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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

**January 6, 2004**

**Electricity**

**Peak Demand in Pacific Northwest Close to Four-Year High Yesterday**
According to a Northwest dealer "Yesterday we probably had the peak load
for the last four years or so\..." Temperatures were expected to rise a
bit today easing the demand for natural gas to produce electricity.
Reserves of electricity were lowest in the California/Mexico area of the
region with reserves at 8.7% (3,349 megawatts) yesterday. Estimates are
reserves will be 10% for the Pacific Northwest today and 9.4% for the
California/Mexico region. Reserves in California/Mexico yesterday were
down to 3,349 megawatts due to extremely high peak demand and additional
outages and curtailments of 1,461 megawatts from Monday. Reuters 1405
January 6, 2004

**Perry 1 Nuke Plant Reduces Power Again**

# FirstEnergy Corp.\'s 1,320 megawatt Perry nuclear unit in Ohio which had ramped back up to 94% yesterday, tripped overnight and is back up to 76% power today. Bloomberg News 0814 January 6, 2004 Genscape Overnight Update January 6, 2004

**Campbell Plant in ECAR Trips Overnight** The plant tripped overnight,
but was running near 450 megawatts by early today. Genscape Overnight
Update, January 6, 2004

**Basin Electric Power Brings Antelope Valley Plant Back on Line** Basin
Electric Power's Antelope Valley 450 Megawatt power plant was brought
back on line today helping to ease the electricity demand in the
Midwest. Genscape Overnight Update, January 6, 2004

**Coal-fired Laramie River Plant has Outage** Extremely cold weather and
an unplanned outage at Missouri Basin Power Project's 550 megawatt
Laramie River plant unit 1 in Wyoming crimped electricity supplies in
the Midwest yesterday. Reuters 1225 January 6, 2004

**Bonneville Power Completes Power Line into Wash.'s Puget Sound**
Bonneville Power Administration finished a needed \$40 million power
line in Washington state's growing Puget Sound just in time to meet
record high demand. The Kangley --Echo Lake line went into full
operation on December 31. Reuters 0910 January 6, 2004

**Oconee-1 Declares End to Unusual Event** Duke Power\'s Oconee-1 exited
an unusual event Jan. 2, a day after it was declared due to unidentified
reactor coolant system (RCS) leakage. The \"small\" leak of about 14
gallons per minute was detected as coming from a relief valve on the
pressurizer sample line on the RCS. Workers isolated the valve and made
repairs, he said. Oconee-1 is expected to end its refueling outage soon.
An unusual event is the lowest level of NRC\'s four categories of
emergency preparedness. <http://www.platts.com/stories/nuclear2.htm>

**Petroleum**

**NYMEX Crude Hits 9-Month High Today** Crude oil was little changed
after touching a nine-month high on speculation that colder-than-normal
temperatures in the U.S. Northeast and Midwest will boost consumption of
heating fuels and drain oil inventories. With the price of natural gas
so high as well, some analysts expect to see some fuel switching away
from natural gas and to petroleum products. Bloomberg News, 1441 January
6, 2004

**EPA Exempts California Phase 3 RFG from Many Federal Requirements**

The US Environmental Protection Agency has extended for a year
enforcement discretion related to California Phase 3 reformulated
gasoline, exempting the fuel from many of the federal RFG gasoline
reporting and record keeping provisions. The exemptions are intended to
reduce the burdens associated with overlapping California and federal
regulations. The Phase 3 requirements, which were developed separately
from the state ban on the oxygenate MTBE, became effective Jan 1. The
state\'s earlier clean burning gasoline, Phase 2 CaRFG, was exempt from
the same federal RFG provisions under a previous EPA rule, and
California officials had requested that the enforcement exemptions be
extended to Phase 3 CaRFG. EPA initiated a rulemaking process in 2001
exempting Phase 3 CaRFG. <http://www.platts.com/stories/oil4.html>

**Marathon Ashland Petroleum Recalls Tainted Kerosene\
**Marathon Ashland Petroleum (MAP) customers that pulled kerosene from
the Cincinatti, Ohio, terminal over the past month may have received a
tainted product that could cause a fire if used in a heater. MAP advised
customers this week of a recall of kerosene that was mixed with gasoline
and sold at the terminal between Dec. 1 and Jan. 4. The fuel was then
delivered to points in Dayton and Cincinnati, Ohio, and Northern
Kentucky and Southeast Indiana. MAP is still investigating the latest
problem, and has so far identified six locations that received bad
kerosene in Ohio: Mount Orab Marathon, Mount Orab; Marathon Colony Food
Mart, Oxford; H Sardinia Fuel Mart, Sardinia; Speedway, Amelia; Sunoco,
Dayton; Sunoco, West Milton. Customers should not use kerosene that
smells like gasoline, or has any strange burning properties, in heaters
or any other application. Fire or explosion may result from use, MAP
warns. OPIS Price Watch Alert January 6, 2004

**US Govt Still Adding to Strategic Petroleum Reserve Despite High Oil
Prices** The U.S. Government's insistence to continue adding 100,000
barrels per day of crude oil to its Strategic Petroleum Reserve (SPR)
--- while commercial stocks are below historic averages and the crude
market is tight --- is drawing heavy criticism from analysts who claim
that the US government is to blame for 20-year high US crude prices last
year. Other analysts conclude that the wellflagged additions to the SPR
at best would have a slight psychological impact on the market, but a
minimal effect on oil prices as the SPR volumes are too small and
represent only one facet of a whole spectrum of factors determining oil
prices.

The four underground SPR storage facilities in Texas and Louisiana added
another 38 million barrels, or 104,000 b/d, to 636 million bbl in 2003,
while total stocks held by commercial firms dropped 26 million bbl to
929 million bbl, or a fall of 72,000 b/d. Oil Daily January 6, 2004

**Colonial Pipeline Extends Allocation of TX-NC Distillate Line to 2^nd^
Cycle** Colonial Pipeline C. said on Monday it will continue to allocate
its Texas to North Carolina distillate line on the second cycle as
demand from the Northeast continues to outpace capacity. There are no
allocations on the gasoline line. Reuters 1530 and 1539 January 5, 2004

**Natural Gas**

**US Henry Hub Gas Hits 10-month Peak on Cold** U.S. benchmark Henry Hub
natural gas prices soared Today to a 10-month high on cold Northeast and
Midwest weather that has pushed nearly all U.S. energy prices sharply
higher the past two days traders said. Gas for Wednesday delivery went
up 76 cents or 12 percent to \$7.04 per million Btu. The price jumped 9%
yesterday. Reuters 1438 January 6, 2004

**Shell Starts Production from Gulf of Mexico Field** Shell Exploration
& Production Co., a unit of Royal Dutch/Shell Group, on Monday said it
started production from subsea wells in its Princess field in the Gulf
of Mexico last month. Princess, located 140 miles southeast of New
Orleans on Mississippi Canyon Blocks 765 and 766, currently is producing
9,000 barrels of oil and 15 million cubic feet of natural gas per day.
Peak production for the project\'s initial stage of development is
estimated to be 55,000 barrels of oil and 110 million cubic feet of gas
per day. Shell, operator and 45 percent owner of the project, estimates
Princess has 175 million barrels equivalent of recoverable oil and gas.
Co-investors are BP Plc, 23 percent; Exxon Mobil Corp. , 16 percent; and
ConocoPhillips , 16 percent. The initial phase consists of one well on
Shell\'s Ursa tension leg platform and an expandable, three-well subsea
system tied back to Ursa. The Ursa well began production in the fourth
quarter of 2002. Reuters January 6, 2004

**Other News**

**Arizona Has A New Pipeline Policy**

The Arizona Corporation Commission (ACC) started the year with a new
cost-recovery policy for building new pipelines or storage capacity to
serve the robust growth in Arizona natural gas markets. The ACC hopes
the pre-approval mechanism for cost recovery will incite utilities to
invest in the infrastructure needed since past development efforts have
yet to materialize desired results for current and future markets. The
ACC said the state needed the policy to address volatile natural gas
prices, growing demand from all sectors, expected additions of several
new gas-fired power plants, future supply concerns and infrastructure
security interests. The policy encourages utilities to possess a
diversified portfolio, including the consideration of natural gas
storage facilities and their participation in new interstate pipeline
development. The state lacks any natural gas storage and the ACC also
has concerns about recent federal limitations placed on traditional
Arizona shippers on the El Paso pipeline system. Arizona natural gas
markets depend heavily on imports via the El Paso and Transwestern
interstate pipelines. The systems support Arizona's expanding industrial
and commercial operations and growing electricity markets, but with
little competition or assurance that future natural gas demand needs can
be met, according to ACC. Oil Daily, January 6, 2004

**Midwest ISO and PJM File Operating Agreement with FERC**

The operators of the U.S. Midwest and Mid-Atlantic power grids filed a
joint operating agreement with the Federal Energy Regulatory Commission
on Wednesday, December 31, which had been put on hold following the
August 14 blackout. The Midwest ISO, the Midwest grid operator, and PJM
Interconnection, the Mid-Atlantic grid operator, said in a joint
statement they expect the agreement will allow the reliable flow of more
power between the regions, covering 22 states from Montana to the East
Coast and part of Canada. Under the agreement, the operators will
exchange more information about the movement of power, improve
communications, and enhance joint emergency plans.

<http://hsweb01.screamingmedia.com/PMA/pma_newsarticle1_reuters.htm?SMDOCID=reuters_pma_2003_12_31_eng-reuters_pma_MIDWEST-ISO-PJM-FILE-OPERATING-AGREEMENT-WITH-FERC&SMContentSet=0>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (         | Ago**     | Ago**      |
|                               | 1/6/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 34.14     | 32.84     | 32.13      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 7.05      | 5.96      | 4.94       |
|                               |           |           |            |
| **Henry Hub**                 |           |           |            |
|                               |           |           |            |
| \$/Million Btu                |           |           |            |
+-------------------------------+-----------+-----------+------------+

> Source: Reuters, Wall Street Journal

**This Week in Petroleum** from the Energy Information Administration
(EIA)

<http://tonto.eia.doe.gov/oog/info/twip/twip.asp>

Last Updated on December 31, 2003

**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)

Last Updated on December 29, 2003