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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### April 30, 2004

**Highlights / Major Developments**

**Update -- Kinder Morgan Pipeline Rupture, Spill not as Bad as
Initially Reported**\
Kinder Morgan Energy Partners, L.P. today reported a release on its
14-inch Concord to Sacramento, Calif., underground pipeline. Preliminary
estimates indicate that less than 63,000 gallons of diesel (a refined
petroleum product), were released about five miles south of Fairfield
into the Suisun Marsh. Contrary to some national news reports, the
release is contained with booms and no product has reached the Suisun
Slough or San Francisco Bay. The estimated area impacted by the release
is approximately 15 to 20 acres. There is no danger to the public and
the pipeline remains shut down. Kinder Morgan is working closely with
the U.S. Coast Guard, the California Department of Fish and Game\'s
Office of Oil Spill Prevention and Response and other agencies to clean
up the spill and repair the pipeline. The cause of the release is under
investigation. Company officials estimate the pipeline, which transports
gasoline, jet fuel and diesel to Chico and Sacramento, Calif., and Reno,
Nev., will be back in service Saturday morning. It is part of KMP\'s
Pacific operations, comprised of approximately 3,800 miles of pipeline
in California and neighboring states. SOURCE Kinder Morgan Energy
Partners, L.P.
<http://ir.thomsonfn.com/InvestorRelations/PubNewsStory.aspx?partner=5327&product=IR&storyid=112973>

**Kinder Morgan Expects Pipeline to be Shutdown Until Saturday
Morning**\
Kinder Morgan had its North Line rupture yesterday, the 14 inch pipeline
that feeds the Sacramento, Chico and Reno markets had a break about 15
miles east of Concord, Calif. The line had to be shutdown as a result
and will effect the movement of all refined products. Kinder Morgan told
customers that it expects the pipeline to be down until Saturday morning
and that it is doing everything possible to restore service. Sources
however, tell OPIS that they are skeptical on a return that soon. One
supplies has already cut unbranded sales in Reno, sources said. The Reno
market is said to be very tight on both gasoline and diesel supplies.
OPIS Alert, April 30, 2004

**Shutdown sends US oil products suppliers scrambling**\
The shutdown of a pipeline that supplies gasoline, diesel and jet fuel
to Sacramento and northern Nevada sent suppliers scrambling to assure
fuel deliveries on Thursday afternoon. The shutdown by Kinder Morgan
Energy Partners L.P. of the 14.5-inch (35.5 cm) pipeline after a leak
detected Tuesday night, was expected to initially hit the Reno, Nevada,
area hardest. Reno is at the end of the shut pipeline and was short on
gasoline and diesel inventory before the shutdown was announced.
<http://biz.yahoo.com/rc/040429/energy_kindermorgan_supply_2.html>

**Electricity**

**Power Outages in Pacific Northwest Linger From Spring Storm**

Thousands of northwest Washington residents remained without electricity
Wednesday, April 28, after a wind storm brought lightning, hail and a
report of a rare tornado touching down east of Sumas, near the Canadian
border. About 200,000 homes and businesses lost power at the height of
the storm Tuesday, April 27, when sustained winds of 45 mph buffeted the
region. Mike Thorne of the Snohomish County Public Utilities District
said about 40,000 customers were still without power Wednesday.
Spokesperson Tim Bader or Puget Sound Energy said it had about 12,000
customers without service, down from about 50,000 outages at the
storm\'s peak. About 9,900 customers lost power in Seattle City Light\'s
coverage area and another 5,600 customers were out in Tacoma,
spokespersons said.\
Source: [http://www.kgw.com/sharedcontent/APStories/stories/D827QTCG0
.html](http://www.kgw.com/sharedcontent/APStories/stories/D827QTCG0.html)

####### 

#### High Loads for Electricity in West

"Load is going off the charts,\" one dealer said, noting temperatures
were expected to soar, sparking heavy use of air conditioning systems.
The heatwave was expected to spread across California and the desert
Southwest. The Weather Channel forecast that Las Vegas, Nevada, and
Fresno, California, would both peak at 98 degrees F on Monday, sharply
up from anticipated highs of 82 degrees and 87 degrees respectively on
Friday. Dealers said the ability of suppliers in the Pacific Northwest
to ship power south on Monday to meet the expected surge in loads would
be restricted by an expected derating, or reduced power, on the AC
Pacific Intertie. Southbound capacity on the AC line, a key link between
the Northwest and California, is due to be limited to 2,900 MW for most
peak hours on Monday, down from a normal maximum of around 4,800 MW.

Reuters, 1352 April 30, 2004

####### Petroleum

**Citgo Texas Refinery Unit Shut Yesterday, State Says**

Citgo Petroleum Corp., a subsidiary of Venezuela\'s state oil company,
shut a gasoline-producing unit at its refinery in Corpus Christi, Texas,
yesterday following an electrical problem, state regulators said. An
electrical short in a compressor control panel led to the shutdown of
the refinery\'s No. 2 fluid catalytic cracker, the Texas Commission on
Environmental Quality said on its Web site. The Corpus Christi refinery
can process about 157,000 barrels of crude oil a day.

Bloomberg News, 1101 April 30, 2004

**BP\'s Texas City Damaged Reformer Seen Out 2 Months**\
A reformer damaged late last month by a fire at BP\'s 470,000 barrels
per day (bpd) Texas City oil refinery will be out for at least two
months, an industry source said on Friday. \"Damage to the reformer was
significant,\" said a source with knowledge of the refinery\'s
operations. He said BP will most likely replace the entire unit.
Reformers boost octane in gasoline. The source said the effect of the
outage on production could be mitigated by giving heavy naphtha to
nearby refineries run by other companies. Those refiners could then sell
it back to BP Texas City to make blendstocks for gasoline. \"That\'s not
the optimum financial thing to do, but it limits production impact,\"
said the source. Besides the damaged unit, the refinery has one other
reformer. The units had a combined capacity of 138,000 bpd.
<http://biz.yahoo.com/rc/040430/energy_bp_texascity_1.html>

**Highway near Texas refinery to shut on terror fear**\
A one-mile stretch of highway that passes within feet of a major Texas
refinery will be permanently closed to safeguard the facility against a
possible terrorist attack, state officials said on Friday. No threats
have been made against the 223,000 barrel per day ConocoPhillips
refinery in Sweeny, Texas, or the Chevron Phillips Company L.P. chemical
plant on the other side of the two-lane highway called Farm to Market
Road 524. But last month, the U.S. Federal Bureau of Investigation
warned Texas refineries of a possible attack before the November
elections. An FBI security task force has recommended permanently
closing the portion of the roadway by the refinery, according to the
company. <http://biz.yahoo.com/rc/040430/security_refinery_1.html>

#### Natural Gas 

**Inconsistent Quality of Natural Gas Raises Safety and Reliability
Concerns**

It used to be that natural gas producers would strip out traces of
propane and butane before piping the desired fuel −− primarily methane
−− to power plants and utilities. The impurities were actually worth
more than the natural gas itself, so collecting them gave producers a
nice side business. However, currently with gas supplies tight and
valued at twice their historical average, many producers want to pump as
much as they can −− impurities included. The result is a fuel cocktail
that many power plants and home appliances weren\'t designed to handle,
presenting a number of safety, environmental and reliability concerns.
Industry officials frustrated by the increasingly inconsistent quality
of natural gas have warned federal regulators about potentially
dangerous levels of carbon

monoxide emissions in homes, increased pollution from power plants and
needless wear and tear on gas turbines and home appliances. Several
industry officials said it is too soon to know just how widespread and
severe the problems may be. However, around the country power producers
and utilities are facing higher maintenance costs and have, at times,
been forced to cut off service to clean equipment.

http://www.mlive.com/newsflash/business/index.ssf?/newsflash

/get_story.ssf?/cgi−free/getstory_ssf.cgi?f0169_BC_NaturalGa

s−QualityCon&&news&newsflash−financial

**Homeland Security Confirms Illegal Aliens, Drugs and Possible
Terrorist Ties to LNG Tankers**\
The federal government has known for several years that illegal aliens
smuggling drugs have stowed away on Algerian-flagged liquefied natural
gas (LNG) tankers entering Boston Harbor, and had \"some suspicion of
possible associations\" between the stowaways arriving in Boston and the
terrorists indicted for their role in the so-called \"Millennium Plot\"
to blow up Los Angeles International Airport and other U.S. landmarks,
an official with the Department of Homeland Security said. Natural Gas
Intelligence, April 29,2004

####### 

####### Other

**Baker Hughes-US rig count up 15, Canada up 25**\
The number of rigs searching for oil and gas in the United States rose
by 15 to 1,161 last week, oil services firm Baker Hughes said on Friday.
During the same week last year, there were 1,001. The number of rigs
exploring for oil and gas in Canada rose 25 to 155 compared to 110 last
year. <http://biz.yahoo.com/rc/040430/energy_rigs_bakerhughes_1.html>

**New Ship Security Regulations Could Impact Jet Trade**

*A significant chunk of the world\'s tanker fleet \-- including clean
product tankers used for transporting jet fuel \-- could be excluded
from the spot charter market if ship security fails to improve ahead of
the Jul. 1 deadline established in the wake of the Sep. 11 attacks. Less
than 4% of the world\'s eligible shipping fleet \-- including dry cargo
vessels as well as oil tankers \-- had been issued with the necessary
certificate by the start of this month.
<http://www.energyintel.com/PublicationHomePage.asp?publication_id=7>*

**Largest utilities agree to SERC\'s reliability enforcement plan**

The Southeastern Electric Reliability Council said Thursday that
utilities representing about two-thirds of the generation, transmission
and load within the SERC region have signed a \"regional compliance and
enforcement program\" that requires participants to face penalties for
non-compliance with certain electric reliability standards adopted by
the North American Electric Reliability Council. SERC Chairman Terry
Boston said that he believes that

enforceable reliability standards \"are an enhancement to the SERC
processes, and serve to minimize the possibility of system
disruptions.\" He added, \"In light of the Aug 14, 2003, blackout and
the various initiatives to further

strengthen reliability, we believe SERC should take on a leadership role
in implementing the RCEP.\" SERC utilities that have signed the RCEP
agreement and are participating in its immediate implementation include
the largest in the 13-state SERC region: Duke Power, Entergy, Southern
Company, the Tennessee Valley Authority, and Dominion.
[http://www.platts.com/Electric%20Power/News/5055624.xml?S=n](http://www.platts.com/Electric Power/News/5055624.xml?S=n)

**Key companies, organizations urge passage of energy tax package**

Over 100 energy companies, organizations and other businesses Friday
asked the US Senate to approve legislation providing for about \$14-bil
in energy industry tax incentives over the next ten years. In a letter
to Senate leaders, the companies and organizations\--including the
Edison Electric Institute, PacifiCorp, Wisconsin Energy and MidAmerican
Energy Holdings---said prompt passage of the legislation, part of the
broad corporate tax bill, S

1637, \"is vital for supporting continued economic growth\" and
addressing the country\'s energy supply needs. The bill heads to the
Senate floor Monday. Supporters acknowledged numerous amendments
threaten passage of the measure, but asked lawmakers to work together.
\"With every month that passes without passage of energy tax
legislation, the energy industry faces continuing uncertainty and
disincentives to investing in areas such as renewable energy, energy
efficiency and new technologies,\" the companies and organizations said.
[http://www.platts.com/Electric%20Power/News/2587910.xml?S=n](http://www.platts.com/Electric Power/News/2587910.xml?S=n)

**The Cost of Coal** An announcement by Xcel Energy may be a harbinger
of things to come. The Minneapolis-based utility says that it expects a
"significant portion" of its new generation to be coal-fired, all to
combat the high price of natural gas and to grow its asset base that
will help improve its credit ratings. The nation must pursue a pragmatic
energy policy. A real question exists as to whether gas producers will
gain more access to restricted lands and whether the wells they drill
will satisfy America\'s long term energy needs. Given that dilemma and
given that the United States has vast coal reserves, many energy
analysts are endorsing the advancement of clean coal technologies. "Not
only do we anticipate increased demand, we also see a need for more
base-load generating capacity on our system," says Wayne Brunetti, CEO
of Xcel. "Coal-fired generation helps us meet those needs in a very
cost-effective way. Base-load units cost more to construct, but they
produce energy at a much lower cost because the price of fuel---which is
coal---is low.\'\' According to UtiliPoint statistics, more than 80 coal
plants with a total capacity of 40 gigawatts are now under
consideration. Coal, at about a third of the cost of natural gas, has
200 years worth of reserves. When the price of natural gas is three
times that of coal, it becomes economically feasible to build coal-fired
facilities. Such facilities require that expensive pollution controls be
installed, which means they are more costly and more time-consuming to
build than gas-fired plants that get relatively easy regulatory
approval. The Energy Information Administration (EIA) now projects that
coal will actually increase its share of the U.S. electricity generation
market from 50 percent in 2002 to 52 percent by 2025. This year, as the
economy gathers steam, the demand for power is expected to grow 2.4
percent annually.\
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZijfgnmkUUokt9K%22bfej%5Bv](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZijfgnmkUUokt9K"bfej%5Bv)

**St. Lucie Nuclear Plant Guards Removed from Duty**

Six security guards and a supervisor have been removed from duty at the
St. Lucie Nuclear Plant after a Florida Power & Light Co. audit found
the guards failed to complete their patrols, a Wackenhut Corp. official
said Tuesday, April 27. The audit revealed the guards skipped parts of
their rounds at the plant, and took shortcuts during patrols designed to
detect and prevent fires. FPL launched its audit in March, after a
security officer told plant managers certain guards were not completing
their patrols, said FPL spokesperson Rachel Scott. FPL examined computer
records tracking the location of guards and discovered some had not
covered all their assigned areas. Scott said FPL had \"no tolerance\"
for such oversights. Because the plant uses many different security
measures, including electronic and video surveillance, Scott said the
lapses did not compromise security. Since March, FPL has installed a
more sophisticated patrol-monitoring system that tracks the location of
guards in real-time. It also clarified its expectations and requirements
of Wackenhut guards, Scott said. The St. Lucie Nuclear Plant is located
near Ft. Pierce, FL.\
[*http://www.tcpalm.com/tcp/local_news/article/0,1651,TCP_1673
6_2842623,00.html*](http://www.tcpalm.com/tcp/local_news/article/0,1651,TCP_16736_2842623,00.html)

**Arch Coal Terminal Completes Expansion: State-of-the-Art Terminal Now
Includes Custom Blending Capabilities** rstCall/ \-- Arch Coal,
Inc.today announced that its Arch Coal Terminal, located at Milepost 6.8
LDB on the Big Sandy River in Catlettsburg, Ky., has recently completed
an expansion effort. The expanded shipping facilities include a barge
unloading system that allows Arch to offload 600 tons of coal or other
bulk materials per hour. The enhancements also include the availability
of custom coal blending services for Arch and other companies.
<http://biz.yahoo.com/prnews/040429/cgth057_1.html>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (4        | Ago**     | Ago**      |
|                               | /30/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 37.31     | 37.22     | 26.09      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.81      | 5.53      | 5.25       |
|                               |           |           |            |
| **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