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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

**February 20, 2004**

**Electricity**

**Consumers\' Mich. Palisades nuke reduced for work**\
Consumers Energy\'s 789 megawatt Palisades nuclear unit in Michigan was
reduced to 72 percent power early Thursday due to equipment problems, a
plant spokesman said. Operators were examining a feedwater pump that
pushes water through a steam generator, the spokesman said. The pump was
not running properly Wednesday and operators decided to trim power
production to study the problem, he said, adding it was not known how
long the work would take.
<http://biz.yahoo.com/rm/040219/utilities_consumers_palisades_1.html>

**Palo Verde 2 Nuke Plant in Arizona Shut on Thursday Afternoon for
Repairs** The 1,270 MW Unit 2 at the Palo Verde nuclear plant in Arizona
was shut on Thursday afternoon to repair a small leak in one of its two
steam generators. Bloomberg News 12:43 February 20. 2004

**Callaway 1 Nuke Ramped Back to Full Power** AmerenUE's 1,150 MW
Callaway 1 nuclear plant completed its ramp up to 100 percent power
which was started on Wednesday following tests and repairs to a turbine
output breaker. Bloomberg News 14:26 February 19, 2004

**Intermountain Coal-Fired Unit in Utah Taken Down for Repair on
Thursday** The 840 MW Unit 1 at the Intermountain coal-fired plant in
Utah was also taken down on Thursday to repair a tube leak. The unit is
expected to return to service on Saturday evening, a plant spokesman
said. Reuters 13:19 February 20, 2004

**Waterford 3 Nuke Cuts Back Power Friday** Entergy\'s 1,075 megawatt
Waterford 3 nuclear unit in Louisiana was cut to 17 percent of capacity
by early Friday, the Nuclear Regulatory Commission said in its power
reactor status report. On Thursday, the unit was operating at full
power. An Entergy spokeswoman said the unit was taken off line to repair
a turbine valve, but said she could not comment for competitive reasons
as to when the unit might return to service. Reuters 13:22 February 20,
2004

**Laramie River 1 Coal-Fired Plant Scheduled for Repairs Late Tonight**
The 550 MW coal-fired Laramie River Unit 1 in Wyoming was slated to go
off the grid late Friday for tube leak repairs, returning late Sunday,
market sources said. Reuters 13:01 February 20, 2004

**Power Grid Alert System is Upgraded**

The Midwest Independent Transmission System Operator, blamed by U.S. and
Canadian investigators for failing to help prevent North America\'s
biggest blackout, said Wednesday, February 18, it has a new computer
monitoring system that would have contained the August 2003 power
failure. A computer called the \"state estimator\" \-- which is used to
help operators identify when transmission lines are overloaded or power
plants have shut down \-- has been upgraded, said Jim Torgerson, chief
executive of the group. Federal regulators want to ensure that the
Midwest grid operator is improving operations before this summer, when
electricity demand peaks because of hot weather. \"I\'m very pleased
with the state estimator,\" said Pat Wood, chairman of the Federal
Energy Regulatory Commission. The system isn\'t required for other grid
operators, Wood said. \"I think that will change,\" he added. The grid
operator also added alarm systems at the control room near Indianapolis,
IN, which start blinking when a power line or plant goes down, and
audible alerts sound around the operators. The operators then call
utilities and ask them to make changes.\
<http://www.ohio.com/mld/ohio/business/7987910.htm>

**NERC Predicts Great Lakes Power Jams this Summer**

The leading electricity industry group is predicting power lines around
the Great Lakes will jam up this summer, which could lead to blackouts
if utilities and other systems operators don\'t shape up. Officials at
the North American Electric Reliability Council will be auditing
operations at Akron\'s FirstEnergy Corp. next week to help ensure the
reliable flow of electricity this summer and in the future. In a press
conference yesterday, Gent said his experts have not completed their
formal assessment of this summer\'s outlook, but are certain of
bottlenecks around the so-called Lake Erie Loop that runs across
Northeast Ohio. Among the top recommendations in NERC\'s report,
outlined in detail for reporters yesterday, is to make sure utilities do
a better job trimming or cutting down trees on land near power lines.
NERC, based in New Jersey, said FirstEnergy failed to properly clear
vegetation along power lines, which on Aug. 14 overheated, sagged and
touched trees, causing the lines to short out and destabilize the grid.
Other contributing factors included communication problems among
utilities and the organizations that help oversee the grid, as well as a
FirstEnergy computer failure. Besides those at FirstEnergy, NERC
identified problems with two so-called reliability coordinators, the
Midwest Independent Transmission System Operator (MISO) and PJM
Interconnection, as contributing to the August blackout. Earlier this
week, MISO trumpeted the completion of the first phase of its
multimillion-dollar improvement plan, which includes a new computer
monitoring system. Akron Beacon Journal February 20, 2004

**Petroleum**

**Fire Seen at Tesoro's Bay Area Refinery in California** Trading
sources tell OPIS that a fire was burning at Tesoro\'s 170,000 b/d
refinery and local news reports indicate the same. According to local
reports a power failure was the cause of the fire, which lasted about 10
minutes. When the failure occurred at the refinery it emitted fire and
black smoke, according to the Contra Costa Times. KCBS said that
refinery employees were burning off excess fuel, which is causing some
flaring. OPIS Price Watch Alert, 15:28 February 20, 2004

**ConocoPhillips puts some West Coast Jobbers on Allocation**
ConocoPhillips has just notified jobbers in northern California and the
Pacific Northwest that it is putting them on allocation for branded
gasoline. The base period for calculating the allocation will be 110% of
actual December and January liftings. The allocation period will run
from Friday to Thursday\-\--the exact restriction for calculating what
exceeds the threshold isn\'t yet known, but ConPhil will impose a 20cts
gal overlifting charge on any branded gallons lifted in excess of base.
The allocation will be revisited and reviewed weekly. OPIS Price Watch
Alert 12:02 February 20, 2004

**Valero in California Reports Glitch** A fluid catalytic cracking unit
at Valero Energy's oil refinery in Wilmington, California, suffered a
glitch during restart. Valero said Wednesday night that the cat cracker
had a "lubrication problem" during an attempt to restart it after winter
maintenance work. The problem is expected to be resolved by "early next
week," the company said. "In the initial stages of start-up\...we
discovered a lubrication problem in some brand-new equipment," Valero
stated. "Rather than continue with the start-up and potentially have
continuing issues with this new equipment, we decided it was more
prudent to resolve these deficiencies now." The 54,000 b/d unit at
Wilmington, which is near Los Angeles, was scheduled to be undergoing
maintenance work for 33 days. The restart of the cat cracker, market
sources said, began Tuesday after it went offline for work in
mid-January. Valero said it does not usually comment on the restart of
units under planned maintenance, but did so in this case because of so
much "misinformation" in the market. Oil Daily February 20, 2004

**Part of Mississippi shut near New Orleans by spill, Valero says it is
Not Affected\
**About 17 miles of the Mississippi River south of New Orleans was shut
to all vessels Friday morning due to a fuel spill upriver, the U.S.
Coast Guard said. There was no word on how long the river may be shut.
However, the Coast Guard narrowed the closed portion of the waterway
from a 50-mile stretch on Thursday night. Valero Energy Corp. said
Friday its operations were not affected when a cargo ship struck a
vessel unloading crude oil at its St. Charles refinery Thursday night on
the river. About 500 barrels of ship fuel spilled in the accident, and
were being cleaned up Friday morning. There was no spillage of crude
oil, officials said. The fuel was spilled from an auxiliary tank of the
vessel unloading crude oil, the Genmar Alexandria, said Mike Hanson of
MTI Network USA, the company handling the spill. The Genmar Alexandria
was struck by the cargo vessel Bright State, Hanson added. The refinery
will take another crude vessel\'s load on Sunday, said Mary Rose Brown,
spokeswoman for the company.
<http://biz.yahoo.com/rm/040220/energy_mississippi_closure_1.html>
<http://biz.yahoo.com/djus/040220/1039000668_1.html> Reuters 10:20
February 20, 2004

**Natural Gas**

**Algerian LNG Explosion Caused by Gas Pipeline Leak, not Faulty
Boiler** A gas pipeline leak, not a boiler malfunction, was officially
deemed the cause of an explosion last month at the Skikda, Algeria,
Liquefied Natural Gas (LNG) complex, Algerian Energy and Mines Minister
Chakib Khelil has said. The blast killed 27 people, injured 74 others,
destroyed three of the six LNG trains at the complex, and heavily
damaged a nearby berth for loading LNG tankers. Officials at Sonatrach,
Algeria\'s state-owned oil and gas company, initially had blamed a
faulty boiler for the explosion. The blast caused worldwide
repercussions for planned and existing LNG projects, as sponsors rushed
to reassure neighboring populations and investors of the safety of their
facilities.\
[http://ogj.pennnet.com/articles/web_article_display.cfm?ARTI
CLE_ID=198948](http://ogj.pennnet.com/articles/web_article_display.cfm?ARTICLE_ID=198948)

**Consultant: Peak Shaving LNG Often Overlooked as Significant Supply
Source**\
Pipeline constraints and balancing requirements/penalties had something
to do with the record high gas prices this winter in the Northeast, but
energy consultant Ben Schlesinger also believes inadequate gas market
information, particularly regarding peak shaving liquefied natural gas
(LNG) capacity, was part of the cause. Natural Gas Intelligence February
19, 2004
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZhjgfhjkSTmjy30qbfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZhjgfhjkSTmjy30qbfej%5B!)

**DOE: Higher Standards for LNG-Sourced Gas May Make U.S. Unattractive
to Exporters**\
Foreign suppliers of liquefied natural gas (LNG) could bypass U.S.
energy markets if the standards for the Btu-enriched product entering
interstate pipelines are set too high, a Department of Energy (DOE)
official warned Wednesday. Natural Gas Intelligence February 19, 2004
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZhjgfhjkSTmjy30qbfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZhjgfhjkSTmjy30qbfej%5B!)

#### Some East Coast Utilities Switch from Oil to Gas

Milder weather and slumping natural gas prices are encouraging some East
Coast utilities to switch back to gas from more expensive residual fuel
oil, energy industry sources said. \"Loads have dropped a bit, but it
definitely looks like gas is the preferred fuel this week,\" a utility
fuel buyer said. While crude oil has been in a solid uptrend over the
past two weeks, adding more than \$3 a barrel, or 10 percent, and
underpinning fuel oil prices in New York, East Coast natural gas prices
have been in retreat as temperatures climbed.

Reuters 13:47 February 19, 2004

**Other News**

**Nigeria Oil Output Not Yet Being Cut In Line With OPEC**\
Oil companies in Nigeria have not yet been told to cut production in
line with OPEC\'s policy, a Nigerian government spokesman said Friday.
But traders expect some kind of reduction in how much crude is shipped
from the world\'s seventh-biggest exporter. In Nigeria, a spokesman from
the Department of Petroleum Resources, the government\'s liaison with
oil companies, said presidential oil advisor Edmund Maduabebe Daukoru
had not notified them of a policy change.
<http://biz.yahoo.com/djus/040220/1105000695_2.html>

**Russian Oil Min Calls On OPEC To Raise Output**\
Russian Energy Minister Igor Yusufov said Friday that the Organization
of Petroleum Exporting Countries should raise its crude oil output to
keep international markets from \"blowing up\". \"If OPEC continues to
suppress output, western oil countries won\'t be able to handle the
added pressure,\" Yusufov said. \"It isn\'t correct to take advantage of
your partner at a moment of weakness.\"
<http://biz.yahoo.com/djus/040220/0755000480_3.html>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (2        | Ago**     | Ago**      |
|                               | /20/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 35.80     | 34.51     | 36.45      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.19      | 5.62      | 6.38       |
|                               |           |           |            |
| **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 (was on Thursday this week due to Presidents' Day
holiday)

**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 (was on Thursday this
week due to Presidents' Day holiday)

**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