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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### May 3, 2004

**Highlights / Major Developments**

**Update \-- California Gasoline Pipeline Reopened**\
Kinder Morgan Energy Partners L.P.
(NYSE:[KMP](http://finance.yahoo.com/q?s=kmp) -
[News](http://finance.yahoo.com/q/h?s=kmp)) reopened a gasoline pipeline
between San Francisco and northern Nevada at approximately 2:30 pm PDT
on Sunday, a spokesman said. The 14.5-inch (35.5 cm) pipeline, which
carries gasoline, diesel and jet fuel from San Francisco Bay area
refineries to Sacramento, California, and Reno, Nevada, was shut on
Tuesday after gauges showed problems with flow in the pipeline. The site
of the pipeline leak was found Wednesday morning in the Suisun Marsh on
the northern edge of the greater San Francisco Bay. Incidents like a
shut pipeline, a refinery fire or malfunction, can cause refined
products prices to spike on the West Coast, which is isolated from other
major U.S. refining areas. As of Friday, prices were unaffected in West
Coast spot markets by the pipeline shutdown and suppliers said shortages
would likely not occur if the pipeline was reopened by Monday. Flow
through the pipeline, which is buried at least three feet (0.9 meters)
underground, was restored Sunday afternoon after a 50-foot (15.2 meters)
section of pipe was replaced, said Kinder Morgan spokesman Jerry
Engelhardt. The U.S. Coast Guard, California Fish and Game Department
and State Fire Marshal\'s Office are overseeing the cleanup of the marsh
area and investigating the spill which Kinder Morgan estimated at less
than 63,000 gallons. \"We continue to work with the state and federal
agencies supervising the incident,\" Engelhardt said. As many as 135
people were working on the cleaning up the diesel, which killed eight
birds and six mammals. Another nine birds are being cleaned of the fuel
according to a statement from the Fish and Game Department.
<http://biz.yahoo.com/rc/040502/energy_california_pipeline_1.html> .
<http://biz.yahoo.com/prnews/040502/nysu027_1.html>

**No Shortages Seen from Kinder Morgan Pipeline Rupture**\
Suppliers said they saw no shortages in refined oil products in northern
California on Friday as Kinder Morgan Energy Partners L.P. said it plans
to reopen a shut pipeline on Saturday. Refined products suppliers in
Sacramento said the only product they have had to hunt for is diesel.
They\'ve been able to find it, but only with a lot of effort and
rerouting of tanker trucks. \"It slows everything down because everyone
goes to the same few places,\" said one supplier.
<http://biz.yahoo.com/rc/040430/energy_california_supply_1.html>

**Electricity**

**Constellation Trips N.Y. Nine Mile 1 Nuke Over Weekend**\
Constellation Energy Group Inc. manually tripped its 565 megawatt Nine
Mile Point 1 nuclear unit in New York on May 2, the company told the
Nuclear Regulatory Commission in an event report. In the report, the
company said it tripped the unit due to rising torus temperature due to
a stuck electromatic relief valve.
<http://biz.yahoo.com/rc/040503/utilities_constellation_ninemile_1.html>

**Hope Creek 1 Nuclear-Power Plant at Full Power, Company Says**

PSEG's 1,100 MW Hope Creek Nuclear Unit reached full power over the
weekend after completing a non-nuclear repair.

Bloomberg News, 1050 May 3, 2004

**Cooper 1 Reduces Power to Repair Pump Controller, Company Says**

Nebraska Public Power District's 780 MW Cooper 1 Nuclear Unit reduced
output over the weekend (to 70%) to troubleshoot a failed fuel-pump
controller. Bloomberg News, 0942 May 3, 2004

**Palisades 1 Nuclear-Power Plant at Full Power, Company Says**

Consumers Energy's 789 MW Palisades 1 Nuclear Unit ramped up to full
power on Friday afternoon after repairing a main steam generator turbine
valve. Bloomberg News, 1019 May 3, 2004

####### 

####### Petroleum

**Atofina Texas Refinery Back to Normal after Power Outage**\
The 180,000 barrel-per-day Atofina refinery in Port Arthur, Texas, was
producing at normal rates on Monday after a brief power outage over the
weekend, the company said. The plant briefly reduced production at its
reformer and catalytic cracker on Saturday after a power loss, according
to a filing with the Texas Natural Resource Conservation Commission.
\"We had a power blip during a huge storm on Saturday, but we brought
(the plant) back up the same day,\" a company spokesman said. The
refinery has a total fluid catalytic cracker capacity of 67,000 bpd and
a total reformer capacity of 37,000 bpd.
<http://biz.yahoo.com/rm/040503/energy_atofina_refinery_1.html>

**Crown Central\'s Refinery Unit in Texas Shut by Fire**

Crown Central Petroleum Corp. shut a reformer yesterday at its refinery
in Pasadena, Texas, after a fire at the plant. The fire broke out at the
unit, which processes desulfurized feedstock into high-octane gasoline
blending components, as a result of a leak on a pump seal, said Bruce
Hicks, a spokesman for the company in Houston. The fire started at 3:30
p.m. local time and was extinguished at 8:37 p.m., he said. \`\`There
were no injuries and no damage to other areas in the refinery,\'\' Hicks
said. \`\`There was no affect on operations at the rest of the
refinery.\'\' He said he didn\'t know how long the reformer would be
shut for repairs and how much gasoline production would be affected by
the shutdown. The Pasadena refinery can process 100,000 barrels of oil a
day. Bloomberg News, 1024 May 3, 2004

Reuters 1926 May 2, 2004

**Citgo Restarts Cat Cracker at Corpus Christi Plant**

Citgo restarted Saturday a gasoline-making unit at its 165,000
barrel-per-day refinery in Corpus Christi, Texas, according to a filing
with the Texas Natural Resource Conservation Commission. The fluid
catalytic cracker was shut down after a wet gas compressor tripped
during heavy rains on Saturday. The unit was restarted the same day, the
filing stated. The same unit was shut down and then restarted on
Thursday after a power failure. Reuters, 0921 May 3, 2004

**Motiva Reduces Port Arthur Refinery Operations Saturday**

Motiva Enterprises LLC reduced operations on Saturday when storms caused
a power outage in Port Arthur, Texas. Bloomberg News, 1442 May 3, 2004

<http://biz.yahoo.com/rm/040503/markets_energy_nymex_6.html>

**N.Y. Crude Oil Surges to 13-Year High After Saudi Arabia Attack**

Crude oil futures in New York rose to a 13-year high after five foreign
workers were killed in Saudi Arabia, raising concern that terrorists may
hobble the petroleum industry in the country, the world\'s biggest oil
exporter. The workers, employees of Swiss engineering company ABB Ltd.,
were shot Saturday at a petrochemical complex in the Saudi city of
Yanbu. James Oberwetter, the U.S. ambassador, told Americans they should
leave the country because their security can\'t be guaranteed, the
Associated Press reported, citing participants at a meeting with the
envoy. \`The violence in Saudi Arabia occurring near oil assets,
combined with refinery glitches here, is pushing prices higher,\'\' said
Joshua Sadler, vice president of energy trading at Societe Generale\'s
SG Corporate & Investment Banking in New York. Three of the four gunmen
who killed the foreigners in Yanbu worked for one of the companies
inside the city and used their passes to gain access, said Mohammed
Jouwaiser, director general

of the Royal Commission for Jubail and Yanbu. \`\`This was an inside
job,\'\' O\'Grady (director of fundamental futures research at A.G.
Edwards & Sons Inc. in St. Louis) said. \`\`This means that the Saudi
industry has been infiltrated.\'\' Bloomberg News, 1442 May 3, 2004

#### 

#### 

#### Natural Gas 

**El Paso** said the necessary replacement parts for repairing
mechanical damage to Flagstaff (AZ) Station\'s Unit #1 will not be
available until mid-June, and thus it declared the outage a force
majeure event. The incremental reduction of North Mainline capacity due
to the Flagstaff outage is 100 MMcf/d, and other North Mainline
maintenance previously scheduled during May is being reassessed in light
of the Flagstaff situation. Previously posted capacity reductions will
be revised as soon as possible. El Paso also said the Alamo Lake (AZ)
Station\'s #2 turbine was started Thursday but experienced a mechanical
failure and must be disassembled to determine the extent of damage.
Capacity of the Havasu Crossover was returned to 570 MMcf/d Friday until
further notice.

*NGI's Daily Gas Price Index*

**Gulf South** began unscheduled maintenance Thursday until further
notice on Index 387-3 (the 8-inch Hattiesburg Line in Mississippi).
Service to Eaton Power Plant has been interrupted for the duration of
the maintenance period. Gulf South has scheduled maintenance on Index
129 (Agua Dulce to the 30-inch Perryville Line) in Jackson County, TX
from 4 p.m. CDT Tuesday through 9 a.m. Thursday. The force majeure work
will affect Gulf South\'s ability to provide service to 19 meters.

*NGI's Daily Gas Price Index*

**Sonat** reported completion of repairs at the Logansport (LA)
Compressor Station and restored capacity to normal on the 14-inch
Logansport Line effective with Thursday\'s intra-day 2 nominations
cycle. The pipeline also said it does not expect the 24-inch White
Castle-Franklinton Loop Line in Louisiana to return to service before
May 18, as inspections are still under way and a repair plan is being
developed. No impact to firm service is anticipated from the outage, but
interruptible (A-1 and/or IT) service may be affected.

*NGI's Daily Gas Price Index*

**Revised Questar Pipeline Expansion Would Service Multiple Basins,
Markets**\
Questar Pipeline Co. (QPC) has released revised open season specifics
for a 300-450 MMcf/d expansion project, which includes about 170 miles
of new 24-inch diameter pipeline. The revised project would accept
incremental gas production from multiple Rocky Mountain areas rather
than only the Piceance Basin. It also would allow deliveries to various
pipeline interconnections rather than only to pipelines that deliver gas
to the Midcontinent region. Natural Gas Intelligence, April 30, 2004

**New York Regulations Hinder LNG Transport, Terminal Development**\
In order to serve continuing gas demand growth in the already
constrained New York City area, the state and city must reconsider
current regulatory obstacles to the expanded use of liquefied natural
gas (LNG), according to a new report by the Center for Management
Analysis (CMA) at the C.W. Post Campus of Long Island University in
Brookville, NY. Natural Gas Intelligence, April 30, 2004

**Enbridge Gears Up to Build Large East Texas Pipeline**\
Enbridge Energy Partners said it has purchased the right of way and
awarded the pipeline contract for a new 107-mile, 36-inch diameter East
Texas expansion project that is scheduled to be built starting this
fall. Natural Gas Intelligence, April 30, 2004

**LA Governor Blanco Endorses Cheniere Energy Sabine Pass LNG Receiving
Terminal**\
Attending the Offshore Technology Conference in Houston for meetings
with the nation\'s oil & gas executives, Louisiana\'s Governor, Kathleen
Babineaux Blanco committed her state\'s full support for Cheniere
Energy\'s Sabine Pass LNG Receiving Terminal in southwest Louisiana.
Blanco\'s charge to her state\'s agencies and to the Federal government
to support the project follows the overwhelming support from local
communities nearby the site where Cheniere Energy plans to build the
nation\'s largest receiving terminal to import over 2.6 billion cubic
feet per day of LNG (Liquefied Natural Gas). A recently released report
\"Economic Opportunities for LNG Development in Louisiana\" by the
Center for Energy Studies at Louisiana State University concluded that
development of a liquefied natural gas infrastructure in the state could
increase gas export volumes through the existing pipeline system by over
237%, could provide \$398 million in annual gas expenditure savings,
create over 13,000 jobs and preserve 11,600 existing jobs, and inject
over \$2.3 billion into the state economy.
<http://biz.yahoo.com/bw/040503/35684_1.html>

**Tight Eastern Coal Supplies May Cause Havoc in Gas Markets**\
US coal markets are unusually tight heading into the summer, and
producers and analysts are warning of potential delivery problems in the
eastern US that could hamper coal generation and force some utilities
onto natural gas. (See Energy Assurance Daily, April 22, 2004 for more
details of tight coal markets.) Natural Gas Week, May 3, 2004

####### Other

**Nuclear Protective Measures Under Heat**\
While some U.S. officials say nuclear plants are well-prepared to defend
against terrorism, other government investigators argue that such
facilities are vulnerable. Enhancing them may take another five years,
well past the 2006 official deadline. According to a new General
Accounting Office (GAO) study on nuclear safety issued this week, the
Department of Energy must guard against sophisticated techniques such as
having a gang of terrorists take over a plant that contains radioactive
material in an effort to build a basic nuclear bomb that would later be
detonated. Current plans conceive of such an effort but go on to predict
that any terrorists would be detained on the way out. Meanwhile, the
study adds that nuclear storage facilities all have security plans
centered on a small band of terrorists who might enter facilities. But,
in today\'s hostile environment, that may be wishful thinking, says the
Energy Department. Special nuclear material sites, it says, are exposed
to a large-scale attack, although those that handle nuclear weapons have
adequate safety precautions. The Energy Department has focused on what
its nuclear safety experts refer to as "the maximum near-term threat to
their facilities"---a notion that the GAO says should be reviewed in
light of the ever-evolving terrorists\' methods. "We believe they are
not sufficient to ensure that all of the (Energy Department\'s) sites
are adequately prepared to defend themselves against the higher
terrorist threat in a post-September 11, 2001, world." The report did
applaud immediate measures that facilities have taken to beef up
security, noting that they have posted more security guards who conduct
an increasing number of car inspections. That said, the report maintains
that the guards are overworked and the safety precautions may still have
voids because of human error. The security measures are costly, with the
Energy Department increasing such funding by 75 percent since 2002.
Today, it says that it spends \$707 million on those endeavors compared
to \$411 million in 2002---helping to build a "strong and effective"
nuclear safety program. All nuclear facilities are required to counter
terrorists\' threats using multifaceted protective systems that include
integrated alarms and sensors, physical barriers such as concrete blocks
and special nuclear material detectors as well as metal detectors. At
the same time, all such plants have a heavily armed paramilitary
security force that is equipped with automatic weapons, night vision
equipment, body armor and chemical protective gear. Nuclear plants are
definitely on the minds of would-be terrorists. A memo released two
years ago by the Nuclear Regulatory Commission says that a senior Al
Qaeda operative indicated that the group had discussed ways to crash a
plane into a nuclear power plant. At the same time, the FBI said it
uncovered information contained on a computer owned by an individual
with close links to the terrorist\'s organization implying that nuclear
plants would make good targets. At a hearing before the House Government
Reform subcommittee, Rep. Christopher Shays, R-Conn., expressed concern
that it might take another five years to ensure that current nuclear
facilities are protected with the best available technologies. In the
meantime, he questioned why there were so many different plants that
housed nuclear materials that could possibly be targets for terrorists.
Toward that end, he suggested that the materials be moved and
consolidated---an idea that the Energy Department said could take
decades and cost billions. Perhaps the greatest danger to nuclear plants
could come from the air, or possibly by missile. At risk are the nuclear
reactors and radioactive fuel deposits as well as spent fuel that is in
transport. More than half of the nation\'s 103 nuclear reactors are
located near population centers, including two near Washington, D.C.,
and two close to New York City. An air attack might be a more concerning
scenario. But, unlike the World Trade Center, nuclear reactors are small
targets that necessitate a plane to slow down in order to lower its
altitude. The strength of a reactor\'s containment dome, say some
experts, could withstand that kind of strike. The effects of such an
attack could be further lessened by placing steel poles and cables in
strategic locations---fixtures that would force the break up of an
aircraft before it hit critical components. Exelon Nuclear, which is the
largest nuclear power plant operator in the United States with 17
reactors on 10 sites in Illinois, Pennsylvania and New Jersey, has been
proactive when it comes to protecting its facilities. Plain-clothed
employees carry semi-automatic weapons. All cars are searched for
explosives. And, barricades surround facilities to impede speeding
vehicles.
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZijijijjRSfd%216C%29bfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZijijijjRSfd!6C)bfej%5B!)

**OPEC May Hike Oil Output Levels for Q3-UAE Oilmin**\
OPEC might raise its official oil supply limits to cool off prices and
replenish lean stockpiles during the third quarter, the United Arab
Emirates\' oil minister said on Monday.
<http://biz.yahoo.com/rm/040503/energy_opec_emirates_1.html>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (         | Ago**     | Ago**      |
|                               | 5/3/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 38.26     | 37.02     | 25.74      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.80      | 5.60      | 5.24       |
|                               |           |           |            |
| **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