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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### May 14, 2004

**Electricity**

**Reuters**\
**APS\' Ariz. Palo Verde 3 nuke up to 87 pct power**\
Friday May 14, 7:34 am ET

NEW YORK, May 13 (Reuters) - Arizona Public Service\'s 1,270 megawatt
Palo Verde 3 nuclear unit in Arizona ramped up to 87 percent of capacity
by early Friday, the Nuclear Regulatory Commission said in its power
reactor status report.

On Thursday, the unit was operating at 40 percent of capacity.
<http://biz.yahoo.com/rc/040514/utilities_pinnaclewest_paloverde_1.html>

**New York ISO sees progress, but says vulnerabilities remain**

Washington (Platts)\--13May2004

The New York Independent System Operator Thursday said that while it has
made

progress in developing a robust competitive wholesale market, the state

remains vulnerable to another August 2003-like blackout and must take
steps to

ensure the fast-growing areas of New York city and Long Island will have

enough generation to meet demand. In its annual state-of-the-grid
report,

\"Power Trends: New York\'s Success & Unfinished Business,\" the ISO
said more

than 3,000 MW of capacity have been added since it issued its first
report in

2001, calling for the construction of 5,000-7,000 MW by 2008. An
additional

2,038 MW is being built and another 3,120 MW have won siting approval.
The ISO

also said a number of transmission projects have progressed since the
2001

report, including completion of the 330-MW Cross Sound Cable. Two other

projects\--the 600-MW Neptune, which will connect New Jersey to Long
Island and

the 2,000-MW Empire Connection, which will feed New York city from the

north\--are both in the permitting process.
[http://www.platts.com/Electric%20Power/News/5010894.xml?S=n](http://www.platts.com/Electric Power/News/5010894.xml?S=n)

**PacifiCorp Ventures Indicate Wind Power is Economically Viable**

By Ken Silverstein Director, Energy Industry Analysis\
When PacifiCorp set out to add 1,100 megawatts of renewable generation
to its overall portfolio over the next seven years, it discovered that
wind energy has huge possibilities. The Portland, Ore.-based utility
received 42 bids totaling 5,600 MW of new renewable resources that
equate to 54 projects---85 percent of which are for wind units.
(UtiliPoint - May 13) 05 13, 2004 - PowerMarketers Industry Publications
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZiknrtpnWThe%216C%29bfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZiknrtpnWThe!6C)bfej%5B!)

**New Power Plant and Coal MINE MEAN JOBS**

**May 13, 2004 - St. Louis Post-Dispatch\
Author(s): The Associated Press**

A coal mine and power plant project in Taylorville promises to generate
hundreds of new jobs and bring millions of dollars to central Illinois,
officials said.

Construction is scheduled to begin late this year or early next and will
take 18 to 24 months to complete. The mine will cost \$64 million to
build and will create about 250 full-time jobs, officials said.

The ERORA Group, based in Louisville, Ky., plans to develop a power
station next to the mine and will buy 1.5 million tons of coal a year.
The power station will come on line by early 2009 and occupy a 400-acre
site, ERORA officials said.

Construction of the facility is expected to cost \$650 million and take
36 months. The plant will use state-of-the-art systems to burn coal
cleanly, and its operation will provide work for up to 75 employees,
officials say.
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8knpp%5EZiknopsrWThe%216C%29bfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8knpp^ZiknopsrWThe!6C)bfej%5B!)

# NY electric reliability improves, but work remains 

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### ![](media/image4.png){width="0.3125in" height="0.15625in"}[North America power grid ready for summer](http://www.energycentral.com/centers/news/daily/article_pro.cfm?aid=4851986) 

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*NEW YORK, May 13 (Reuters)*

Since the massive blackout of 2003, the New York power grid operator has
improved the reliability of the electric system, but still has work to
do, according to a state-of-the-grid report issued on Thursday.

The August 2003 blackout, which left about 50 million people in the
dark, originated in the U.S. Midwest following a series of operating
deficiencies in violation of voluntary operating standards.

In its report, the New York Independent System Operator recommended the
conversion of voluntary operating standards into national mandatory
standards with the force of law.

To date, however, Congress has not passed a law to create the national
standards.

The NYISO, created in 1999 to operate the grid and oversee the
restructuring of the state\'s electric industry, said in the report
power supplies and transmission have improved since 2001 when it issued
the first state-of-the-grid report.

Power companies have built more than 3,000 megawatts of generation in
New York since 2001 when the grid operator warned the state would need
another 5,000 MW to 7,000 MW by 2008.

One megawatt is enough power for about 1,000 homes.

Even though more than 2,000 MW were now under construction, the NYISO
said more generation was still needed in New York City and Long Island.

TRANSMISSION

In addition to more power plants, the NYISO said, power companies also
need to upgrade the state\'s transmission system, especially in heavily
congested New York City and Long Island regions where the lines are
already fully loaded.

In its report, the NYISO recommended state and federal regulators adopt
rules allowing companies to earn big enough returns on their
transmission investments to encourage them to undertake the needed
upgrades.

Over the past decade, only one new transmission line has been built in
New York \-- the Cross Sound Cable.

The cable, which can carry up to 330 MW between Connecticut and Long
Island, was shut earlier this month. It is the subject of an ongoing
legal battle between Connecticut and the state-owned Long Island Power
Authority.

The grid operator also said it was continuing to work with neighboring
grids to reduce the cost of power moving between regions in an effort to
increase those flows.

Reuters 2004. All rights reserved. Republication or redistribution of
Reuters content, including by caching, framing or similar means, is
expressly prohibited without the prior written consent of Reuters.
Reuters and the Reuters sphere logo are registered trademarks and
trademarks of the Reuters group of companies around the world.
<http://www.energycentral.com/centers/news/daily/article.cfm?aid=4857214>

####### Petroleum

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| gn                                                                   |   |   |
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|   height="0.3125in"}                                                 |   |   |
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| **Reuters**\                                                         |   |   |
| **Hess says N.J. gasoline FCC unit shut for one day**\               |   |   |
| Friday May 14, 2:46 pm ET                                            |   |   |
|                                                                      |   |   |
| NEW YORK, May 14 (Reuters) - Amerada Hess                            |   |   |
| (NYSE:[AHC](http://finance.yahoo.com/q?s=ahc) -                      |   |   |
| [News](http://finance.yahoo.com/q/h?s=ahc)) said that a              |   |   |
| gasoline-making fluid catalytic cracking unit at its Port Reading,   |   |   |
| N.J. refinery went into emergency shutdown on Friday afternoon       |   |   |
| because of a power blip and that the unit is to return to normal     |   |   |
| operations Saturday, a company spokesman said.                       |   |   |
|                                                                      |   |   |
| There was no fire as was rumored on the floor of the New York        |   |   |
| Mercantile Exchange where gasoline futures are traded, said Jay      |   |   |
| Wilson of Hess.                                                      |   |   |
|                                                                      |   |   |
| \"We had an electrical disruption within our refinery that caused    |   |   |
| the cat cracker to go into a shutdown,\" Wilson said. \"When that    |   |   |
| happened, an arc was caused in the electrical substation and that    |   |   |
| caused a boom.\"                                                     |   |   |
|                                                                      |   |   |
| The cat cracker has a capacity of about 62,000 barrels per day.      |   |   |
| <http://biz.yahoo.com/rc/040514/energy_hess_gasoline_1.html>         |   |   |
+----------------------------------------------------------------------+---+---+

**Reuters**\
**UPDATE - Oil at 21-year high on global supply strains**\
Friday May 14, 12:26 pm ET\
By Andrew Mitchell

(updates prices)

LONDON, May 14 (Reuters) - Oil prices vaulted to a 21-year high on
Friday for fear that supplies already stretched by world economic
expansion could be hit by an attack on Middle East oil facilities.

U.S. light crude (CLc1) touched \$41.50 a barrel, an all-time high in
the 21-year history of the New York Mercantile Exchange contract. London
Brent (LCOc1) stood 34 cents higher at \$38.83 a barrel.
<http://biz.yahoo.com/rc/040514/markets_oil_4.html>

NYMEX crude futures set new all-time high in ACCESS trade

London (Platts)\--14May2004

Front-month WTI futures traded up to fresh all-time highs in ACCESS

out-of-hours dealing in Friday. June futures rose to an intra-day high
of

\$41.22/bbl, up from Thursday\'s \$41.08/bbl open outcry close. June had
drifted

back to unchanged at the time of writing at 0957 GMT.

The front month crude

contract on the New York Mercantile Exchange set an all-time record high

Thursday when the June contract reached \$41.16/bbl shortly after the
start of

overnight electronic trade. The previous record high of \$41.15/bbl had
stood

since Oct 10, 1990. The NYMEX June crude contract began 2004 trade at

\$30.77/bbl, representing a full 33% rise in prices since then. Gasoline
prices

have been the leader in terms of supplying strength to the whole
complex,

ahead of the heavy demand period of the summer months, analysts say,
with

Middle East geopolitical factors also restricting many players desire to
take

a more bearish view of the wider market, despite such relatively high
prices.

Speculative buying interest from hedge funds has been to the fore in
recent

sessions, with the front-month Unleaded future notching new all-time
highs

since as far back as late March.
<http://www.platts.com/Oil/News/7471788.xml?S=n>

[**Arizona Bans
MTBE**](http://www.energyintel.com/DocumentDetail.asp?document_id=121940)

#### 

#### Natural Gas 

####### 

**FERC Gives Swift Approval to Wyoming Interstate Lateral Project**\
Responding swiftly, FERC on Tuesday awarded a certificate to Wyoming
Interstate Company Ltd. (WIC) to build a lateral and compression
expansion in southern Wyoming that would deliver increasing natural gas
production from the Central Rocky Mountain region to existing markets.
[NGI\'s Daily Gas Price
Index](http://powermarketers.netcontentinc.net/subscribers/daily/)* *
May 13, 2004
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZiknrusrYThe%216C%29bfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8kowu%5DZiknrusrYThe!6C)bfej%5B!)

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|   **Welcome** \[[**Si                                                |   |   |
| gn                                                                   |   |   |
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|                                                                      |   |   |
|  In**](http://login.yahoo.com/config/login?.src=quote&.intl=us&.done |   |   |
| =http://biz.yahoo.com/rc/040513/energy_chevrontexaco_1.html)\]   [Re |   |   |
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|   heig                                                               |   |   |
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|   height="1.0416666666666666e-2in"}                                  |   |   |
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| **Reuters**\                                                         |   |   |
| **ChevronTexaco says mulling more LNG sites in U.S.**\               |   |   |
| Thursday May 13, 6:38 pm ET                                          |   |   |
|                                                                      |   |   |
| HOUSTON, May 13 (Reuters) - ChevronTexaco                            |   |   |
| (NYSE:[CVX](http://finance.yahoo.com/q?s=cvx) -                      |   |   |
| [News](http://finance.yahoo.com/q/h?s=cvx)) is evaluating more U.S.  |   |   |
| sites to build liquefied natural gas receiving terminals, a company  |   |   |
| official said on Thursday.                                           |   |   |
|                                                                      |   |   |
| \"We\'re looking at a number of difference options off the West      |   |   |
| Coast \... and a variety of options on the East Coast,\" Joe Naylor, |   |   |
| ChevronTexaco\'s vice president for strategy, planning and business  |   |   |
| support told reporters on the sidelines of an LNG conference.        |   |   |
| ![](media/image16.png){width="0.20833333333333334in"                 |   |   |
| height="0.15625in"}![](media/image17.gif){width="3.125in"            |   |   |
| height="2.6041666666666665in"}                                       |   |   |
|                                                                      |   |   |
| The No. 2 U.S. oil company has previously said it would seek to      |   |   |
| build LNG terminals off the coast of Louisiana and Mexico\'s Baja    |   |   |
| California peninsula.                                                |   |   |
|                                                                      |   |   |
| Those two projects are still in the engineering stage with final     |   |   |
| decisions on whether to proceed with construction expected later     |   |   |
| this year, Naylor said.                                              |   |   |
|                                                                      |   |   |
| More than three dozen LNG terminals have been proposed in the United |   |   |
| States to draw supplies of the super-cooled LNG from production      |   |   |
| sites in Asia, the Middle East, Africa and South America, but        |   |   |
| experts expect only a handful of U.S. plants will be built.          |   |   |
|                                                                      |   |   |
| Currently four LNG plants are operating on the U.S. East and Gulf    |   |   |
| coasts. Forecasts for shortfalls in U.S. natural gas supplies in the |   |   |
| coming years have triggered a rush to develop new plants to bring in |   |   |
| the fuel.                                                            |   |   |
|                                                                      |   |   |
| The Asia-Pacific region has the most developed trade in LNG, with    |   |   |
| Japan and South Korea the major consumers.                           |   |   |
|                                                                      |   |   |
| Most of those shipments are under long-term contracts and many of    |   |   |
| the deals will expire between 2008 and 2012, Naylor said.            |   |   |
|                                                                      |   |   |
| With many of the new U.S. terminals due to come on line around 2007  |   |   |
| and 2008, that could help draw supplies across the Pacific, he said. |   |   |
|                                                                      |   |   |
| \"It could be a perfect marriage,\" he said.                         |   |   |
|                                                                      |   |   |
| The U.S. terminal owners will need to sign some long-term contracts  |   |   |
| to secure supplies, instead of relying on the short-term and spot    |   |   |
| market terms that are typical in the U.S. industry.                  |   |   |
|                                                                      |   |   |
| \"The Asian market needs to become a little bit more North American, |   |   |
| and North America needs to get a little bit more Asian,\" Naylor     |   |   |
| said.                                                                |   |   |
|                                                                      |   |   |
| Early signs of a spot LNG market in Asia are appearing, he said,     |   |   |
| although it remained modest and would not be a major factor in       |   |   |
| developing new U.S. facilities.                                      |   |   |
|                                                                      |   |   |
| \"We don\'t envision LNG projects being financed purely on spec, or  |   |   |
| for the spot market,\" he said.                                      |   |   |
| <http://biz.yahoo.com/rc/040513/energy_chevrontexaco_1.html>         |   |   |
+----------------------------------------------------------------------+---+---+

####### 

####### Other

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (5        | Ago**     | Ago**      |
|                               | /14/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 |           |           |            |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               |           |           |            |
|                               |           |           |            |
| **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

16:04 14May2004 RTRS-NYMEX crude ends near highs as gasoline hits new
peak

NEW YORK, May 14 (Reuters) - NYMEX crude oil futures ended up and just
beneath record highs on Friday as gasoline again scaled an all-time
peak.

The latest gasoline run-up was fueled by news of a glitch at the Hess
refinery in Port Reading, New Jersey, adding to supply concerns ahead of
the summer driving season which begins during Memorial Day weekend later
this month.

Crude\'s rise toward the close brought them to the highest levels since
NYMEX introduced crude oil futures 21 years ago.

\"It\'s really risky to be short this weekend, what with security
concerns out there and technicals awfully strong,\" said Phil Flynn,
market analyst at Alaron Trading in Chicago.

\"For anybody who took profits today, there was a willing buyer ready to
take a chance for a further spike in prices next week,\" Flynn added.

Concerns of crude oil supply being disrupted by growing violence in the
Middle East, which has raised oil\'s security premium, remained the big
reason why more players were not selling, according to traders.

With global demand now at a 16-year high amid economic growth in China
and India and a rebounding U.S. economy, traders fear a further stress
on supplies as OPEC output is approaching capacity.

NYMEX crude for June delivery \<CLM4\> settled at \$41.38 a barrel, up
30 cents or 0.7 percent on the day and extending its advance in four
days by \$2.45. It peaked at \$41.56.

Overnight, crude futures surpassed the previous all-time NYMEX high of
\$41.15 hit on Oct. 10, 1990, during the buildup to the first Gulf War.

NYMEX crude prices are up more than \$9 or 28 percent since the year
began. Allowing for inflation, prices are about half those during the
oil price shock that followed the Iranian revolution in 1979. Technical
analysts now see resistance at \$43.50, with support expected to form at
\$40.30.

In London, June Brent \<LCOM4\> expired 27 cents higher at \$38.76 a
barrel after trading from \$38.19 to \$38.95. July Brent \<LCON4\>
settled 15 cents higher at \$37.86.

NYMEX June gasoline \<HUM4\> settled at \$1.4101 a gallon, up 0.95 cent
after hitting a record \$1.42. Gasoline has broken records almost every
day since April 12 when it hit \$1.1830, and has advanced nearly 24
cents or 20 percent.

The gasoline crack spread \-- gasoline\'s premium over crude \-- had
rocketed to over \$18 a barrel at the day\'s highs.

The latest record came amid talk of a fire at the Amerada Hess \<AHC.N\>
refinery in Port Reading, New Jersey. But fire officials in nearby
Woodbridge said there had been no such fire. The company said later that
a gasoline-making unit at the plant would be down for a day because of a
power outage.

News that a gasoline-making unit at Marathon Ashland Petroleum\'s
refinery in Minnesota had been shut and will be down for about two weeks
lift prices in the early going.

Crude futures have rallied despite a buildup in U.S. stocks in the last
10 of the past 11 weeks. Traders fear, for a variety for reasons, that
gasoline may be short when peak demand hits this summer.

Gasoline stocks fell 1.5 million barrels to 202.5 million barrels last
week, even refinery runs rose heftily indicating record demand ahead the
Memorial Day weekend at month\'s end, the traditional start of the
summer driving season..

\"This has reinforced the impression that we will not get to what is
viewed as the minimum operating level of 215 million barrels by the time
the driving season starts,\" said Nauman Barakat, senior vice president
at Refco Energy Group.

Saudi Arabia has called on OPEC to raise its output ceiling by 1.5
million bpd, but analysts note that this may only legitimize cheating as
production is already more than 2 million barrels in excess of official
limits. OPEC will meet on June 3 in Beirut to review production policy.

Iraqi oil exports, meanwhile, have stayed well below the post-war
average after a pipeline sabotage.

NYMEX June heating oil \<HOM4\> settled down 0.78 cent at \$1.0409 a
gallon after peaking at \$1.0550, below the overnight high of \$1.0560
which was the loftiest since \$1.13 during the week of March 16, 2003.

((Reporting by Gene Ramos, editing by John Picinich; Reuters Messaging:
gene.ramos.reuters.com@reuters.net; email: gene.ramos@reuters.com; +1
646 223 6054))

For Related News, Double Click on one of these codes:

\[E\] \[U\] \[O\] \[OIL\] \[C\] \[MTL\] \[GRO\] \[SOF\] \[ELN\] \[MF\]
\[RNP\] \[DNP\] \[ENR\] \[US\] \[CRU\] \[PROD\] \[CHE\] \[DRV\] \[NGS\]
\[ELG\] \[LEN\] \[RTRS\] \[O/N\] \[AHC.N\]

For Relevant Price Information, Double Click on one of these codes:

\<AHC.N\>

Friday, 14 May 2004 16:04:00

RTRS \[nN14607192\] {EN}

ENDS

13:52 14May2004 RTRS-Texas City \"blip\" had no impact on output -Valero

HOUSTON, May 14 (Reuters) - Valero Energy Corp. \<VLO.N\> said on Friday
that heavy rains on Thursday caused a minor \"blip\" in instrumentation
at its Texas City refinery, which did not affect output at the 243,000
barrel per day refinery.

\"We are operating per plan,\" said Valero spokeswoman Mary Rose Brown
in a statement. No production units were affected by the problem.

Heavy rains averaging between two and four inches pounded Southeast
Texas on Thursday.

((Reporting by Erwin Seba; editing by Christian Wiessner; Reuters
Messaging: erwin.seba.reuters.com@reuters.net; +1 713 210 8508; email:
erwin.seba@reuters.com))

(Updates with details)

HOUSTON, May 14 (Reuters) - Valero Energy Corp. \<VLO.N\> said on Friday
that heavy rains Thursday caused an instrumentation problem that shut
the gasoline-producing fluidic catalytic cracking unit for two hours at
its 243,000-barrels-per-day Texas City, Texas, refinery.

\"We immediately returned to normal and remain normal,\" said Valero
spokeswoman Mary Rose Brown in a statement.

In an earlier Friday statement to Reuters, Brown said, \"there was a
2-hour instrumentation blip due to heavy rains, but it was a
non-event.\" No production units were mentioned as being affected by the
problem in the earlier statement.

Heavy rains averaging between two inches and four inches pounded
Southeast Texas on Thursday.

((Reporting by Erwin Seba, editing by Richard Chang; Reuters Messaging:
erwin.seba.reuters.com@reuters.net; +1 713 210 8508; email:
erwin.seba@reuters.com))

For Related News, Double Click on one of these codes:

\[O\] \[E\] \[U\] \[OIL\] \[RNP\] \[DNP\] \[PSC\] \[PCO\] \[PCU\]
\[CRU\] \[PROD\] \[ENR\] \[US\] \[LEN\] \[RTRS\] \[VLO.N\]

For Relevant Price Information, Double Click on one of these codes:

\<VLO.N\>

Friday, 14 May 2004 13:52:07

RTRS \[nN141043\] {EN}

ENDS

15:07 14May2004 RTRS-MURPHY SAYS MERAUX, LA. REFINERY CRUDE UNIT SHUT
AFTER FRIDAY FIRE

15:08 14May2004 RTRS-MURPHY SAYS MERAUX FIRE OUT, DAMAGE TO UNITS AND
RETURN TO NORMAL OPS UNKNOWN

15:20 14May2004 RTRS-Fire shuts crude unit at Murphy plant in Meraux,
La.

NEW YORK, May 14 (Reuters) - Murphy Oil Corp. \<MUR.N\> said a crude
unit at its 125,000-barrels-per-day refinery in Meraux, Louisiana, was
shut after a fire Friday.

The company said the fire was extinguished, and no one was injured. The
fire was caused when a seal failed on a crude unit pump about 12:30 p.m.
CDT (1730 GMT), said Mindy West, a Murphy spokeswoman.

There was no word yet how long the crude unit or any other units at the
plant will be out, West said. Meraux is southeast of New Orleans.

((Reporting by Bernard Woodall; editing by J.S. Benkoe; New York Energy
Desk; email: bernard.woodall@reuters.com; Reuters Messaging:
bernard.woodall.reuters.com@reuters.net; 1 646-223-6052))

For Related News, Double Click on one of these codes:

\[O\] \[OIL\] \[C\] \[MTL\] \[GRO\] \[SOF\] \[PCM\] \[CRU\] \[PROD\]
\[SHP\] \[LEN\] \[RTRS\] \[US\] \[ENR\] \[MUR.N\]

For Relevant Price Information, Double Click on one of these codes:

\<MUR.N\>

Friday, 14 May 2004 15:07:17

RTRS \[nN147161\] {EN}

ENDS

14:36 14May2004 RTRS-HESS SAYS PORT READING, N.J. GASOLINE-MAKING FCC
UNIT DOWN 1 DAY ON POWER BLIP

14:46 14May2004 RTRS-Hess says N.J. gasoline FCC unit shut for one day

NEW YORK, May 14 (Reuters) - Amerada Hess \<AHC.N\> said that a
gasoline-making fluid catalytic cracking unit at its Port Reading, N.J.
refinery went into emergency shutdown on Friday afternoon because of a
power blip and that the unit is to return to normal operations Saturday,
a company spokesman said.

There was no fire as was rumored on the floor of the New York Mercantile
Exchange where gasoline futures are traded, said Jay Wilson of Hess.

\"We had an electrical disruption within our refinery that caused the
cat cracker to go into a shutdown,\" Wilson said. \"When that happened,
an arc was caused in the electrical substation and that caused a boom.\"

The cat cracker has a capacity of about 62,000 barrels per day.

((Reporting by Bernard Woodall; Editing by David Gregorio; New York
Energy Desk; email: bernard.woodall@reuters.com; Reuters Messaging:
bernard.woodall.reuters.com@reuters.net; 1 646-223-6052))

For Related News, Double Click on one of these codes:

\[O\] \[E\] \[OIL\] \[U\] \[RNP\] \[DNP\] \[PSC\] \[PCO\] \[SHP\]
\[CRU\] \[PROD\] \[LEN\] \[RTRS\] \[AHC.N\]

For Relevant Price Information, Double Click on one of these codes:

\<AHC.N\>

Friday, 14 May 2004 14:36:31

RTRS \[nN144365\] {EN}

ENDS

13:03 14May2004 RTRS-US lacks \'real-world\' model to evaluate LNG
safety

By Tom Doggett

WASHINGTON, May 14 (Reuters) - U.S. regulators have no scientific models
to accurately predict what may happen in an accident or act of sabotage
involving a tanker filled with liquefied natural gas (LNG), a new report
said on Friday.

The potential dangers of hauling LNG has raised concerns since the
September 11 attacks and as energy firms propose building some 30 new
LNG receiving terminals to supply the U.S. market.

LNG is natural gas chilled to minus 259 degrees Fahrenheit for
transportation aboard tankers from Algeria, Trinidad, Qatar and other
exporting nations.

Currently four U.S. terminals operate in Maryland, Georgia,
Massachusetts and Louisiana. But with domestic gas production flat,
several companies want the Federal Energy Regulatory Commission to
approve plans to build new terminals.

LNG now accounts for about 2 percent of U.S. gas supply, but the
government estimates imports will make up 11 percent of domestic supply
by 2015.

However, a new report commissioned by FERC said current scientific
models don\'t reflect how LNG is shipped or likely to spread from a
spill in various weather conditions.

\"No models available were identified that account for the multi-hull
structure of an LNG carrier and the physics of a release of cryogenic
LNG,\" the report said.

The report prepared by ABS Consulting recommended that FERC use another
recognized model to review the effect of spills from a hole in

13:03 14May2004 RTRS-US lacks \'real-world\' model to evaluate LNG
safety

By Tom Doggett

WASHINGTON, May 14 (Reuters) - U.S. regulators have no scientific models
to accurately predict what may happen in an accident or act of sabotage
involving a tanker filled with liquefied natural gas (LNG), a new report
said on Friday.

The potential dangers of hauling LNG has raised concerns since the
September 11 attacks and as energy firms propose building some 30 new
LNG receiving terminals to supply the U.S. market.

LNG is natural gas chilled to minus 259 degrees Fahrenheit for
transportation aboard tankers from Algeria, Trinidad, Qatar and other
exporting nations.

Currently four U.S. terminals operate in Maryland, Georgia,
Massachusetts and Louisiana. But with domestic gas production flat,
several companies want the Federal Energy Regulatory Commission to
approve plans to build new terminals.

LNG now accounts for about 2 percent of U.S. gas supply, but the
government estimates imports will make up 11 percent of domestic supply
by 2015.

However, a new report commissioned by FERC said current scientific
models don\'t reflect how LNG is shipped or likely to spread from a
spill in various weather conditions.

\"No models available were identified that account for the multi-hull
structure of an LNG carrier and the physics of a release of cryogenic
LNG,\" the report said.

The report prepared by ABS Consulting recommended that FERC use another
recognized model to review the effect of spills from a hole in
single-hull LNG carriers, even though LNG is transported in
double-walled ships for better safety. That model can only provide a
\"rough guide\" to the impact, it said.

FERC made the report public on Friday.

ABS also said the current method of estimating the spread of an LNG
spill on open water does not account for wind, water currents and waves.

\"No existing model for an LNG spill appropriately accounts for these
effects. It should be recognized that the recommended model is based on
the assumption of smooth quiescent water,\" the report said.

When natural gas is cooled to LNG it shrinks to less than 1/600 of its
original volume. After it arrives at a U.S. terminal by tanker, LNG is
returned to a gaseous state.

As a liquid, LNG will neither burn or explode, ABS said.

But if a tanker spill were to occur, the LNG would turn back into a gas
as it reacts with air and water temperatures. The gas vapors released
could ignite.

The report warned that \"an event of such magnitude\" to rupture an LNG
carrier\'s outer hull, inner hull and cargo tanks \"may also provide
ignition sources\" for the spilled LNG.

FERC said it will use the scientific models recommended in the report to
evaluate the safety of proposed LNG projects, even if they don\'t
reflect real-world conditions.

\"Nobody has the real-world data to really know for sure what\'s going
to happen\" because there have been no major LNG spills, said FERC
spokesman Bryan Lee. \"You can\'t look at this (report) and draw a
conclusion as to whether or not LNG is inherently dangerous or not.\"

Critics of LNG projects have expressed concern about the safety of
residents and businesses located near a receiving terminal. They contend
that an LNG tanker, or its facilities onshore, could become targets for
sabotage or terrorism.

A deadly accident at an Algerian LNG complex in January has been linked
to a cracked pipe that allowed the gas to escape and explode. The blast
killed more than two dozen people.

\"The public can take comfort in the fact that LNG has been safely
transported by ship for nearly a half century,\" FERC chairman Pat Wood
said in a letter accompanying the report.

((Reporting by Tom Doggett; editing by Christian Wiessner; Reuters
Messaging: tom.doggett.reuters.com@reuters.net; Tel: +1 202 898 8320))

For Related News, Double Click on one of these codes:

\[O\] \[OIL\] \[US\] \[WASH\] \[CRU\] \[PROD\] \[NGS\] \[ENR\] \[ENV\]
\[ELG\] \[LEN\] \[RTRS\]

Friday, 14 May 2004 13:03:25

RTRS \[nN14538236\] {EN}

ENDS

07:58 14May2004 RTRS-MARATHON ST. PAUL, MINNESOTA, CAT CRACKER SHUT
UNPLANNED 2 WEEKS-SOURCE

08:09 14May2004 RTRS-Marathon Minn. cat cracker down unplanned 2 weeks

NEW YORK, May 14 (Reuters) - A gasoline-making fluid catalytic cracking
unit at Marathon Ashland Petroleum LLC\'s refinery in St. Paul,
Minnesota, has been shut and will be out of operation for about two
weeks, a source with knowledge of the refinery\'s operation said on
Friday.

The cat cracker has capacity of about 26,000 barrels per day and the
plant has a total crude distillation capacity of about 70,000 bpd.

The refinery is located in a part of the country, because of shipping
logistics, that is acutely affected by a downed gasoline-making unit,
particularly in mid-May just as gasoline demand rises.

Deliveries to some customers will be affected. Non-contract wholesale
customers have already been locked out, the source said.

Marathon Ashland Petroleum is owned by Marathon Oil Co. \<MRO.N\> and
Ashland Inc. \<ASH.N\>.

((Reporting by Bernard Woodall, editing by John Picinich; New York
Energy Desk, +1 646 223-6050; bernard.woodall@reuters.com))

For Related News, Double Click on one of these codes:

\[E\] \[U\] \[O\] \[OIL\] \[RNP\] \[DNP\] \[PSC\] \[PCO\] \[PCU\]
\[CRU\] \[PROD\] \[SHP\] \[LEN\] \[RTRS\] \[US\] \[MRO.N\] \[ASH.N\]

For Relevant Price Information, Double Click on one of these codes:

\<MRO.N\> \<ASH.N\>

Friday, 14 May 2004 07:58:16

RTRS \[nN14130708\] {EN}

ENDS

Marathon Shut Minnesota Refinery Unit for 2 Weeks, Reuters Says

2004-05-14 08:45 (New York)

By Soozhana Choi

May 14 (Bloomberg) \-- Marathon Ashland Petroleum LLC shut a

gasoline-making unit at its refinery in St. Paul, Minnesota, for

two weeks, Reuters news service reported, citing an unidentified

source.

The fluid catalytic cracker has a processing capacity of

26,000 barrels a day, and the refinery can process 70,000 barrels

of oil a day, according to the report.

Marathon Oil Corp. agreed in March to purchase Ashland

Inc.\'s 38 percent stake in Marathon Ashland Petroleum, which owns

seven refineries in the U.S. Midwest and Gulf Coast region.

(Reuters 5/14)

For the Reuters Web site, see {RNEW \<GO\>}.

\--Editor: Banker.

Story illustration: See {MRO US \<Equity\> GP \<GO\>} to chart

Marathon Oil\'s shares. For a series of screens related to

Ashland, click on {ASH US \<Equity\> CNP11042050105 \<GO\>}. Press

the space bar to pause on a screen, and hit the \<GO\> key to

resume the slide show. For more news related to refinery outages,

go to {NI REFOUT \<GO\>}. For more oil stories, see

{OTOP \<GO\>}. To see a glossary of refining terms, see

{REFG \<GO\>}.

To contact the reporter on this story:

Soozhana Choi in New York at (1) (212) 940-1151 or

schoi11@bloomberg.net.

To contact the editor responsible for this story:

Robert Dieterich at (1) (212) 893-4485 or

<rdieterich@bloomberg.net>.

ire Reported Amerada Hess Refinery in Port Reading, New Jersey

2004-05-14 14:30 (New York)

Fire Reported Amerada Hess Refinery in Port Reading, New Jersey

By Soozhana Choi

May 14 (Bloomberg) \-- A fire broke out at the Amerada Hess

Corp. refinery in Port Reading, New Jersey, according to the

city\'s fire department.

The incident was reported to the department at about noon,

said Fire Commissioner Brian Dziedzic. He didn\'t know the cause

of the incident and if the fire was still burning.

U.S., Mexican Towns Reject Plans for LNG Terminals, WSJ Reports

2004-05-14 02:16 (New York)

By James Kraus

May 14 (Bloomberg) \-- Many coastal towns in the U.S. and

Mexico have rejected plans to build liquefied-natural-gas

terminals on concern that such installations might become a

target for terrorist attacks, the Wall Street Journal said,

citing local officials.

This year, the state government in Mexico\'s Baja California

appropriated land that Marathon Oil Corp. planned to use for a

terminal and residents of Harpswell, Maine, voted down a proposal

for similar installations. Calpine Corp. also abandoned plans for

a terminal in Eureka, California after local opposition.

Rising opposition to LNG terminals will make it harder to

ensure adequate supplies of natural gas in the U.S., the Journal

said. Flat and declining North American supplies have caused

prices to surge and increased the risk of heating-fuel shortages

and blackouts, the paper said.

Ninety-six percent of the world\'s natural-gas supplies are

located in places that are geographically remote, such as West

Africa or Qatar, the paper said. The gas is cooled to reduce its

volume and shipped around the world.

(Wall Street Journal 5-14 Online)

For the Wall Street Journal\'s Web Site see {WWSJ \<GO\>}

\--Editor: Peterson

Story illustration: For the IPAA Web site, see

http://www.ipaa.org. For a slide show of natural-gas

data, see {CNP 09101550204 \<GO\>}. Press the space bar to pause

the tour and \<GO\> to resume.

atural Gas Terminals Losing Out to Local Fears, NYT Reports

2004-05-14 07:02 (New York)

By Art Daniels

May 14 (Bloomberg) \-- Natural gas terminals proposed for

North America have run into opposition because of environmental

and safety risks, eroding hopes that imports of liquefied gas

will provide relief from high gas prices in the years to come,

the New York Times reported.

Energy companies had announced plans to build terminals

where large amounts of gas could be imported by tanker in

liquefied form and then distributed by pipeline to U.S.

customers, the newspaper said. Environmental and civic groups

cite the danger of explosions at the terminals, either from

accidents or from terrorist attacks, the Times said.

Local opposition led the Calpine Corp. to withdraw plans in

March for a gas receiving terminal at Eureka, in Northern

California. ConocoPhillips canceled a terminal project in

Harpswell, Maine, for the same reason.

Marathon Oil Corp. pulled out of a project near Tijuana,

Mexico, after the land for it was seized by the state government

of Baja California. Exxon Mobil Corp. suspended work on a

terminal near Mobile, Alabama.

(New York Times 5-14 C1)

For the New York Times Web site, see {NYTI \<GO\>}.

\--Editor: Purkiss.

Story illustration: See {XOM US \<Equity\> ERN \<GO\>} for an

earnings profile on Exxon Mobil. For a series of screens related

to the company, click on {X US \<Equity\> CNP 11042050105 \<GO\>}.

Press the space bar to pause on a screen, and the \<Go\> key to

resume the slide show.

To contact the reporter on this story:

Art Daniels in New York (1) (212) 893-5402, or at

adaniels1@bloomberg.net.

To contact our editor responsible for this story:

Chris Collins on 44 20 7330 7547, or

collinsc@bloomberg.net.

CPN US \<Equity\> CN

COP US \<Equity\> CN

MRO US \<Equity\> CN

XOM us \<Equity\> CN

NI US

NI SUM

NI CA

NI MEX

NI NRG

NI USSPOT

NI ME

NI COS

NI GAS

NI MAR

NI CMD

NI CARIB

NI OIL

NI ENV

NI GOV

NI POL

Nymex Gasoline Rises to Record on Prospect for Summer Shortage

2004-05-14 16:03 (New York)

Nymex Gasoline Rises to Record on Prospect for Summer Shortage

By Bruce Blythe

May 14 (Bloomberg) \-- New York gasoline futures rose to a

record for a third day as traders speculated that strong demand

and limited refining capacity will leave the U.S. short of fuel

this summer.

The nation\'s gasoline stocks unexpectedly fell last week as

economic growth drove demand to a seven-month high, government

data showed. Consumption is running at a record pace and is

forecast to increase further when the travel season starts this

month.

\`\`The numbers that came out this week are unbelievable for

gas demand,\'\' said Gordon Rutledge, president of Onyx Brokerage

Inc. in New York. \`\`Demand is way high, and that\'s what\'s

fueling\'\' the rally.

Gasoline for June delivery rose 0.96 cent, or 0.7 percent,

to \$1.4101 a gallon on the New York Mercantile Exchange, the

highest close since the futures contract began trading in 1984.

The price has closed at a record in 12 of the past 15 sessions.

Futures, which reflect wholesale prices, have risen 21

percent the past three weeks and 49 percent this year.

Crude-oil futures also rallied to a record close amid

concern that terrorists will sabotage refineries and pipelines in

the Middle East. The June contract on the Nymex rose 30 cents to

\$41.38 a barrel. Oil is up 27 percent this year.

Gasoline demand averaged 9.132 million barrels a day the

past four weeks and 8.901 million barrels so far this year. Both

averages are up 3.2 percent from the same periods in 2003, U.S.

Energy Department data showed.

Record Pump Prices

Demand is increasing even with pump prices soaring as

refiners pass along higher crude-oil costs. The average U.S.

price for regular-grade gasoline reached a record \$1.953 a gallon

yesterday, according to AAA, formerly the American Automobile

Association.

The national average will rise above \$2 a gallon in coming

weeks, according to Energy Department forecasts. The U.S. retail

average is typically 60 cents to 65 cents above Nymex futures.

\`\`With crude oil prices closing at more than \$40 a barrel

this week and demand for motor fuel at an all-time high, it

appears that there is no price relief in sight for motorists,\'\'

Rose Rougeau, a spokeswoman for AAA Texas, said in a statement.

Record consumption is forecast this summer as people take to

the roads for vacation. The summer travel season traditionally

starts around Memorial Day in late May and runs through Labor Day

in September.

Increased Refining

U.S. gasoline stocks slipped 1.5 million barrels last week

to 202.5 million barrels, down 3.8 percent from the five-year

average for that period, the Energy Department said. Reserves

fell even as refinery processing and imports increased and

gasoline production surged to a record.

Refiners are ramping up operations, spurred by surging

gasoline prices that have boosted profit margins from making the

fuel to a record of almost \$18 a barrel, analysts said. That\'s

almost three times the average of \$6.59 last year, based on Nymex

futures.

The industry worked at 96 percent of capacity last week, up

from 93 percent the previous week and the highest in almost a

year, according to the Energy Department.

\`\`That is a significant increase,\'\' said Peter Beutel,

president of Cameron Hanover Inc., a New Canaan, Connecticut,

energy consultant. \`\`In the past, increases in utilization in

late April and into May have managed to end bullish markets.\'\'

\`\`This market is not responding to fundamental changes in

supply and demand, unless they appear to be bullish,\'\' he said.

\`\`Bearish changes are being ignored, as they almost always are

during bull markets.\'\'

On the cash wholesale market, reformulated gasoline for

delivery over the next three days at the New York harbor was up

1.46 cents to \$1.4514 a gallon at 3:22 p.m. local time, according

to Bloomberg data. Conventional gasoline at the Gulf of Mexico

rose 1.51 cents to \$1.3976.

\--With reporting by Joe Aboussleman in Princeton. Editor:

Beazley. Editor: Beazley.

Story Illustration: To chart Nymex gasoline futures, click on

{HU1 \<Cmdty\> GP \<GO\>}. For a chart of U.S. gasoline demand over

the past five years as tracked by the Energy Department, see

{DOEDMGAS \<Index\> GP W \<GO\>}. For a chart of U.S. gasoline

inventories over the past five years as tracked by the Energy

Department, see {DOESTMGS \<Index\> GP W \<GO\>}. For a tour of

gasoline functions, enter {CNP 00278490113 \<GO\>}. Press the space

bar to pause the tour and \<GO\> to resume.

To contact the reporter on this story:

Bruce Blythe in Chicago at (1) (312) 692-3731 or

bblythe@bloomberg.net.

To contact the editor responsible for this story:

Robert Dieterich at (1) (212) 893-4485 or

<rdieterich@bloomberg.net>

.S. Regulators to Enhance Evaluation of LNG Terminal Safety

2004-05-14 10:23 (New York)

U.S. Regulators to Enhance Evaluation of LNG Terminal Safety

By Jim Efstathiou Jr.

May 14 (Bloomberg) \-- Federal energy regulators said they

will enhance their evaluation of risks posed by spills of

liquefied natural gas at proposed import terminals.

Five methods will be used to assess safety and environmental

issues posed by construction of new LNG terminals, the Federal

Energy Regulatory Commission said in a report today. The studies

will determine the amount of flammable vapor and heat that would

be released in an LNG tanker spill.

At least 30 proposals have been made for construction of

U.S. terminals for LNG, which is transported in refrigerated

tankers after being cooled to minus 260 degrees Fahrenheit (minus

162 Celsius). The fuel is warmed to gaseous state at the

terminals before being injected into pipelines.

Some of the proposals have been scrapped because of local

opposition.

In March, the mayor of Fall River, Massachusetts, Edward

Lambert, asked the developers of a planned LNG terminal 60 miles

south of Boston to withdraw the proposal saying the site was too

close to heavily populated communities. The developer, Weaver\'s

Cove LLC, an investor group, rejected that request.

\`\`An LNG tanker safely docks in Japan every 20 minutes,

commission Chairman Pat Wood said in a letter accompanying the

report. \`\`LNG spills and fires are low-probability events. This

report will help us all understand the consequences of such

events more realistically.\'\'

Imports of LNG are needed to augment domestic supplies of

natural gas as a growing U.S. economy increases demand for the

fuel.

\--Editor: Bixby.

Story illustration: To graph Nymex natural-gas futures prices,

see {NG1 \<Cmdty\> GP \<GO\>}. For New England spot-gas prices, enter

{NGNE \<GO\>}. See {ETOP \<GO\>} for a menu of the top energy

stories.

To contact the reporter on this story:

Jim Efstathiou Jr. in Washington at (1) (202) 654-1224 or

jefstathiou@bloomberg.net.

To contact the editor responsible for this story: Robert

Dieterich at (1) (212) 893-4485 or rdieterich@bloomberg.net.

NI GAS

NI LNG

NI CMD

NI NRG