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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### April 27, 2004

**Electricity**

#### 

#### Tractebel\'s Ennis in ERCOT tripped late Monday The plant has since recovered and is running near 300 MW early Tuesday. Genscape Overnight Update, April 27, 2004

**U.S. West Spot Power up Sharply Yesterday, Heat Boosts Loads**

A scorching heat wave in California sparked a sharp rise in spot power
prices Monday with heavy air conditioning-driven demand anticipated.
\"There are record temperatures everywhere and I think there is still a
lot of stuff (power plants) out right now,\" one dealer said, saying
many plants in the region remain down for spring maintenance. The
California Independent System Operator issued a system warning notice
and asked plant operators to restrict maintenance operations in a bid to
keep as many units as possible on-line to meet the expected surge in
demand. A spokesman for the ISO said loads have also been running higher
than had been expected this year. \"When you factor in the temperatures
and everything else the load has been considerably higher than
anticipated,\" said ISO spokesman Gregg Fishman. The Weather Channel
forecast Fresno in central California would peak at 97 degrees F on
Monday, breaking a record for the date of 93 degrees set in 1973. On
Tuesday, a peak of 96 degrees was forecast.

Dealers said strong loads in California had led to congestion on
virtually all the major transmissions lines that carry power into the
state.

Reuters 1338 April 26, 2004

#### New England has Enough Electricity for the Summer

Electric grid operator ISO New England said Monday its six-state region
would have enough power supplies for the summer air conditioning season.
As in years past, however, the ISO warned transmission constraints in
the heavily populated New York suburbs of southwest Connecticut could
require the grid operator to take certain steps to help maintain
reliability in that area. In the past, those steps have pleas for public
conservation, voltage reductions and warnings of rotating blackouts.
\"Southwest Connecticut has limited generating supply and often
experiences transmission constraints that can make it difficult to
import all the power needed,\" said Stephen Whitley, ISO New England\'s
senior vice president and chief operating officer.

Reuters, 1318 April 26, 2004

####### 

####### 

####### 

####### Petroleum

**Valero Shut Texas City Refinery Unit Yesterday**

Valero Energy Corp., the third largest U.S. refiner, shut a unit at its
refinery in Texas City, Texas, yesterday, the Texas Commission on
Environmental Quality said. The crude distillation unit, which heats raw
crude oil and

divides the ingredients according to temperatures at which they boil in
the early phase of the refining process, experienced an \`\`unexpected
shutdown,\'\' according to a report Valero filed with the commission.
The shutdown resulted in flaring of pollutants into the air from 9:45
a.m. to 12:45 p.m. local time yesterday, the report said. The refinery
can process 243,000 barrels of oil a day, according to San Antonio-based
Valero\'s Web site. Valero spokeswoman Mary Rose Brown said a \`\`heater
trip\'\' caused the company to operate the crude unit at reduced rates
for a few hours. She said there was no impact to refinery production,
according to an e-mailed statement.

Bloomberg News, 1056 April 27, 2004

**Valero Shut Ardmore, Oklahoma, Refinery Unit Today for Repairs**

Valero Energy Corp., the third largest U.S. refiner, shut a unit at its
refinery in Ardmore, Oklahoma, earlier today for repairs. The fluid
catalytic cracker, which processes vacuum gasoil into gasoline or
lighter products, was shut after the discovery of a leak in a steam
generator, Valero spokeswoman Mary Rose Brown said in an e-mailed
statement.

Bloomberg News, 1637 April 27, 2004

**NYMEX Oil Ends Sharply Up as Gasoline Hits New High**

NYMEX crude oil futures rallied for a second straight session Tuesday on
concerns about potential supply disruptions, refinery outages, and amid
violence in the Middle East and worries over gasoline supplies in the
United States. NYMEX June crude settled 56 cents or 1.5 percent higher
at \$37.53 a barrel after moving between \$37.21 and \$37.70, setting a
fresh contract peak that was the loftiest price in a week. It traded as
low as \$37.21 earlier. In London, IPE June Brent settled 70 cents or
2.1 percent higher at \$34.28 a barrel, after extending gains to a fresh
post-Iraq War peak of \$34.45. It bottomed at \$33.55 in the early
going. NYMEX May gasoline futures hit another record all-time high of
\$1.2075 a gallon, up 2.53 cents or 2.1 percent, before settling 2.45
cents or 2 percent higher at \$1.2067.

Reuters 1513 April 27, 2004

OPIS Alert, 1516 April 27, 2004

**Giant's Ciniza Rack to Undergo 8-Hour Shutdown** Giant\'s Ciniza,
N.M., rack will be down completely for maintenance from 7 a.m. MDT to 3
p.m. MDT on Wednesday, April 28. Shell told its customers to use
alternate terminals while the rack is down. Very little product is
available to begin with due to the shutdown of Giant's Ciniza refinery.
The refinery suffered a fire early this month and then went into a
30-day turnaround a little earlier than it had planned. The refinery
will be down until mid-May. There is a small volume of product available
from inventories in the terminal and from Giant\'s Bloomfield, N.M.,
refinery, sources said. OPIS Alert, 1652 April 27, 2004

**Saudi Arabia would consider JVs for new US refineries: Naimi**

Saudi Arabia would consider joint ventures as part of its proposal to
build two 500,000 b/d refineries in the US, Saudi Oil Minister Ali Naimi
said Monday. \"We will do it 100%, joint-ventures \-- whatever mode is
appropriate\"

for such construction,\" he said in response to a reporter\'s question
following a forum in New York. Naimi added, however, that it was too
soon to say where the refineries would be constructed or to provide
other details on the

proposal. Naimi also indicated that he had been misquoted last week in
saying that two 250,000 b/d refineries were planned. He said the target
sizes had always been 500,000 b/d. He added that the Saudis estimate a
US refining

capacity shortage of 1-mil and 1-mil b/d. Naimi had announced Saudi
Arabia\'s interest in building the refineries during the forum. Despite
the Saudi proposal, there has not been a grassroots refinery built in
the US several decades.

<http://www.platts.com/Oil/News/7531540.xml?S=n>

**Saudi Refinery Offer Welcome, but Larger Problem Would Remain: US**

A Saudi offer to build two 500,000 b/d refineries in the US is \"very
welcome,\" but would not address gasoline market constraints caused by
stringent blend specifications that vary by region, a US energy official
said Tuesday.

Kyle McSlarrow, US deputy energy secretary, said the additional refining
capacity would help in instances when unit outages at existing plants
cause product supplies to tighten. \"We are in such a constrained market
that if anything happens, we don\'t have excess refining capacity,\" he
said at a Center for Strategic and International

Studies forum on US-Saudi relations. But the Saudi offer, which Oil
Minister Ali Naimi revealed last week in

Dallas, would not address problems that arise due to the varied
cleaner-burning gasoline specifications in the US, according to
McSlarrow. The potential for supply shortages and higher prices exist,
in large part, because gasoline used in some parts of the US cannot be
used in other regions due to the varied blending specifications. Naimi,
at the same forum earlier Tuesday, reiterated that Saudi Arabia stands
ready to build the refineries alone or as part of a joint venture. He
provided no other details about the plan. No grassroots refinery has
been built in the US in decades. \"We will do our best to get the
permit(s) and proceed,\" Naimi said. McSlarrow, though, differed from
Naimi and other OPEC ministers who have said repeatedly that current
high world crude prices are due in large part to US refining bottlenecks
and stringent gasoline specifications. McSlarrow simply turned that
around and blamed high gasoline prices on high crude prices.

<http://www.platts.com/Oil/News/6863210.xml?p=Oil/News&S=n>

#### OPEC May Raise Price Band Based on Inflation, US\$ Value: Purnomo

OPEC is considering raising its price band above \$22-28/bbl, based on
inflation and the rate of US dollar depreciation, OPEC President Purnomo
Yusgiantoro said Tuesday. \"OPEC research and development team is
studying the new price range. Some members believe the band should be
changed because of inflation and US dollar depreciation,\" Purnomo said.
\"The current price base was set up in 2000 and is not appropriate
anymore,\" he said. Purnomo said he personally thought that the price
band should be raised. He further said any increase in price band would
not harm the world economy. \"The current oil price at about \$32-34/bbl
is still safe for the economy,\" Purnomo said. Asked about the
possibility of raising the OPEC price band to \$25-32/bbl Purnomo said:
\"The possibility is there if OPEC were to consider inflation and US
dollar depreciation. I think the OPEC price band will be raised, but I
don\'t know the exact level because OPEC is still studying
possibilities.\" <http://www.platts.com/Oil/News/5480477.xml?S=n>

**Recent OPEC Output "Cut Not a Move to Abandon Price Band": Naimi**

OPEC\'s decision to implement a 1-mil b/d cut in its formal output
ceiling from April 1 was \"not a move to abandon\" the cartel\'s
\$22-\$28/bbl price band, Saudi Arabian Oil Minister Ali Naimi said
Tuesday. Naimi, in a speech to the Center for Strategic and
International Studies, also said OPEC\'s target price continued to be
\$25/bbl, which he said was fair for producers and consumers. Apart from
dipping below \$28/bbl on two separate days, the OPEC\'s basket has
remained above the target range since Nov 7, 2003. The basket of seven
crudes rose 29 cents Monday to 32.87/bbl. Though not an automatic
mechanism, the band provides OPEC with a guide under which it could
raise production by 500,000 b/d if its basket stays above \$28/bbl for
20 consecutive trading days and cut output by the same amount if the
basket falls below \$22/bbl for 10 straight business days. Naimi also
Tuesday reiterated that there was no shortage of crude on the market,
saying high prices were due in part on a tight US gasoline market,
market speculation, and regional political instability.

<http://www.platts.com/Oil/News/5397559.xml?p=Oil/News&S=n>

**ChevronTexaco halts Wales refinery unit**\
U.S. oil major ChevronTexaco has stopped production from its
32,500-barrel-per-day alkylation unit at its 210,000 bpd Pembroke
refinery in Wales, gasoline traders said on Tuesday. The unit produces
alkylate, a key component in gasoline production. The halt in production
was unscheduled and it was unclear what caused the problem, traders
said. A ChevronTexaco spokeswoman said that the company could not
comment on refinery operations, but said that there had been no
disruption to supply. Gasoline cargo loadings from the refinery have not
been interrupted, one trader said. Traders said that the problem may
have been dogging the refinery for a few days. One trader said that
ChevronTexaco is expected to complete repairs at the refinery by Friday.
The Pembroke refinery exports gasoline to the United States. It is one
of the few European refineries capable of making the tough new
specification gasoline used in the states of New York and Connecticut.
<http://biz.yahoo.com/rc/040427/energy_gasoline_refinery_1.html>

#### Natural Gas 

**US Needs Major LNG Import Capacity Boost to Access Gas: Greenspan**

The U.S. natural gas market requires a \"major\" expansion of LNG import
capacity in order to access world gas supplies and mirror the supply
flexibility found in oil markets, US Federal Reserve Chairman Alan
Greenspan said Tuesday. Greenspan, in a speech to the Center for
Strategic & International Studies in Washington, noted existing
proposals for LNG terminals in the US \"bode well\" for long-term gas
supplies. \"These movements bode well for widespread natural gas
availability in North America in the next decade and beyond,\" he said,
according to a transcript. \"The near term, however, is apt to continue
to be challenging.\" That challenge is ensuring the North American gas
market works in a similar fashion to oil markets insofar as tapping
foreign supplies when

domestic output does not meet demand. \"Markets need to be able to
adjust effectively to unexpected shortfalls in domestic supply in the
same way that they do in oil,\" he said. \"Without the flexibility (LNG)
facilities impart,

imbalances in supply and demand must inevitably engender price
volatility.\"
[http://www.platts.com/Natural%20Gas/News/1815793.xml?S=n](http://www.platts.com/Natural Gas/News/1815793.xml?S=n)

####### Other

Nothing to report.

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (4        | Ago**     | Ago**      |
|                               | /27/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 37.55     | 37.61     | 25.92      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.81      | 5.46      | 5.39       |
|                               |           |           |            |
| **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