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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

**February 5, 2004**

**Electricity**

**Ariz. Palo Verde 1 nuke seen back up on weekend**\
The 1,270 megawatt Unit 1 at the Palo Verde nuclear power plant in
Arizona is expected to return to service over the weekend and reach full
power by Monday morning, a spokeswoman for the plant\'s operator,
utility Arizona Public Service, said on Wednesday. The Phoenix-based
company had earlier said it had discovered a leak in its reactor coolant
system on Tuesday and subsequently taken the unit off-line.
<http://biz.yahoo.com/rc/040204/utilities_pinnaclewest_paloverde_1.html>

**N.D. 450 MW Antelope Valley 1 unit seen off grid**

Basin Electric Power Cooperative\'s 450 megawatt Unit 1 at the
coal-fired Antelope Valley power plant in North Dakota was off the grid
early on Thursday to repair a tube leak, a source familiar with the
plant said. The forced outage pushed up spot power prices in the
northern MAPP market to as high as \$56 a megawatt hour for power to be
delivered Friday from a high of \$53/MWh Wednesday, traders said. The
unit, in Beulah, North Dakota, is expected to return to service \"in a
couple of days,\" the source said.

**11:37 05Feb2004, Reuters**

**Petroleum**

**Chevron Mississippi Refinery Hit by Brief Power Outage**

ChevronTexaco\'s 350,000 bpd Pascagoula, Mississippi, refinery
experienced a partial power outage on Wednesday morning, a spokesman
said. \"The power outage began at 3:15 a.m. and lasted less than 24
hours,\" the official said. \"It did not affect the entire refinery.\"
The official would not comment on what units of the refinery experienced
the power outage and on the effect the outage might have had on refinery
operations.

**14:51 05Feb2004, Reuters**

**Shell Deer Park, Texas, Refinery Back to Normal**

A catalytic reformer is now operating normally at Deer Park Ltd.\'s oil
refinery in Deer Park, Texas, after the unit was shut Monday for
unplanned maintenance, a Shell Oil Co. spokesman said Thursday. The
340,000 bpd plant is known as the Shell Deer Park refinery. \"The
catalytic reformer at Shell Deer Park\'s refinery returned to normal
operation (Thursday) morning following a brief unplanned maintenance
shutdown,\" said Dave McKinney of Shell Oil. The affected unit is one of
two at the plant, which has a reforming capacity of about 71,000 bpd. A
reformer is used to produce high-octane gasoline.

**14:38 05Feb2004, Reuters**

**Colonial Allocates Nominations for 5th Cycle Distillates**

Colonial Pipeline said Wednesday it has again been forced to allocate
shipping nominations on its dedicated distillates line due to continued
heavy demand for line space. A spokesman for the company said
nominations were allocated for fifth cycle shipments on Line 2, which
links Houston to Greensboro, North

Carolina. Allocating nominations means companies can only ship a
specific volume during a particular 10-day cycle, with the amount based
on past shipping history. Market sources noted the cause of the
allocations is continued heavy production by US Gulf Coast refineries
and the need to get barrels out of the region. Sources said they believe
Colonial is also suffering from a lack of tankage in its system for
product storage
[http://www.platts.com/Oil/News/Colonial%20allocates%20nominations%20for%205th%20cycle%20distillates%20sources.xml?S=n](http://www.platts.com/Oil/News/Colonial allocates nominations for 5th cycle distillates sources.xml?S=n)

**Natural Gas**

**U.S. Working Gas in Storage Has Biggest Drop of Season** See Natural
Gas Weekly Update link at bottom of report.

**Iroquois\' Long-Awaited Eastchester Line Due to Begin Deliveries
Thursday\
**Iroquois Gas Transmission System said its long-awaited Eastchester
Extension that crosses Long Island Sound into New York City will begin
transporting natural gas on Thursday (Feb. 5). Natural Gas Intelligence,
February 4, 2004

**Washington State Site Proposed for LNG Terminal**\
Cherry Point, Washington, is emerging as the latest hotspot for proposed
liquefied natural gas terminals. Oil Daily, February 5, 2004

**U.S. Gas Supply Volatility Partly Blamed on Reduced Liquidity**

Increased volatility in US natural gas prices is due in part to reduced
liquidity in the wholesale market, according to company officials
speaking at the Natural Gas Symposium Tuesday in Boston. \"The demise of
marketers has led to a decline in liquidity at several hubs,\" said Jim
Carmichael, principal of Merrimack Energy Group, noting that credit
requirements have further reduced the number of qualified players. Dan
McElduff, director of gas research at NYMEX, said liquidity in gas
futures remains strong but has shrunk to some degree since the collapse
of large energy merchants such as Enron. Carmichael maintained that
price-induced demand destruction also contributed to the recent
volatility as consumption rises and falls depending on changing market
conditions. Two actions that would dampen volatility, Carmichael said,
are

investing more in storage and pipeline capacity in key US Northeast
market areas and increasing liquefied natural gas send-out capacity in
the region. The increased volatility in New England spot prices during
the week of Jan 12-16 was due mainly to inadequate transportation to
market areas with record-high demand and not due to a general supply
tightness, according to Carmichael. \"The largest effect on gas-price
volatility in the New England market is not a gas-supply risk, but
rather the risk of adequate transportation capacity between supply hubs
and the market,\" he asserted. Carmichael said there is no point in
having ample gas storage supplies in New York if there is no firm
transportation capacity to move it to the New England market areas that
need it. During the Jan 12-16 week, many pipeline operators in the US
Northeast were forced to limit transportation to firm customers due to
capacity limitations, he said. Strained pipelines also were imposing
balancing restrictions with a 2% tolerance between nominations and
deliveries and no flexibility on the park-and-loan systems, he noted.
[http://www.platts.com/Natural%20Gas/News/US%20gas%20price%20volatility%20partly%20blamed%20on%20reduced%20liquidity.xml?p=Natural%20Gas/News&S=n](http://www.platts.com/Natural Gas/News/US gas price volatility partly blamed on reduced liquidity.xml?p=Natural Gas/News&S=n)

**Other News**

**Power Outage Task Force Posts Public Recommendations on August 2003
Blackout, Seeks Further Comment**

As it prepares to issue its final report, the U.S. Canadian Power
Systems Outage Task Force has announced that a summary of the comments
received on the *Interim Report: Causes of the August 14^th^ Blackout in
the United States and Canada* is now available at the Department of
Energy (DOE) website:
<http://electricity.doe.gov/documents/web_comments.pdf>

**Delays terminate Plans to Ship Decommissioned San Onofre Reactor**

A decommissioned reactor pressure vessel will remain at the San Onofre
Nuclear generating Station indefinitely, rather than being shipped to a
burial site in South Carolina. The three month trip to its disposal site
was delayed and the trip cannot now be made in time to meet deadlines
for its delivery according to a Southern California Edison spokesman.
The intended move took four years of planning and the approval of at
least seven state and federal agencies.
<http://story.news.yahoo.com/news?tmpl=story&u=/ibsys/20040204/lo_kgtv/1989830>

**Peabody Energy Eyes Big Illinois Power Plant**

Peabody Energy said on Thursday it could begin construction of a \$2
billion coal-fired power plant in Illinois late this year if it can
reach final agreements on an air emissions permit, partners and power
sales contracts. ST. Louis-based Peabody, the world\'s largest coal
company, said the 1,500 megawatt Prairie State Energy Campus plant
received a draft air permit from the state of Illinois and hopes to get
a final permit this summer. On that timetable, the plant, about 50 miles
southeast of St. Louis, could begin operations in 2008, he said. Peabody
said Prairie State would burn 6 million tons a year of coal from an
adjacent mine and provide electricity for more than 1 million homes. The
company also plans to build a \"sister project\" 1,500 megawatt power
station in western Kentucky.

**15:22 05Feb2004, Reuters**

**OPEC Appears to Be Unwilling to Increase Its Output Levels**

OPEC Ministers appear unwilling to pump additional oil into global crude
markets and still could cut production at the OPEC meeting next week,
suggesting that today's high prices are unlikely to ease soon. The Wall
Street Journal, February 5, 2004

**Armed Pirates Target Oil Tankers in Indonesia-IMB**

Armed pirates have struck against two oil tankers in Indonesian waters,
a piracy black spot, and two freighters in Singapore close to some of
the world\'s busiest shipping lanes, according to an ocean crime
watchdog. The International Maritime Bureau, already concerned about a
rising trend of attacks on chemical and oil tankers in the region, said
in a report this week that a chemical tanker narrowly escaped being
boarded by 10 masked pirates armed with guns in the Karimata Strait last
week. The four speedboats followed the tanker for an hour before
aborting their attack, it said. The latest attacks follow last week\'s
warning by the IMB that global acts of sea piracy are rising at an
alarming rate. In a report it said attacks jumped to 445 in 2003 \-- 20
percent higher than the previous year. The IMB said the waters between
Singapore, Malaysia and Indonesia continue to rank as some of the
world\'s most pirate-infested.

**08:42 05Feb2004, Reuters**

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (         | Ago**     | Ago**      |
|                               | 2/5/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 33.26     | 32.86     | 33.91      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.54      | 5.99      | 6.22       |
|                               |           |           |            |
| **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