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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### May 11, 2004

**Electricity**

#### PPL\'s Pa. Susquehanna 2 Nuke up to 98 Percent Power

PPL Corp.\'s 1,150 megawatt Susquehanna 2 nuclear unit in Pennsylvania
was at 98 percent power early Tuesday, up from 65 percent early Monday,
the U.S. Nuclear Regulatory Commission said in its power reactor status
report. It was not known why the unit, in Berwick, Pennsylvania, had
been reduced.

Reuters, 0720 May 11, 2004

# Summer\'s Anticipated Power Demands Could Stress Wisconsin Grid A surging economy and hot weather could jolt Wisconsin\'s already fragile power grid this summer as residents and factories fire up air conditioners and assembly lines at a record pace. Utility officials and regulators are optimistic there will be plenty of juice to quench the state\'s growing thirst for electricity this summer. But the grid is only as reliable as its fleet of aging power plants and tenuous network of transmission lines, utility representatives warn. Last summer, state utilities were able to meet record demand during a short heat wave just weeks after the biggest blackout in U.S. history narrowly missed turning the lights out in Wisconsin. But the state was blessed with a cool summer, and a sluggish economy kept manufacturers and other companies from using up loads of power. A prolonged heat wave, problems on the state\'s only major transmission line to Minnesota or sudden shutdowns of major power plants could pose problems this summer. \"This is not going to be a good summer coming up,\" warned Jose Delgado, president of American Transmission Co., the Pewaukee company responsible for operating transmission lines in eastern Wisconsin. The failure of the utility industry and Congress to penalize utilities that try to sell too much power across stressed power lines leaves the nation prone to further blackouts, Delgado said. In Wisconsin, a forecast published by the state Public Service Commission predicts that demand for power this summer will hit an all-time high in July \-- eclipsing last year\'s record by 4 percent. Barring major storms, a prolonged heat spell and sudden plant shutdowns, the state should be in good shape this summer, the commission and leaders of utilities that own power plants say. 

Milwaukee Journal Sentinel \-- May 9
<http://www.energycentral.com/centers/news/daily/article.cfm?aid=4844960>

# North American Power Is Probably Adequate to Meet Summer Demand U.S. and Canadian power supplies will probably be adequate to meet demand this summer, the North American Electric Reliability Council said. Unanticipated equipment breakdowns and unseasonably hot weather could temporarily cause demand to exceed available generation and transmission capacity, the council said. Summer demand will exceed 2003 levels by 2.5 percent. Bloomberg News, 1618 May 11, 2004

# Wind Power Could Ease Gas Needs in Anchorage, Alaska, Area Chugach Electric Association is cautiously optimistic about its plan for a 50-megawatt wind power project on Fire Island, a 4,000-acre island in Cook Inlet three miles from Ted Stevens International Airport. Steve Gilbert, Chugach\'s manager for energy projects development, said that if the project were expanded to its full scope of 100 megawatts, it would reduce Chugach\'s requirements for natural gas to fuel its electrical power plants by 14 percent. Gilbert said Chugach expects to complete its feasibility studies on the project by the end of this year. Chugach has issued requests for proposals for construction of a 138-kilovolt-transmission line to the island as well as route studies and related civil and environmental studies. **By Tim Bradner, Alaska Journal of Commerce, Anchorage \-- May 9 <http://www.energycentral.com/centers/news/daily/article.cfm?aid=4845767>**

**NERC Urges Closer Ties with NRC on Grid Reliability**

NRC and North American Electric Reliability Council (NERC) should
formalize a communications and coordination plan on grid reliability
issues through a memorandum of understanding, a NERC official suggested.
The NRC also should advise nuclear plant operators to adopt cyber
security standards established by the Federal Energy Regulatory
Commission (FERC), a FERC staffer recommended. NRC commissioners said at
a briefing today that they would consider recommendations to protect
reactors from grid instability but noted that NRC does not have direct
jurisdiction over grid management issues. Congress is considering
reliability standards giving NERC and FERC long-sought regulatory
powers. The NRC staff said it has been working with the industry to

ensure plants are prepared for any grid outages. The discussions stem
from last year\'s widespread blackout across parts of the U.S. and
Canada.

<http://www.platts.com/Nuclear/News/2760040.xml?S=n>

####### 

####### Petroleum

**US Retail Gasoline Surges 9.7 Cents to Record \$1.941/Gallon: EIA**

The average US retail regular-grade gasoline prices surged 9.7 cents
over the past week to a new record, non-inflation-adjusted high of
\$1.941/gal, the US Energy Information Administration said Monday.
Nationwide average pump prices are now 45 cts/gal higher than the
corresponding week a year ago, although they are still well shy of the
US all-time, inflation-adjusted mark near \$3/gal in 1981 and the pump
prices regularly seen in Europe.
<http://www.platts.com/Oil/News/6737318.xml?S=n>

Reuters, 1547 May 11, 2004

#### Gasoline Surge May Continue as Refiners at Full Output

U.S. oil refiners are producing as much gas as they can; however, they
are not keeping up with demand. Supplies may run short this summer when
vacationers hit the road and push demand to a peak, according to Valero
Chief Executive Bill Greehey. The debate over crude oil supplies misses
the point, according to ConocoPhillips Chief Executive James Mulva.
\"There is plenty of oil on world markets,\" Mulva said. \"It\'s a
question of limited refining capacity.\" No one has built a new refinery
in the U.S. since 1976, even as surging fuel demand swells refining
profits, because of daunting environmental hurdles, Mulva said. Stricter
anti-pollution rules that took effect January 1 require refiners to
process oil at higher temperatures and pressures to filter out more
sulfur, and that reduces the amount of gasoline made from each barrel of
oil. Output declined during the first three months of the year as
producers shut some plants to install new equipment needed to make the
lower-sulfur gasoline. The sulfur rules also limit imports, which have
fallen 6.6 percent so far this year to an average of 808,000 barrels a
day.\
[http://quote.bloomberg.com/apps/news?pid=10000103&sid=asTN4K
Y8L5xI&refer=us](http://quote.bloomberg.com/apps/news?pid=10000103&sid=asTN4KY8L5xI&refer=us)

**Oil Rebounds on OPEC Capacity Doubts**\
Oil prices rebounded toward 13-year peaks on Tuesday on doubts that top
world exporter Saudi Arabia\'s call for a rise in OPEC quotas would add
much actual supply to a tight international market. U.S. light crude
(CLc1) rose 47 cents to \$39.40 a barrel, back within 60 cents of the
13-year peak touched on Friday at \$40. London Brent crude was up 64
cents to \$36.61 a barrel. Saudi Arabia triggered a dollar slump in
prices on Monday by proposing that the OPEC cartel raise official.
<http://biz.yahoo.com/rb/040511/markets_oil_4.html>

**New York Oil Closes Higher Than \$40 for First Time in 13 Years**
Crude oil futures in New York surged, closing higher than \$40 a barrel
for the first time since 1990, on speculation that a growing global
economy will boost fuel demand and lower inventories. \`\`I would expect
the first place to look for negative change is in the automotive
industry, particularly those who are promoting and selling SUVs,\'\'
said John Blank, director of industry economists at Bank One Corp. in
Chicago. British Airways Plc and Qantas Airways Ltd. are raising fares,
while Singapore Airlines Ltd.\'s cargo unit is raising rates after a 58
percent increase in jet fuel prices over 12 months. Bloomberg News, 1607
May 11, 2004

**EIA Says \'Adequate\' NY, CT RBOB Supply Potential Exists**      The
Energy Information Administration (EIA) recently released an update of
its October 2003 report on \"Preparations for Meeting New York and
Connecticut MTBE Bans,\" which finds that \"adequate reformulated
gasoline (RFG) blendstock for use with ethanol (RBOB) supply potential
has emerged.\" The EIA report also finds that gas prices in the two
states \"are moving similar to the rest of the country\" and that
\"necessary gasoline imports will be available.\" \"An earlier EIA
report had cited the possibility of a \'worst-case\' scenario that some
misinterpreted as a prediction of supply shortages and significantly
higher prices resulting from the transition from MTBE to ethanol,\" said
Renewable Fuels Association (RFA) president Bob Dinneen. \"This latest
report is based on actual     petroleum industry actions and
preparations. Thus far, contrary to the predictions of some last fall,
the transition to MTBE-free gasoline has gone very smoothly.\" The EIA
report is available online through the administration\'s\
website at [http://www.eia.doe.gov](http://www.eia.doe.gov/).

#### Natural Gas 

####### 

Alaska, Authority in Gas Deal

The Alaska state government and the Alaska Gasline Port Authority signed
an agreement to facilitate and development and construction of a
pipeline to connect and transport stranded North Slope natural gas to
the Lower-48 States. According to a statement released by Alaska
Governor Frank Murkowski, the agreement guarantees that the state will
help the authority get permits for the pipeline and any needed
processing facilities, terminals, rights-of-way and will also help North
Slope gas find a market in Alaska power plants. In exchange, the gasline
authority will provide the state with a detailed cost estimate and
copies of any other agreements the authority makes with companies
regarding North Slope gas or liquefied natural gas.

Oil Daily, May 11, 2004

**Yukon Pacific Gets Another Delay for Alaska LNG Export Facilities**\
FERC has given Yukon Pacific Co. LP a three-year extension to begin
construction of its proposed liquefied natural gas (LNG) export project
in Alaska. It was the company\'s third request to push back the
construction start-up date. Natural Gas Intelligence, May 10, 2004.
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZikipvsqVTeb%216C%29bfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZikipvsqVTeb!6C)bfej%5B!)

#### N.Y. Natural Gas Soars to 4-Month High as Oil Reaches \$40

Natural gas traded in New York soared to a four-month high as a rally in
oil to \$40 a barrel raised factory-fuel prices and allowed gas
marketers to charge more for the industrial and power plant fuel.
Natural gas and oil markets can influence each other because gas
competes with oil-based products in 5 to 10 percent of U.S. factories
and utilities. Oil rallied on a growing world economy and concern that
supplies of gasoline will be low this summer. Gas for June delivery rose
20.2 cents, or 3.3 percent, to \$6.386 per million British thermal units
on the New York Mercantile Exchange. Natural gas is up 26 percent from
this year\'s low of \$5.077 per million Btu on Feb. 24.

Bloomberg News, 1545 May 11, 2004

**Trinidad Pipeline Strike Ends**

Workers laying a Trinidad natural gas pipeline returned to the job
Monday after a 10-week strike that threatened the timetable for
completing Trinidad and Tobago's fourth liquefied natural gas (LNG)
train. Contractor Bechtel will try to maintain the original completion
target of late 2005. The workers walked off the job during a
higher-profile strike at the Atlantic LNG plant.

Oil Daily, May 11, 2004

####### 

####### Other

**Iraq Resumes Oil Exports After Sabotaged Pipe Repair** Iraq, the
Middle East\'s third-largest oil producer, resumed full exports from the
south of the country earlier than planned after repairing damage to an
oil pipeline that was attacked on Sunday. Iraqi fire-fighters last night
put out the blaze at the 28-inch pipeline, one of three connecting
southern oilfields with export terminals in the Persian Gulf, allowing
inspectors to assess and repair the damage, said Norman Szydloski, U.S.
deputy senior adviser to the Iraqi Oil Ministry. \`\`The damage was not
as great as initially feared and flow has been restored to full
capability\'\' of 1.6 million barrels a day, Szydloski said by telephone
from Baghdad. The damage, which had cut exports by more than a third,
could take about two days to repair, Szydloski had said yesterday.
Reuters, May 11, 2004

#### US Farmers Criticize Cargill\'s Brazil Ethanol Plans

A U.S. farm group on Tuesday urged Cargill Corp. to reconsider its plan
to import Brazilian ethanol via El Salvador, saying the company was
trying to use a loophole to sidestep U.S. tariffs on imports of the fuel
additive. The United States is a growing market for ethanol, which is
typically distilled from corn or sugar to produce a cleaner-burning
gasoline additive. Cargill said last week it plans to build a
dehydration plant in El Salvador that would process Brazilian ethanol
into fuel grade ethanol. Because El Salvador is part of the U.S.
government\'s Caribbean Basin Initiative to encourage investment in that
region, some ethanol from the plant would be exempt from import duties.
The United States will produce more than 3 billion gallons of ethanol
this year, accounting for about 10 percent of the U.S. corn crop.
Reuters 1525, May 11, 2004

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (5        | Ago**     | Ago**      |
|                               | /11/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 40.32     | 38.88     | 27.65      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 6.24      | 6.21      | 5.73       |
|                               |           |           |            |
| **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