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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

**February 11, 2004**

**Highlights / Major Developments**

**Coal Trains Trapped by Union Pacific Derailment in Colorado until
Thursday**

Two loaded coal trains are trapped at their mines in Colorado until
Union Pacific can repair a bridge that partially collapsed on Feb. 9.
Trains carrying coal from Arch Coals West Elk mine and Oxbow Carbon &
Minerals Elk Creek mine are stuck at the mines, unable to move westward
on the North Fork Branch to the main UP line at Grand Junction until the
bridge reopens. A beam supporting the bridge over the Gunnison River
failed as a loaded 105-car coal train crossed it on Monday morning,
causing the derailment of the last 16 cars of the train. No coal spilled
into the river, and there were no injuries. UP crews are unloading the
coal onto a temporary pad set up at the site and are working to repair
the beam. A UP spokesman said the company expects the bridge to reopen
on Thursday morning.
[http://www.platts.com/Coal/News/Coal%20trains%20trapped%20by%20Union%20Pacific%20derailment%20in%20Colorado.xml?p=Coal/News&S=n](http://www.platts.com/Coal/News/Coal trains trapped by Union Pacific derailment in Colorado.xml?p=Coal/News&S=n)

**Electricity**

**DC Pacific Intertie Briefly Shut Today, Still Running at Reduced
Capacity**

The DC Pacific Intertie, a key transmission link between the Pacific
Northwest and Southern California was briefly shut early Wednesday, a
spokeswoman for Bonneville Power Administration said. The line was shut
around 4:07 a.m. Pacific time due to a problem with a converter at the
Sylmar substation in California, she said, noting it returned to its
previous capacities around 4:50 a.m. The DC Intertie currently has a
southbound capacity of 1,086 MW and a northbound maximum of 1,070 MW due
to some repair and maintenance projects. Its normal capacities are
around 3,000 MW in each direction. Reuters, 14:30, 11 February 2004

**AC Pacific Intertie Continues to be Limited Until Friday Evening**

Dealers noted that AC Pacific Intertie continued to be limited to 3,000
MW, southbound, during daytime hours. It should return to 4,400 MW on
Friday evening.

Reuters, 14:15 11 February 2004

**NRC Lowers Threat Level**

The Nuclear Regulatory Commission reduced the threat level for its
licensees from orange to yellow Feb. 10. The U.S. Department of Homeland
Security lowered the general terrorism threat level from orange, or
\"elevated,\" to \"yellow,\" or high, last month, but for some sectors,
such as nuclear plants, the threat had remained at orange. An NRC
spokesman confirmed Feb. 10 that the agency had sent out an advisory to
its licensees notifying them of the change, but he said the advisory
would not be made public.
[http://www.platts.com/Nuclear/News/NRC%20lowers%20threat%20level.xml?p=Nuclear/News&S=n](http://www.platts.com/Nuclear/News/NRC lowers threat level.xml?p=Nuclear/News&S=n)

**Petroleum**

**US Energy Secretary Sees No Crude Release from SPR**

U.S. Energy Secretary Spencer Abraham, speaking hours after OPEC
announced production cuts that sent world oil prices higher, said on
Tuesday the United States would not release crude oil from its Strategic
Petroleum Reserve in a bid to ease prices. \"We definitely are not going
to release SPR for price reasons,\" he said. \"It\'s a national security
project, we view the SPR as how we protect America from unexpected
disruption in supply, and it\'s not used to manipulate price. Reuters,
21:29 10 February 2004

**Natural Gas**

**Major Expansion Planned at Dominion's Cove Point LNG Plant in
Maryland** Norway\'s Statoil said on Wednesday it had signed a
preliminary deal with U.S. energy group Dominion to more than quadruple
its liquefied natural gas (LNG) capacity at a U.S. import terminal,
preparing for a growing market. Statoil controls a third of LNG
reception capacity at Dominion Resources Inc \'s expanding Cove Point
terminal in Maryland, on the east coast of the United States,
corresponding to annual capacity of about 2.4 billion cubic metres.
Dominion will ask the Federal Energy Regulatory Commission to approve an
increase in the plant\'s daily output capacity from 1 billion cubic feet
(Bcf) per day to 1.8 Bcf per day. Storage capacity at the terminal would
increase to approximately 14.6 Bcf. Dominion Cove Point now has 5 Bcf of
LNG tank storage, with another 2.8 Bcf under construction and scheduled
to be completed in 2005. Two pipeline projects are also proposed.
Dominion Cove Point plans to expand its pipeline in Maryland to deliver
more natural gas to interstate pipeline connections in Virginia.
Dominion\'s interstate pipeline company, Dominion Transmission, Inc.,
also plans to build a pipeline and two compressor stations in central
Pennsylvania to move natural gas from its Perulack station in Juniata
County to the Dominion South Point market hub, other interstate
pipelines and the major natural gas storage fields at Leidy in Clinton
County, Pennsylvania. Construction of new LNG storage tanks would begin
as soon as regulatory approval is received and will take about three
years to complete. Construction of the pipelines in Maryland and
Pennsylvania will be timed to go into service no later than at the
completion of the new LNG facilities, which is anticipated to be in late
2008. <http://biz.yahoo.com/rc/040211/energy_statoil_lng_7.html>
<http://biz.yahoo.com/prnews/040211/clw015_1.html>

**Other News**

**US FERC Highlights Interagency Agreement on LNG Safety, Security**

Representatives of three federal agencies on Wednesday unveiled an
interagency agreement meant to codify and clarify their working
relationship in the interest of promoting safety and security of the
burgeoning liquefied natural gas industry. Under the agreement, the US
Federal Energy Regulatory

Commission, Dept. of Transportation and US Coast Guard intend to step up
their cooperation on the \"full range of safety and security issues,\"
including design through operation of waterfront import/export
facilities, a FERC staffer explained. The purpose of the agreement is to
\"show we\'re working in a coordinated manner to address issues
comprehensively,\" avoid duplication of effort, maximize exchange of
information and identify FERC as the lead agency for environmental
review of LNG facilities, said the staffer. The agencies also will
promote concurrent permitting so that \"everybody will be lined up and
ready to go at same time\" when a new project is proposed, he said.
[http://www.platts.com/HOME/News/US%20FERC%20highlights%20interagency%20agreement%20on%20LNG%20safety,%20security.xml?p=HOME/News&S=n](http://www.platts.com/HOME/News/US FERC highlights interagency agreement on LNG safety, security.xml?p=HOME/News&S=n)

**FERC Says May Back Off Reliability Audits Plan**\
The Federal Energy Regulatory Commission indicated on Wednesday that it
may drop an effort to conduct its own reliability audits of the U.S.
power grid, saying industry-led efforts are adequate. The industry and
the government agency have been at odds over who will lead the push to
ensure that the U.S. power grid is more reliable.
<http://biz.yahoo.com/rc/040211/utilities_reliability_2.html>

**Update -NERC Approves Recommendations Aimed at Bolstering
Reliability**

The North American Electric Reliability Council Tuesday approved
recommendations designed to prevent a reoccurrence of the massive August
blackout and improve reliability of the transmission system. The

recommendations, which were issued by NERC staff in January, were based
on the interim findings of the US-Canada task force investigating the
causes of the Aug 14 blackout. NERC\'s board, however, added language to
address concerns raised Monday at a stakeholder committee meeting, where
participants expressed worried over whether and how information about
violations of NERC standards would be made public and over how the
council would work with the US Federal Energy Regulatory Commission. The
changes state NERC will \"apply greater transparency to violations of
standards, while respecting the confidential nature of some information
and the need for a fair and deliberate due process.\" It also calls for
NERC to \"inform and work closely\" with FERC and other state or
provincial regulatory agencies.
[http://www.platts.com/Electric%20Power/News/NERC%20approves%20recommendations%20aimed%20at%20bolstering%20reliability.xml?S=n](http://www.platts.com/Electric Power/News/NERC approves recommendations aimed at bolstering reliability.xml?S=n)
(See Energy Assurance Daily February 9, 2004 for more info)

**OPEC May Reverse Production Cuts, Officials Say**

OPEC Delegates from Libya, Nigeria, and OPEC's head of research said
that OPEC may backtrack on yesterday's decision to cut supplies.
Bloomberg News, February 11, 2004

**Nigeria Tops OPEC Oil Quota in Jan, No Feb Cut Seen**

Nigeria pumped nearly a quarter over its OPEC oil production allowance
in January, and February export schedules indicate it will keep up quota
busting this month, trading and industry sources said on Wednesday.

Reuters, 08:09, 11 February 2004

**Update - Chevtex returns to damaged Nigerian oil wells**\
U.S. oil giant ChevronTexaco
(NYSE:[CVX](http://finance.yahoo.com/q?s=cvx) -
[News](http://finance.yahoo.com/q/h?s=cvx)) said it regained access on
Wednesday to one of its oilfields in Nigeria\'s southern delta after an
11-month absence due to fears of ethnic violence. (See Energy Assurance
Daily from February 10, 2004 for more details.)
<http://biz.yahoo.com/rc/040211/energy_nigeria_chevtex_1.html>
<http://biz.yahoo.com/djus/040211/1333000995_2.html>

**Iraq Set to Hike Crude Output From Southern Oil Fields**

Iraq is still chasing an elusive oil production goal of 2.8 million
barrels per day by the end of March, but expects to crank up output from
the south of the country --- currently the only source of exports ---
when water injection facilities are completed in the coming days. The
production recovery in the south has been limited by the lack of water
injection installations that were trashed in the wake of the US-led
invasion last spring and are now close to being repaired or replaced,
after some delays in the original schedule. The complex at Garmat Ali
near Basrah was looted repeatedly. The imminent production capacity
gains from the restart of water injection in the southern oil fields
should bring the country significantly closer to its 2.8 million b/d
short-term output target. This new target for the south of the country
would also exceed the pre-invasion peak of 2.1 million b/d that was
achieved by the South Oil Co. in February 2003. At the moment production
by the North Oil Co. from the northern oil fields around Kirkuk is
300,000-400,000 b/d. "The plan was to have the watering completed by the
end of the month. Exports were about 1.6 million b/d in January. Despite
the continued closure of the northern export pipeline to Turkey due to
sabotage, Faraj said that export plans for the coming months include
some northern production. Peter Kemp, Oil Daily February 11, 2004,

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (2        | Ago**     | Ago**      |
|                               | /11/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 33.93     | 34.20     | 35.43      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.34      | 5.74      | 6.19       |
|                               |           |           |            |
| **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