million bbl
of oil from the U.S. market.

Oil Daily, May 26, 2004

Latin America

**Update \-- US Olympic pipeline system restarted after Sunday\'s
outage**

The US\' Olympic Pipeline has successfully restarted its 400 mile
products system after an outage Sunday due to a leak and associated fire
in a small sampling line, the company said in a statement. Olympic
completed repairs of the damaged half inch stainless steel sample line,
which had a small hole in it causing gasoline to leak at the Renton
pumping station. Repairs were also made to a single valve on the 20 inch
main line that sustained minor damage as a result of the fire.

<http://www.platts.com/Oil/News/1625071.xml?S=n>

<http://biz.yahoo.com/rc/040526/energy_olympic_pipeline_2.html>

**Electricity**

**Columbia Station Reduces Power for Maintenance, Company Says**

Energy Northwest's 100 Megawatts Columbia Generating Station reduced
power to 60% from 90% to repair a leak on a condenser tube system.

Bloomberg News, 1151 May 26, 2004

**Calpine Chief Sees Power Troubles for California\
**California faces tight electricity supplies if it does not add more
power plants as the state\'s economy improves, Calpine Corp. Chief
Executive Officer Peter Cartwright said on Wednesday. Cartwright told
shareholders at the independent power company\'s annual meeting in
Aptos, California, that \"we have not built the plants that we should
have\" in the wake of the state\'s energy crisis in 2000-01. \"If plants
are not built as the state economy recovers, and if we have hot summers
and low hydroelectricity years, we will be in trouble,\" Cartwright
said. <http://biz.yahoo.com/rf/040526/energy_calpine_1.html>

**U.S. Grid Operators Work to Improve Reliability** The electric grid
operators of the U.S. Midwest and Mid-Atlantic and Tennessee Valley
Authority said May 24, they agreed to take steps to improve the
reliability of their systems. The three grid operators \-- Midwest
Independent Transmission System Operator Inc., PJM Interconnection and
TVA \-- said in a joint statement they agreed to exchange data to better
coordinate the flow of electricity over their transmission systems**.**
Since the massive blackout last August, caused in part by a lack of
communication between utilities, grid operators have been seeking ways
to better coordinate the ever increasing flow of power between their
systems. In addition, the elimination of the seams that hinder the flow
of electricity between the systems would likely cut energy costs in all
systems by allowing more low-cost power to flow across regional
borders.\
[http://hsweb01.screamingmedia.com/PMA/pma_newsarticle1_reute
rs.htm?SMDOCID=reuters_pma_2004_05_24_eng-reuters_pma_U-S-GR
ID-OPERATORS-WORK-TO-IMPROVE-RELIABILITY&SMContentSet=0](http://hsweb01.screamingmedia.com/PMA/pma_newsarticle1_reuters.htm?SMDOCID=reuters_pma_2004_05_24_eng-reuters_pma_U-S-GRID-OPERATORS-WORK-TO-IMPROVE-RELIABILITY&SMContentSet=0)

**Entergy Reduces Power at La. River Bend Nuke for Work**\
Entergy Corp. said Wednesday it reduced power at its 936 megawatt River
Bend nuclear unit in Louisiana to about 60 percent of capacity to
perform some maintenance work. A spokeswoman for Entergy, Diane Park,
told Reuters the company does not expect to shut the unit to perform
this work, but she could not say how long the unit would be reduced. She
said the company was working on the steam jet air ejector system \-- a
redundant system \-- allowing the company to switch from one system to
the other. She said the work was best done at a reduced power level.
<http://biz.yahoo.com/rc/040526/utilities_entergy_riverbend_2.html>

**FPL\'s Fla. Turkey Point 3 Nuke Back at Full Power**\
FPL Group Inc.\'s 693 megawatt Turkey Point 3 nuclear unit in Florida
returned to full power by early Wednesday, the Nuclear Regulatory
Commission said in its power reactor status report. On Tuesday, the unit
was operating at 45 percent of capacity. Meanwhile, the adjacent 693 MW
unit 4 dipped to 88 percent of capacity from 90 percent on Tuesday. The
Turkey Point station is located in Florida City, Florida, about 25 miles
south of Miami.
<http://biz.yahoo.com/rc/040526/utilities_fpl_turkeypoint_1.html>

**FERC Delays Midwest Grid Market until March 2005**

The Federal Energy Regulatory Commission (FERC) on Wednesday delayed
plans to launch a new Midwest power market by three months to allow area
utilities to renegotiate existing contracts. The Midwest Independent
Transmission System Operator (ISO), which operates the electric grid in
all or parts of 15 states and one Canadian province, had planned to
launch a new market system on Dec. 1. The FERC commissioners on
Wednesday delayed the start until March 1, 2005, giving utilities more
time to rework the terms of over 300 contracts signed prior to September
1998, when the grid framework was created. Those existing or
grand-fathered contracts represent about 40,000 megawatts of capacity,
the FERC said, or 40 percent of the Midwest ISO\'s electricity demand.

Reuters, 1607 May 26, 2004

####### 

####### 

####### Petroleum

**Exxon\'s CEO: No Problems in Crude Supply**\
The current high price of gasoline at the pump was not caused by a
problem with crude oil supply, but by factors such as political
uncertainty in the Middle East, Lee Raymond, chief executive of Exxon
Mobil Corp. said on Wednesday. \"There is adequate supply everywhere in
the world,\" Raymond told reporters after the company\'s annual
shareholders meeting. He also dismissed notions the Organization of
Petroleum Exporting Countries (OPEC) and its kingpin, Saudi Arabia,
could not come up with policies to tackle the high cost of crude. \"I
think you need to be a little cautious if people are concluding that the
issue is out of OPEC\'s and Saudi Arabia\'s hands,\" he said. \"I think
it is a harsh conclusion not supported by the data.\"
<http://biz.yahoo.com/rb/040526/energy_exxonmobil_1.html>

**Exxon CEO: Don\'t Expect New Refineries**\
As gasoline prices soar to record levels at the pump and near highs in
the futures market, ExxonMobil CEO Lee Raymond said Wednesday he
doesn\'t expect a new refinery to be built anytime soon in the United
States. \"There\'s no quick fix,\" he said. Economics and environmental
regulations don\'t make it practical to build the multibillion-dollar
facilities, he told reporters after ExxonMobil\'s annual meeting in
Dallas. According to government data last week, U.S. refineries are
running near 100 percent capacity. \"If the economics are right, large
refineries increase capacity between 1 and 3 percent a year,\" he said,
by accelerating operations and adding new technology. A company planning
to build a new refinery would have to be confident of high margins for
an extended period of time, he said, and in \"no period in the last 50
years has that been the case.\" [See full story on capacity at U.S.
refineries.](http://www.marketwatch.com/news/story.asp?guid={474AD4EC-68D0-477B-8CD5-F0A29DB871C0}&siteid=yhoo)
Raymond said he understand consumer frustration with high gasoline
prices because Exxon is the world\'s largest buyer of crude oil. Prices
for crude, combined with federal and state taxes, take a huge chunk out
of profits and leave the company to make about a nickel per gallon of
gasoline, he said. With new revelations about threats of terrorism in
the United States, Raymond said the company has done a great deal to
secure its facilities and plans to do more. He declined to be specific.
By [Lisa
Sanders](http://www.marketwatch.com/news/mailto.asp?siteid=yhoo&x=108+115+97+110+100+101+114+115&y=Lisa Sanders&guid={CC8BAEA2-D363-4A8E-AC80-8624092CD17E}),
CBS.MarketWatch.com

**Premcor to Slow Gasoline Unit at Texas Refinery, State Says** Premcor
Inc. plans to slow operation of a gasoline-making unit at its refinery
in Port Arthur, Texas, this weekend in order to make repairs. The
company will reduce the processing rate of its fluid catalytic cracker
from Friday to Monday, according to a report the company filed with the
Texas Commission on Environmental Quality. The unit processes vacuum
gasoil into gasoline or other lighter oil products. Bloomberg News, 1023
May 26, 2004

#### 

#### Natural Gas 

**Northern Border to Cut Firm Gas Due to Compressor**\
Northern Border Pipeline Co. said Wednesday it will cut 11 percent of
its firm gas capacity contracted for Thursday and Friday due to an
unplanned outage at a natural gas compressor station in North Dakota. In
a posting on the company\'s Web site, Northern Border said it was
declaring force majeure due to unplanned mechanical problems at
compressor station 8 near Zeeland, North Dakota. \"Northern Border will
be cutting firm capacity for the gas day Thursday, May 27 and Friday,
May 28 by 11 percent of contracted firm capacity past Port of Morgan and
3 percent of contracted firm capacity past Harper,\" the posting said. A
spokeswoman for the company said interruptible customers would also be
cut prior to cutting firm capacity. Shippers that contract for firm
pipeline capacity are normally guaranteed service except in cases of
force majeure, while interruptible customers pay lower rates with
expectations of being cut during periods of high demand. The 1,249-mile
interstate pipeline system transports gas from the Montana-Saskatchewan
border near Port of Morgan, Montana to key markets in the U.S. Midwest.
Its capacity is rated at 2.4 billion cubic feet per day.
<http://biz.yahoo.com/rc/040526/utilities_northernborder_compressor_1.html>

[MARKET INSIGHT: US LNG
Bonanza](http://www.energyintel.com/DocumentDetail.asp?document_id=122597)\
Unusually high North American gas futures prices \-- yanked up by
powerful crude oil markets \-- could have something to do with the fact
that LNG import levels look set to keep all four US receiving terminals
running at full tilt throughout the summer. An uptick in activity in May
to double April levels at the Lake Charles, Louisiana, receiving
terminal is a harbinger of things to come, says a supply manger for
capacity holder BG. Facilitating this shift, Asian buying looks to be
easing back. World Gas Intelligence Wednesday, May 26, 2004

####### 

####### 

####### Other

**Ethanol Output Continues to Break Production Records** U.S. ethanol
producers are still breaking monthly output records as the latest
numbers from the Energy Information Administration revealed domestic
plants making more alcohol than ever in March. New plants coming online
this\
spring and healthy margins have analysts expecting output to remain in
an upswing into summer. Ethanol producers ratcheted up production by
2,000 b/d over February, pumping out an all-time high of 214,000 b/d in
March, according to EIA. That was up more than 22% over the same time
last year, when producers were making\
175,000 b/d. However, record production still did not do much to bulk up
ethanol stockpiles. Despite making some 493,000 bbl more ethanol in
March than in February, ethanol stocks only gained about 45,000 bbl
month-to-month.. OPIS Price Watch Alert, 1532, May 26, 2004

**Algerian Oil Min Says "Happy" with \$22-28 /bbl Oil Price Band**

Algerian Oil Minister Chakib Khelil said on Wednesday that he is happy
with the OPEC cartel\'s current target price band of \$22-\$28 a barrel,
but doubts that any easing of the group\'s output limits will cool the
red-hot market. \"As far as Algeria is concerned, I think we are happy
with \$22-\$28 and the price band that was decided by OPEC,\" Khelil
told reporters on sidelines of an energy conference in Houston. \"I
don\'t think the price band is the issue.\" He added that whatever OPEC
decides at its meeting on June 3 is not likely to affect worldwide oil
prices. \"It is not going to affect prices whatever we do,\" he said.

Reuters, 1333 May 26, 2004

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (5        | Ago**     | Ago**      |
|                               | /26/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 40.60     | 41.63     | 29.74      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 6.70      | 6.18      | 5.92       |
|                               |           |           |            |
| **Henry Hub**                 |           |           |            |
|                               |           |           |            |
| \$/Million Btu                |           |           |            |
+-------------------------------+-----------+-----------+------------+

> Source: Reuters

**This Week in Petroleum** from the Energy Information Administration
(EIA)

[*http://tonto.eia.doe.gov/oog/info/twip/twip.asp*](http://tonto.eia.doe.gov/oog/info/twip/twip.asp)

Updated on Wednesdays

**Weekly Petroleum Status Report** from EIA**\
**[*http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html*](http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html)

Updated after 1:00pm (Eastern time) on Wednesdays

**Natural Gas Weekly Update** from EIA

[*http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp*](http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp)

Updated after 2:00 pm (Eastern time) on Thursdays