![](media/image1.jpeg){width="8.5in"
height="3.5027777777777778in"}**U.S. DEPARTMENT OF ENERGY**

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

**September 3, 2004**

**Highlights/Major Developments**

**Hurricane Update
[(Tracker)](http://www.nhc.noaa.gov/refresh/graphics_astorm6+shtml/022053.shtml?)**

**Hurricane Puts U.S. Energy Industry On Alert**

Powerful Hurricane Frances put the U.S. energy industry on high alert
Friday as it approached Florida, forcing ports to shut in the state and
triggering some precautionary evacuations and production shut-ins on
offshore drilling platforms in the Gulf of Mexico. The storm, packing
winds in excess of 120 mph, was predicted to make landfall on the east
coast of Florida Saturday, sending hundreds of thousands of people
fleeing their homes. The storm\'s path showed a chance it could cross
the state into the Gulf, home to a quarter of the nation\'s oil and gas
production.

The U.S. Coast Guard said it had closed major ports along both coasts of
Florida in advance of the hurricane, delaying shipments of fuel to the
state. Experts said a run on gas stations by people preparing for the
storm and delayed fuel shipments could spell some temporary spot fuel
shortages.

Reuters, September 3, 2004, 1340

**Majors in the U.S. Gulf Prepare for Frances**

Hurricane Frances' path could cross the state into the Gulf of Mexico,
home to a quarter of the nation\'s oil and gas production. As reported
yesterday in the Energy Assurance Daily, Shell Oilevacuated more than
175 workers and shut in some production as a precaution, in case Frances
steers into the region. The company said it had closed 13,900 barrels
per day of crude output and 20 million cubic feet per day of natural gas
production. The Crosby wells (with Ursa platform tie-in) were shut but
the company\'s other locations were not affected. Exxon Mobil Corp. said
it stopped sending nonessential workers to the Gulf as Frances
approached, but added it had not evacuated workers already on the
platforms or reduced output from the sub sea fields. Exxon has 80,000
bpd of oil production and 1.2 billion cubic feet per day of natural gas
production in and around the Gulf, operated by 550 workers and
contractors.

The Louisiana Offshore Oil Port (LOOP) was operating normally Friday
morning and shipping schedules had not been affected according to a LOOP
spokeswoman. LOOP, which unloads about 900,000 bpd of foreign oil and
about 500,000 bpd of domestically produced crude oil from the offshore
Mars platform in the Gulf, was monitoring the storm in case it crosses
Florida into the Gulf and threatens LOOP operations.

Reuters, September 3, 2004, 1340

**Some Florida Gas Stations Face Squeeze As Frances Approaches**

According to the American Automobile Association, some retail gasoline
stations in Florida are likely to run out of fuel ahead of Hurricane
Frances when residents attempt to fill their tanks as shipments of fuel
by boat and truck slowed in advance or the oncoming hurricane. "Some
stations are very likely to run out," said Gregg Laskoski, an AAA
spokesman. \"The trucks are not able to make deliveries in some areas.\"
AAA said that, while there was fuel in storage at key Florida terminals,
much of the fuel is not making it to distributors to replenish the
retail stations. "This will amount to an inconvenience for some people,
but not an all-out fuel shortage," Laskoski said.

Reuters 11:44 September 3, 2004

**US Coast Guard Shuts Florida Ports, Hurricane Looms**

Reuters reported that the U.S. Coast Guard had closed major ports along
both coasts of Florida in advance of Hurricane Frances, delaying
shipments of fuel to the state. A Coast Guard official said that
Atlantic coast ports in Miami, Fort Lauderdale, Palm Beach and Fort
Pierce were shut, along with the Gulf ports of Tampa, Manatee and St.
Petersburg on the state\'s west coast. Port Everglades, the port in Fort
Lauderdale, which receives much of the gasoline for Florida gasoline
stations, stopped taking big tankers, such as gasoline and oil products
vessels, on Thursday, the Coast Guard said.

OEA staff contacted Port Authorities and found that contrary to several
press reports, some key ports remained open Friday morning. Port Tampa
was allowing ships to dock on a case-by-case basis, and both Citgo and
Marathon received shipments of gasoline Friday morning. The Port at
Jacksonville was expected to close some time between 1800 Friday and
0600 Saturday.

Reuters 10:50, September 3, 2004.

For additional port information click on the following.

<https://www.piersystem.com/external/index.cfm?cid=586&fuseaction=EXTERNAL.docview&documentID=51105>

To read OEA's latest Hurricane Frances Situation Report click the
following.

<http://www.ea.doe.gov/hurricane_frances.html>

**Product Liftings at Florida Terminal Halted Ahead of Frances**

Product liftings at the Port Everglades terminal in Fort Lauderdale,
Florida, were halted Thursday afternoon ahead of the expected arrival of
Hurricane Frances, the president of the Florida Petroleum Marketers and
Convenience Store Association said Thursday. The halt was implemented
since further product withdrawals from the tanks and the lack of fresh
supplies after the halting of barge deliveries could threaten the
structural integrity of the tanks, said FPMA\'s Jim Smith. "They need to
keep product in those tanks or they\'ll collapse," said Smith. The Port
Everglades terminal, with a total 7-mil gal of storage capacity, is the
only such facility in southeastern Florida. Similar-sized terminals are
in Tampa on Florida\'s Gulf Coast and in Jacksonville, which, like Fort
Lauderdale, is on the Atlantic Coast. The lack of product in Florida
follows 10 days of shortages in the state following the passing last
month of Hurricane Charley, which halted barge traffic on the Gulf.

<http://www.platts.com/Oil/News/1350872.xml?S=n>

**EPA Grants Fuel Waivers for Parts of Florida Affected by Hurricanes**\
The U.S. Environmental Protection Agency, working with the Florida
Department of Environmental Protection, has determined that shortages of
diesel fuel and gasoline due to the approach of Hurricane Frances
require a waiver of certain fuel requirements under the Clean Air Act.
The EPA is exercising its enforcement discretion to temporarily allow
regulated parties to supply motor vehicle diesel fuel exceeding the
sulfur content standard for highway use under the Clean Air Act (CAA).
The Agency is permitting the waivers for all vehicles in the state, but
the major concern was that shortages of diesel fuel could impair the
ability of emergency vehicles and utility repair vehicles to respond to
damage from Hurricane Charley as well as that anticipated from Hurricane
Frances. The waivers will be in effect until midnight Sept. 7, 2004.
<http://news.yahoo.com/news?tmpl=story&u=/usnw/20040903/pl_usnw/epa_grants_fuel_waivers_for_parts_of_florida_affected_by_hurricanes140_xml>

**Electricity**

## Nine Mile Point Unit 1 Increases Output

Constellation Energy Group's 609 Megawatt Nine Mile Point 1
nuclear-power plant in Lycoming, New York increased electricity
production to 45% (up from zero from the previous report). The plant was
manually scrammed on Monday following a failure of the booster relay
feed-water regulation valve control system. While the plant was down
additional reliability work was performed.

Bloomberg, September 3, 2004

Former Contract Worker at Alabama Nuclear Plant Files Whistle-blower
Complaint

A former contract worker at TVA\'s Browns Ferry Nuclear Plant has filed
a nuclear whistle-blower complaint against two TVA contractors after he
was fired for complaining about "widespread safety violations and
fraudulent billing practices." James Speegle, a contractor for The Shaw
Group and its subsidiary, Stone & Webster, was fired after he raised
questions about his work, then provided information to the U.S. Nuclear
Regulatory Commission. Stone & Webster is operating under an \$800
million contract with TVA to provide modification and engineering
support services to TVA\'s Browns Ferry plant. Speegle\'s complaint
alleges Stone & Webster "committed widespread fraud in the manner in
which it has carried out the modifications services required of it for
the restart of Browns Ferry Unit 1." Units 1 and 3 are operating at the
northern Alabama plant, but Unit 1 is under construction for restart.
Two days after Speegle provided information to the NRC, Stone & Webster
fired him, his complaint alleges.
<http://www.energycentral.com/centers/news/daily/article.cfm?aid=5093201>

**Petroleum**

# 

Sunoco Other Refiners Cut Capacity During Refinery Work

Almost one third of U.S. Northeast refining capacity will be idled this
month because of maintenance work at Sunoco, Valero Energy Corp. Amerada
Hess Corp. and other plants. Sunoco Inc., the largest oil refiner in the
U.S. Northeast, said daily production will be cut by 20 percent during
the month for repairs to equipment used to make gasoline, diesel, jet
fuel, heating oil and chemicals. The work, scheduled for completion this
month, will reduce output by 180,000 barrels per day, mostly from the
Marcus Hook, Pennsylvania refinery, the Philadelphia-based company said
in a statement. Valero, the third-biggest U.S. refiner will spend 17
days this month doing repairs and installing a scrubber to the fluid
catalytic cracking unit at its Paulsboro, New Jersey, refinery. Amerada
Hess closed its 62,000-barrel-a-day Port Reading, New Jersey plant for
several weeks starting Aug. 11 after a lightning strike damaged a
gasoline-production unit.

Bloomberg, September 3, 2004, 1134

# BP Finds Leak in Texas Unit

A problem with a reformer at BP's 460,000 b/d Texas City, Texas refinery
Thursday night caused serious injury to three employees, and has forced
shutdown of the 30,000 b/d unit, the third largest in the U.S. The
incident was reported as a steam leak by some sources and a fire by
others. BP's report to the Texas Commission on Environmental Quality
said "the equipment was depressurized." In March of this year, BP's
largest reformer at the plant was seriously damaged in a huge fire. The
repaired unit was restarted only days ago but is not in full operating
mode.

OPIS Price Watch Alert, September 3, 2004, 1015

The *Oil Daily*, September 3, 2004

Bloomberg, September 3, 2004, 1156

# 

# Iraq North Oil Pipeline Blazes

Iraq on Friday struggled to cope with the fiercest attack yet on its
northern oil export network, while exports from southern terminals
touched post-war highs after recovering from sabotage, officials said.
Fire was still raging on the northern pipeline after it was attacked on
Thursday in the Riad area, around 70 km (45 miles) southwest of the oil
center of Kirkuk. "This is the strongest assault on the northern
pipeline we have seen. The fire could be put out in two days if we
manage to erect sand walls to isolate it," said Ahmad al-Ubaidi, a
senior North Oil Company security official. Firefighters at the scene
withdrew, saying nothing could be done to put out the flames for now.
The pipeline runs from the Kirkuk oilfields to the Baiji refinery and
then northwest to the Turkish Mediterranean coast. Iraq, the Middle
East\'s fifth-largest oil producer, has about 7.5 million barrels of
crude in storage at Turkey\'s Ceyhan port, said ship agents.

Reuters, September 3, 2004, 0940

Bloomberg, September 3, 2004, 0932

<http://biz.yahoo.com/rb/040903/energy_iraq_1.html>

# Statoil Says Lockout to Halt Glitne Oil Output by Tomorrow

Statoil ASA, Norway\'s biggest oil company, expects production at its
29,000 barrel-a-day Glitne field to stop sometime Saturday after a
lockout of Norwegian rig workers began early Friday. The ship-based rig
that pumps oil from Glitne in the North Sea began shutting down when 500
members of the OFS labor union were locked out from work at four rigs in
Norway by employers, said Kristofer Hetland, a Statoil spokesman. The
action is an attempt by employers to force an end to a two-month labor
strike over salaries and social benefits.

Bloomberg, September 3, 2004, 2004, 0443

# Fuel Tanker Accident Closes S.R. 70 as Frances Closes In

A fuel tanker overturned Thursday after a midnight collision with a
bull, spilling hundreds of gallons of gasoline into a wetland area.
Emergency crews applied foam to the tanker and closed off a three-mile
section of State Road 70 extending to the DeSoto County line for about
19½ hours Thursday while draining the 8,000-gallon tanker. The eastbound
and westbound lanes of S.R. 70 reopened at 7:30 p.m. Thursday.

The Herald, September 3, 2004

<http://www.bradenton.com/mld/bradenton/news/9568788.htm>

**Natural Gas**

# California Regulators Take Action to Ensure Adequate Future Gas Supplies

The California Public Utilities Commission directed the investor-owned
utilities in the state to take urgent steps to ensure that the state
does not have a shortage of natural gas the future. In the short term,
the California Public Utilities Commission\'s action seeks to boost
supplies by up to 500 million cubic feet a day \-- 10 percent of daily
statewide demand \-- in time for the winter heating season. For the
longer term, California aims to begin importing liquefied natural gas,
or LNG, from Mexico to connect with utility pipelines in 2006-2007.
Under the decision Thursday, utilities are permitted to widen the range
of gas supply basins beyond their traditional suppliers in the
Southwest, which Kennedy said will mean more gas flowing to California
from the Rocky Mountain regions at more competitive prices. The PUC
decided to allow Sempra Energy and Shell to create a border point where
LNG would move from Mexican to U.S. pipelines.

Associated Press, September 2, 2004, 1818

Reuters, September 2, 2004, 1916

<http://biz.yahoo.com/ap/040902/liquefied_gas_2.html>

# El Paso to Cut Natural Gas Capacity in Arizona, New Mexico

El Paso Natural Gas Co has confirmed that it will conduct maintenance at
the Dutch Flat and Caprock Stations September 6-9. The work will reduce
capacity of the San Juan Crossover by 100 million cubic feet a day to
528 million. At the same time, scheduled maintenance at Dutch Flat
station will be moved up a day to avoid overlapping with the work at
Caprock. Capacity on the Havasu Crossover in Arizona, will be reduced in
increments, by 20 million gallons on September 6, 65 million September 7
and 35 million on September 8.

Bloomberg 14:20 September 3, 2004.

<http://www.elpaso.com/postings/default.asp>.

# Falling US Gas Prices Divert LNG Cargoes from US to Asia

Recent high oil prices are starting to impact the global LNG market.
With US natural gas prices sliding, August imports of LNG into the US
were substantially lower than expected. Market sources say that many of
the short-term cargoes scheduled to discharge at US receiving terminals
have been diverted to Asia instead.

The Oil Daily, September 3, 2004

<http://www.energyintel.com/PublicationHomePage.asp?publication_id=5>

**Other News**

Nothing to Report

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (         | Ago**     | Ago**      |
|                               | 9/3/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 43.94     | 43.18     | 29.43      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 4.32      | 5.08      | 4.68       |
|                               |           |           |            |
| **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