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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### March 25, 2004

**Electricity**

**MidAmerican Coal fired Generating Facility Trips Off-Line**

At approximately 5:28 am EST 3/25/04, Genscape's system identified that
MidAmerican Energy\'s coal fired generating facility in Council Bluff,
IA tripped off-line. Confirmation from a third party source indicates a
mechanical failure on its 841 MW unit 3. Third party source indicates a
return to full service today 3/25/04.

Genscape Alert Update, March 25, 2004

**Petroleum**

**FBI warn of attacks on refiners; reaction muted**

The FBI said on Thursday it had given Texas oil refiners a new warning
about possible terror attacks coinciding with U.S. elections in
November, but reaction from the industry and world oil markets was
muted. The advisory, issued on Tuesday, was based on "very raw
intelligence" from overseas sources, said Bob Doguim, spokesman for the
Houston FBI office. "It was specific only to the extent that it was oil
refineries and Texas," Doguim said. "Beyond that it is really very vague
and we haven't been able to corroborate it yet." Nonetheless, refiners
were warned because it was "the responsible thing to do," he said. A
petroleum industry source who has seen the notification said, "The alert
mentioned threats to pipelines and facilities in Texas to coincide with
the election in November." The source said there have been at least a
half dozen of these types of warnings from the FBI in Texas since last
summer.

Reuters, March 25, 2004, 1404

**Shell Urged to Keep Bakersfield Refinery Open**

It is big ticket gas prices and short-term supply issues that have held
the attention of Californians lately - not the Shell Bakersfield
refinery closing, which is nearly seven months away. But attendees at a
meeting last night in Bakersfield revived the topic with many urging
Shell to keep the refinery open, or at least postpone the closing beyond
a planned date of Oct. 1. If Shell shutters the 65,000 b/d refinery next
fall, the Bakersfield area will face a very serious supply shortage,
some warned. The closing will take 25,000 b/d of mostly diesel fuel out
of the South Central Valley. And although Shell has promised to take
care of branded customers after the shut down, out of an adjacent
terminal, details have not been provided yet, and Shell has not
commented on how it plans to make up unbranded volumes for its unbranded
customers.

OPIS Alerts, March 25, 2004

#### Natural Gas 

**Texas Gas Drilling Highest in 30-Year Record**

Responding to strong demand, Texas gas drillers completed 680 wells
during February, the highest number in more than 30 years. "As demand
increases for clean-burning natural gas in generating electricity and
heating throughout our country, the Texas oil and gas industry has had
to increase drilling in order to maintain reasonable prices for
consumers," Texas Railroad Commissioner Charles Matthews said. Texas
accounts for about 30 percent of total U.S. production at 5.7 trillion
cubic feet per year, the commission said. The state also is the largest
consumer, using 3.9 trillion cubic feet annually. Gas production figures
haven\'t risen yet, although Matthews predicted an increase in
production should follow the increase in well completions.

Associated Press, March 24, 2005

<http://www.miami.com/mld/miamiherald/business/8265546.htm>

**MidAmerican Withdraws Alaska Pipeline Application**\
Warren Buffett\'s MidAmerican Energy Holdings on Thursday said it
withdrew an application that would have set in motion its plan to
construct a \$6.3 billion pipeline to transport natural gas reserves
from Alaska to the continental United States. The Berkshire Hathaway
Inc.unit said the state of Alaska was unable to agree to terms that
would have allowed it to work on an accelerated schedule including an
exclusive five-year development period. Proponents say a pipeline is
necessary because U.S. natural gas production continues to shrink as
demand for the fuel climbs. By 2010, the supply gap could double to 20
billion cubic feet a day, analysts say. MidAmerican jumped into the fray
in January, surprising investors with a proposal to build a 745-mile
(1,200-km) pipeline from the North Slope to the Yukon border by December
2010. As part of that deal, TransCanada Corp.would have built a
companion link to Alberta\'s pipeline hub.
<http://biz.yahoo.com/rm/040325/energy_midamerican_3.html>

**Coast Guard Outlines Rigorous Oversight of LNG Safety**

Attempting to allay growing concerns over the vulnerability of liquefied
natural gas (LNG) tankers and facilities to terrorist attacks, a top
Coast Guard official Wednesday outlined before a Senate panel the Bush
administration's efforts to monitor and minimize the security risks. "I
think we have been very, very detailed, very, very rigorous in dealing
with the security risk," Coast Guard Commandant Thomas Collins assured
Sen. Ernest Hollings (D-S.C.) at a Senate Commerce, Science and
Transportation Committee hearing on maritime security. Hollings, the
ranking member, said he was "very disturbed" by the risk just one
container of LNG could pose, mentioning in particular the LNG traffic
coming into Boston harbor. Collins said the Coast Guard has "a very,
very strong security oversight program for that transit," including
those coming from Trinidad and Tobago. He said his agency coordinates
with companies and ships offshore and also provides escorts and sea
marshals in addition to air coverage when tankers move in and out of the
harbor. Collins also made it clear that the oversight is not restricted
to the Boston harbor alone, but also the Chesapeake Bay and Port Arthur,
Texas. There were multiple safety requirements for LNG facilities, he
asserted. Collins' reassurance comes on the heels of a controversial new
book by former Bush administration anti-terrorism chief Richard Clarke
regarding LNG shipments to Boston harbor. The book, Against All Enemies,
reveals that al Qaeda operatives had been traveling from Algeria to
Boston on LNG tankers.

The Oil Daily, March 25, 2004

**Book Details LNG Terror Risk Former Counterterrorism Chief Says Threat
of Massive LNG Incident in Boston Harbor Considered in Wake of Sept. 11
Attacks** Prior to the terrorist attacks of Sept. 11, 2001, senior Bush
Administration officials knew \"that al Qaeda operatives had been
infiltrating Boston by coming in on liquid natural gas tankers from
Algeria,\" according to a new book by former White House
counterterrorism chief Richard Clarke. The book further states \"we had
also learned that had one of the giant tankers blown up in the harbor,
it would have wiped out downtown Boston.\" The Mobile Register has also
discovered that LNG tanker simulator programs available for sale on the
Internet are designed to instruct crews in every facet of the operation
of LNG tankers. Terrorists who used these programs would be tutored in
all aspects of running the vessels, including controlling the valves and
gauges that regulate temperature and other critical factors that govern
the integrity of LNG storage containers on the ships. Clarke indicates
in the book that shutting down Boston Harbor was one of the
administration\'s first priorities after the terrorist-commandeered
planes hit the Twin Towers. He states that government officials learned
that al-Qaida operatives were entering the country on LNG tankers
\"after the Millennium Terrorist Alert\" in 2000. Federal officials have
confirmed that LNG tankers sailing from Algeria were banned from Boston
Harbor prior to Sept. 11, according to a report this week by the Boston
Globe. Tankers sailing from Algeria still arrive at an LNG terminal in
Cove Point, Md., which is three miles downriver from a nuclear power
plant. Federal security officials told the Globe that they have taken
steps to prevent stowaways on board the LNG ships. Simulators designed
to teach all aspects of LNG tanker ship operation are widely available
over the Internet. One such simulator provides instruction on driving
the vessel as well as \"the layout of the tanks, pipelines, valves and
cargo handling machinery \... and cargo handling facilities in normal
and emergency modes.\" Scientists contacted by the paper said a
terrorist armed with such information would have a tremendous advantage
in terms of using an LNG ship to cause a catastrophic accident.
Clarke\'s statement about the devastation a terror attack on an LNG
tanker might cause in downtown Boston runs counter to numerous
statements from officials with the Department of Energy, the Department
of Transportation and the Federal Energy Regulatory Commission about the
dangers such a fire might pose. A controversial study performed by a
company called Quest Consultants Inc. and commissioned by the DOE after
the 2001 terror attacks suggests that such an LNG fire would be about
475 feet wide. Several leading LNG scientists familiar with these
government analyses said that a successful terror attack on an LNG
tanker could ultimately cause a fire more than a mile wide and so hot
that it would severely burn people two miles away. The status of two LNG
terminals proposed for Mobile Bay remains uncertain. ExxonMobil Corp.
has said it has put a facility planned for Hollingers Island, two miles
south of the city limits, \"on the back burner,\" but has not ruled out
the possibility of eventually building there.
<http://www.al.com/search/index.ssf?/base/news/1080123508102400.xml?mobileregister?nmet>

####### 

####### Other

**Shell, Libya in Oil and Gas Partnership**

Oil giant Royal Dutch/Shell seized on warmer ties between Libya and the
West to sign an industrial partnership with the oil-rich country on
Thursday, 20 years after the company stopped work there. Libyan
officials and the Anglo-Dutch group, whose move puts Libya back on the
radar for the world's top oil firms, said it was too early to talk about
specific deals. But officials accompanying British Prime Minister Tony
Blair on a landmark visit to Tripoli said Shell was on the verge of a
\$200 million natural gas project there. "We expect to sign exploration
agreements in the next few weeks, or one or two months," Shell's new
Head of Exploration and Production, Malcolm Brinded, told Reuters in
Tripoli. He said Tripoli had also been talking to potential partners in
the United States, including the president of Occidental, which opened
up an office in Tripoli earlier this month. A group of other U.S. firms,
called Oasis, is also keen to renew contracts on Libyan acreage, dormant
since U.S. sanctions isolated the nation in the 1980s. These are set to
expire next year.

Reuters, March 25, 2004, 1052

<http://biz.yahoo.com/rb/040325/britain_shell_libya_project_3.html>

**Detroit Edison Nuclear Plant Drill**

Detroit Edison employees are learning what to do in case of an emergency
at the Fermi Two nuclear power plant in Monroe County, OH. Public
information officials simulated an accident, then met 10 miles away at
Monroe Community College to gather the information and get it out the
public. Officials perform this exercise every two years, just to make
sure they're ready if the real thing ever happens. "Everybody out here
has a certain job, they're going to be practicing their job to make sure
they know what to do and they'll be evaluated on how well they do their
job," said Detroit Edison spokesperson Josh Henscheid. Officials from
FEMA and the Nuclear Regulatory Commission watched the exercise and
judged everyone's performance.

WTOL News 11, March 24, 2004

<http://www.wtol.com/Global/story.asp?S=1732355>

**US to Vet Foreign Ports Over Terror Law-Lloyds**

The U.S Coast Guard will conduct spot checks of foreign ports engaged in
international trade to make sure they comply with a maritime anti-terror
law due to be enforced globally on July 1, Lloyd's List reported on
Thursday. The industry newspaper cited Admiral Thomas Gilmour, assistant
commandant of marine safety and security, as saying that teams of U.S.
officials are expected to start the checks shortly after the deadline
kicks-in. The ports to be visited will be based on the number of ships
visiting them, the cargo volume traded and the "terrorism threat that
exists in the country," Lloyd's List quoted Gilmour as saying. The tough
new security rules, known as the International Ship and Port Facility
Security (ISPS) code, drawn up through the United Nations in December
2002, are mandatory for all the world's ports, oil and gas terminals and
merchant ships that engage in international trade. Industry and security
experts fear that nations, particularly in the developing world, are in
danger of missing the deadline. Ports facilities and oil terminals are
most at risk, they say. Maritime security experts involved in advising
key OPEC nations on the security measures have told Reuters that many
oil producing nations are way behind in introducing the code,
potentially jeopardizing their oil exports.

Reuters, March 25, 2004, 0730

**Ontario has Breathing Room on Electricity\--For Now**\
The return to service of nuclear reactors and the startup of gas-fired
power plants should help Ontario avoid electricity shortages over the
next year and a half, the agency overseeing the sector in Canada\'s
biggest power market said on Thursday. Ontario is expected to have
\"adequate\" electricity reserves through September 2005 after being
forced over the past two years to import pricey supply during peak
demand periods, the Independent Electricity Market Operator said in a
forecast. Government-owned Ontario Power Generation\'s restart of unit 4
at the Pickering A nuclear station and the return of Bruce Power\'s
units 3 and 4 have already cut imports into the province of more than 11
million people, IMO chief executive Dave Goulding said in a statement.
Ontario is set for an additional charge-up of 755 megawatts by August,
when new gas-fired plants operated by Atco Ltd., Imperial Oil Ltd., and
Northland Power are in service, Goulding said.
<http://biz.yahoo.com/rc/040325/utilities_ontario_1.html>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (3        | Ago**     | Ago**      |
|                               | /25/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 35.67     | 37.81     | 33.42      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.22      | 5.63      | 5.07       |
|                               |           |           |            |
| **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