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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### April 20, 2004

**Electricity**

#### 

Nothing to report.

#### 

#### Petroleum

**Valero refinery Unit in Louisiana Shut by Power Failure**

Bloomberg News, 1728 April 20, 2004

**Pennsylvania May Replace Gasoline Additive MTBE With Ethanol**

Pennsylvania, the seventh-largest U.S. gasoline market, may force Sunoco
Inc., ConocoPhillips and other refiners to use ethanol next year to
replace a fuel additive that polluted water supplies in the Philadelphia
area. A proposal before the Pennsylvania House of Representatives would
outlaw the use of methyl tertiary butyl ether, or MTBE, a

petrochemical added to gasoline to meet federal rules for reducing
tailpipe exhaust. The ban would boost U.S. demand for ethanol, a
grain-based alternative to MTBE, by 6.2 percent, according to the
Renewable Fuels Association, a trade group. MTBE was banned by
California, New York, Michigan and 11 other states after it leaked from
storage tanks into underground water wells. Missouri, Minnesota and Ohio
will follow suit next

Jan. 1, followed by Kentucky in 2006, according to the Energy
Department. Ethanol prices are up 47 percent in the past year, touching
a three-year high of \$1.7963 a gallon today in Des Moines, Iowa, amid
surging demand from refiners serving East- and West-Coast markets. The
federal government subsidizes ethanol use by giving

refiners a 52-cent tax break for each gallon mixed with gasoline.
Decatur, Illinois-based Archer Daniels Midland Co. is the largest U.S.
ethanol company, with 33 percent of production capacity.

Bloomberg News, 1313 April 20, 2004

**Continental and then American Airlines Hike Fuel Surcharge on Some
Fares**\
Continental Airlines on Tuesday said it has raised a fuel surcharge on
certain tickets to \$15 each way from \$10 each way to offset high jet
fuel prices. Continental tacked on a similar ticket surcharge on March
26 but subsequently rolled it back along with other major U.S. carriers.
The airline blamed high fuel costs for most of a \$124 million
first-quarter loss reported last week and warned that its chances of
posting a full-year profit were \"at great risk\" because of fuel
prices. American Airlines said on Tuesday it will follow Continental
Airlines by raising a fuel surcharge on certain tickets to \$15 each way
from \$10 each way to offset higher jet fuel prices.
<http://biz.yahoo.com/rc/040420/airlines_continental_2.html>

#### Reuters 1632, April 20, 2004-04-20

#### U.S. Energy Secretary Says Gasoline Waivers up to EPA

U.S. Energy Secretary Spencer Abraham said on Tuesday he did not know
whether the Environmental Protection Agency would grant New York and
California temporary waivers from federal clean-burning summer gasoline
standards. \"I don\'t know what they are going to do. It\'s up to them
to make a decision,\" Abraham told reporters. The EPA requires the two
states to sell gasoline blended with ethanol or another additive that
raises its oxygen content, making the fuel burn cleaner and release
fewer exhaust fumes. The two states have asked the EPA for temporary
exemptions to the oxygenate mandate, saying the tough requirements
permit fewer refiners to make the fuel and the gasoline more expensive.
The head of the EPA said last Wednesday it will decide \"in the next few
weeks\" whether to grant the temporary waivers. With U.S. retail
gasoline prices now at a record high, some experts are concerned that
prices could climb further as the two big fuel-consuming states switch
to a special grade for the summer. U.S. refiners have repeatedly blamed
the soaring prices in part on the dozens of gasoline grades required in
different states and localities.

Reuters, 1247 April 20, 2004

#### Natural Gas 

####### 

**In Energy Push, Companies Gather in Gulf**

The furor in Mobile, AL, over ExxonMobil\'s interest in locating a
liquefied natural gas (LNG) terminal in the Bay has died down somewhat
with a recent pitch by a competing company to take the project 11 miles
offshore. As the nation seeks to address its growing energy needs with
growing natural gas imports, security fears about liquefied natural gas
tankers have stimulated staunch resistance to terminals being located
near population centers in Southern California and Maine as well as
Mobile. Due to public reaction over the terminals, many energy companies
have begun to scan the Gulf of Mexico for a more publicly palatable
location \-- despite the additional hundreds of millions of dollars
locating offshore would mean. A typical onshore site costs about \$600
million to develop. An offshore site could pass the billion dollar mark,
said Bob Davis of ExxonMobil. The U.S. Coast Guard, which rules the
regulatory domain on the waves beyond has received five permit
applications to operate LNG terminals in the Gulf of Mexico. Two
companies have received preliminary approval from the U.S. Coast Guard
for their Gulf-based projects, but \"no licenses have actually been
approved yet,\" said Jolie Shifflet, a Coast Guard spokesperson.\
<http://www.sunherald.com/mld/sunherald/8467327.htm>

**TransCanada Signs MOU with State of Alaska**\
TransCanada Corporation today announced that it has signed a memorandum
of understanding (MOU) with the State of Alaska. In the MOU, TransCanada
has committed to file an application under the state\'s Stranded Gas
Development Act, and the state will resume processing of TransCanada\'s
long-pending application for a right-of-way lease for the project. In
the MOU, the state and TransCanada recognize the critical importance of
upstream fiscal negotiations between the State and the North Slope
producers. \"TransCanada remains focused on the development of a
commercially sound transportation proposal,\" said Mr. Kvisle. \"We look
forward to resolving pipeline fiscal issues in parallel with upstream
negotiations between the state and the Alaska North Slope producers.\"
Once a right-of-way lease has been issued by the state and commercial
arrangements adequate to support financing are in place, TransCanada
would be prepared to convey the Alaska right-of-way lease to the
corporation or partnership that would undertake construction of the
project within Alaska. Such conveyance would be subject to an exclusive
interconnection agreement with TransCanada at the Alaska/Yukon border.
TransCanada will continue to lead the development of the Canadian
portion of the project, and will work with Alaska partners to develop
the Alaska portion. TransCanada has agreed to reimburse the State of
Alaska for actual costs of processing the right-of-way agreement, and to
reimburse up to \$1.5 million of processing costs related to its
Stranded Gas application. <http://biz.yahoo.com/bw/040420/206019_1.html>

####### Other

**Schwarzenegger Seeks to Boost Hydrogen-fueled Cars**\
California Gov. Arnold Schwarzenegger signed an executive order on
Tuesday aimed at making California the leader in introducing
environmentally friendly hydrogen-fueled cars in the years to come. \"I
will sign an executive order creating a public-private partnership
creating hydrogen highways all over the state of California by the year
2010,\" he said. \"Hundreds of hydrogen fueling stations will be built.
And these stations will be used by thousands of hydrogen-powered cars
and trucks and buses. This starts a new era for clean California
transportation.\" Although industry experts say it will be at least a
decade or longer before hydrogen cars could become common, backers said
Schwarzenegger was helping to prod their gradual introduction.
California already has 22 hydrogen refueling stations; Schwarzenegger
hopes there will soon be enough such stations across the state to
encourage motorists to drive them. \"If you space them roughly every 20
miles, just to make sure a consumer can find the fuel easily, that
pencils out to roughly 200 stations,\" California Environmental
Protection Agency secretary Terry Tamminen told Reuters. U.S. President
George W. Bush has sought a 43 percent increase in federal spending to
develop fuel cell cars and related service stations. Last year, he
launched a five-year, \$1.2 billion research initiative with the aim of
reducing dependence on foreign oil and putting fuel cell cars on the
road by 2020. One Sacramento company, Anuvu, is already selling fuel
cell cars for about \$100,000 each and expects about a dozen orders this
year, company president Rex Hodge said.
<http://biz.yahoo.com/rc/040420/energy_california_hydrogen_1.html>

**Tax Credit Lapse Lets Air Out of Push for Wind Energy**\
Congress has effectively pulled the plug on the wind energy industry by
failing to extend a crucial tax credit, leaving \$2 billion worth of
projects on hold across the country. Utilities rely on the tax credit,
1.8 cents per kilowatt-hour, to pick up about one-third of the cost of
wind energy they produce. Wind farms that were built when the tax credit
was in place receive the credit for 10 years, so existing operations are
not affected by the credit\'s expiration. But the expiration is holding
up new construction. \"The tax credit lapse has brought the industry to
a screeching halt,\" said Mark Haller, owner of Haller Wind Consulting,
in River Falls. He said Congress should pass a permanent tax credit,
rather than renewing the credit for a few years at a time, as it has
several times since 1992. In Wisconsin, We Energies has contracts with
developers to build three wind projects that would provide 214 megawatts
worth of power - enough to power about 60,000 homes for a year.
Nationally, wind energy provides about 1 percent of the nation\'s
energy. The American Wind Energy Association hopes to increase the
figure to 6 percent by 2020.\
<http://www.wisinfo.com/dailytribune/wrdtbusiness/280311505714317.shtml>

**Lukoil Boosts Arctic Oil Port Capacity to Increase U.S. Exports**

Lukoil, Russia\'s largest oil producer, plans to expand fourfold the
loading capacity at an Arctic oil port in 2006 to boost exports to the
U.S. The Varandey port on the Pechora Sea will be expanded so it can
handle 12 million tons a year of oil (240,000 barrels a day), up from
2.8 million tons now, Lukoil Deputy Chief Executive Leonid

Fedun said in Moscow. The company plans to export 1 million tons of oil
through the port this year and as much as 2.7 million in 2005. Lukoil,
which pumps about a fifth of the oil in Russia, estimates that
bottlenecks in the nation\'s oil pipelines are costing the country \$5
billion a year through excessive transport costs. Bloomberg News, 0853
April 20, 2004

**Shell, ChevronTexaco Urge Russia to Speed Up Building Pipelines**

Royal Dutch/Shell Group and ChevronTexaco Corp. urged Russia to speed up
the construction of oil pipelines, saying insufficient capacity is
trapping fuel inside the country and may deter investment to develop
crude deposits in

the world\'s top oil producer. The country has increased oil extraction
35 percent since 1999 and probably overtook Saudi Arabia as the world\'s
top oil supplier this year. Bloomberg News, 0313 April 20, 2004

**Lukoil Says Arctic Pipe Would Ease Black Sea Logjam**

Lukoil, Russia\'s largest oil producer, said a proposed \$4.5 billion
Arctic oil pipeline is vital because it would ease traffic in the Black
Sea, helping Kazakhstan and Russia boost exports. Lukoil, Yukos Oil Co.,
BP Plc\'s TNK-BP and OAO Sibneft have proposed building a \$4.5 billion
link to the Arctic port of Murmansk, near the borders with Finland and
Norway, to allow for exports to the U.S. The pipeline would be able to
ship as much as 2.4 million barrels a day of oil, or about a quarter of
Russia\'s predicted output by 2008. Bloomberg News, 1050 April 20, 2004

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (4        | Ago**     | Ago**      |
|                               | /20/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 37.61     | 37.08     | 30.10      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.46      | 5.92      | 5.54       |
|                               |           |           |            |
| **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