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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### April 6, 2004

**Electricity**

PacifiCorp\'s Hunter Emery in WECC Tripped Early Tuesday

Genscape Overnight Update, April 6, 2004

#### Pacific DC Intertie to be Shut on Wednesday 

The north-south California/Oregon Intertie was expected to remain
derated at 2,800 MW for the rest of the week, while the north-south
Pacific DC Intertie was expected to be shut for several hours on
Wednesday.

\"There is no way to schedule power on the DC Intertie with it being
rated at zero for a couple of hours. It might as well be shut for the
whole day,\" one trader said. At full capacity, about 4,800 MW of cheap
hydropower can move from the Pacific Northwest to California\'s cities
on the California/Oregon AC Intertie, while the Pacific DC Intertie can
transport about 2,900 MW from the Northwest to Southern

California. Meteorologists forecast high temperatures in Los Angeles,
the biggest population center in the West, would crawl from 69 degrees F
on Tuesday to 70 degrees on Wednesday, in line with the city\'s normal
high of 67 degrees for this time of year.

Reuters 1431 April 6, 2004

**PSEG Plant to Open in Overbuilt Midwest Power Market**

Public Service Enterprise Group Inc.\'s \$700 million Lawrenceburg,
Indiana, power plant will enter

service next month in an overbuilt electricity market. The
1,150-megawatt natural gas-fired plant, near Cincinnati, will be a
so-called merchant facility, selling spot supplies into the wholesale
power market without any long-term contacts. The regional market, known
as the East Central Area Reliability Coordination Agreement, or ECAR,
\`\`is currently soft,\'\' because of excess generating capacity, said
Neil Brown, a spokesman for the Newark, New Jersey-based company\'s PSEG
Power unit. The region does not need new generating plants until 2007,
according to an ECAR assessment. \`\`There was in excess of 20,000
megawatts built in ECAR during the past five years,\'\' bringing the
region\'s capacity to about 133,000 megawatts, said Paul Kyre, ECAR
staff engineer. PSEG has two other gas-fired merchant power plants under
construction that are expected to enter service in 2005, Brown said. A
1,220-megawatt plant in Linden, New Jersey, near New York, will cost
\$775 million and replace an existing 430-megawatt oil-

fired unit at the site, he said. PSEG is also building a 763-megawatt
plant in Bethlehem, New York, near Albany, that will cost \$500 million
and replace a 376-megawatt gas- and oil-fired facility, Brown said.

Bloomberg News, 1439 April 6, 2004

**Petroleum**

#### ChevronTexaco El Segundo Reformer Rumored Shut on Sulfur Problems

ChevronTexaco is believed to have shut a 40,000 b/d reformer at its
260,000 b/d refinery in El Segundo, California, due to problems at the
refinery\'s sulfur plant, US West Coast refiners and traders said
Tuesday. One market source said the major reportedly found the sulfur
plant late last week to be \"out of balance,\" and subsequently
discovered the root of the problem was a leaking vacuum gasoil line that
feeds one of the hydrotreaters. The reformer reportedly was either shut
or ran reduced over the weekend while temporary

repairs were made to the leaking VGO line, a source said. Sources said
unspecified problems with both the reformer and sulfur plant continue,
and that ChevronTexaco shut the reformer on Monday until more permanent
repairs can be made to the sulfur plant-related problems. A
ChevronTexaco spokesman Tuesday was not available for comment on the
status of the reformer, the hydrotreater or the sulfur plant.
<http://www.platts.com/Oil/News/3631525.xml?S=n>

#### Valero Restores Vacuum Unit After Power Outage

Valero Energy Corp. said the vacuum unit at its 98,000 barrel per day
(bpd) Three Rivers, Texas, refinery was operating normally on Monday
afternoon after an early morning power outage. The vacuum unit lost
power during a thunderstorm at about midnight, Valero spokeswoman Mary
Rose Brown said in a statement. The vacuum unit produces gas oil
feedstock for the gasoline-producing fluidic catalytic cracking unit.
\"All units are at planned rates this afternoon,\" Brown said in the
statement. Reuters 1922 April 5 2004

**Memphis Area a "Mess" on Diesel Supply this Week**\
Product supply of low sulfur diesel and even high sulfur No. 2 oil in
the Memphis area is a \"mess\" this week, thanks to heavy demand from an
early planting season, and a weekend problem at Premcor\'s\
182,000 b/d Memphis refinery, sources say. Marketers say that many
terminals are out of low sulfur supplies, and say that much of the low
sulfur output of Premcor ceased on the weekend when problems developed
with a hydrotreating unit. Efforts to restart the unit will be made this
week, but there is no word on whether the downtime could linger. The
outages are likely to stretch to other terminals in the region as\
marketers who normally fill up with fuel at Memphis have to go elsewhere
to find supply. Some help on supply could be forthcoming from Gulf Coast
refiners in Louisiana and Texas, but sources say supplies there are
tight because of recent exports of low and high sulfur No. 2 oil. At
least a half dozen cargoes\
have been moved to the Caribbean, Europe, South America, and even the
Far East, sources report.\
OPIS Price Watch Alert, 1008 April 6, 2004

**UPDATE - U.S. Retail Gasoline Price Hits New Record - AAA**\
The national average price for retail regular gasoline hit a record
\$1.77 a gallon, the AAA auto club said on Tuesday, with little relief
in sight for the nation\'s 200 million drivers. The fact that the summer
driving season hasn\'t even started and OPEC is implementing a new
output cut means things are likely to get worse at the pumps before they
get better,\" said Mantill Williams, national spokesman for AAA,
formerly the American Automobile Association. High gasoline prices,
threatening to hobble a U.S. economic recovery, have been blamed on
surging costs for crude oil and tough new U.S. environmental fuel
regulations. Adding trouble for price-weary motorists, oil cartel OPEC
decided last week to implement a cut of 1 million barrels per day in oil
supplies to counter an expected decline in global demand this spring.
While an all-time high in nominal terms, the current price of gasoline
is still significantly lower than the inflation-adjusted peak of \$3 a
gallon hit in 1981, and well below the prices seen regularly in European
countries <http://biz.yahoo.com/rm/040406/energy_gasoline_retail_1.html>

**US Senate to Hold Hearings on Record-high Retail Gasoline Prices**

US gasoline prices, which hit fresh record highs on Monday, will take
center stage on Capitol Hill Wednesday when a US Senate Judiciary
Committee panel holds a hearing on rising pump prices. Senator Charles
Schumer (Democrat-New York) Tuesday said he would question witnesses at
the hearing to determine once and for all if the price surges are the
result of market forces or price manipulation.
<http://www.platts.com/Oil/News/7499509.xml?S=n>

**Saudi Arabia Pledges to Prevent Any Oil Shortages**

Saudi Arabian Oil Minister Ali al-Naimi said the kingdom will boost its
crude oil production to

prevent any global shortages after OPEC\'s decision to cut
second-quarter output raised concern that prices may extend gains of
more than a fifth in 12 months, a South Korean official said. Naimi
pledged \`\`stable\'\' oil supplies to its customers around the world
including South Korea, Lee Sung Hun, the director general of
international trade and investment at Seoul\'s energy ministry said
after attending a meeting between Naimi and South Korean Energy Minister
Lee Hee Beom in Seoul. Al-Naimi told Korean officials higher global oil
prices have been partly caused by a shortage of refining capacity in
developed countries including the U.S., causing gasoline prices to rise,
Lee Sung Hun said.

Bloomberg News, 0429 April 6, 2004

#### 

#### Natural Gas 

**How Safe is Logan Township (New Jersey) Proposed LNG Terminal?** Some
say the energy content of a liquefied natural gas tanker matches that of
55 atomic bombs. Others say the \"radiant heat\" stemming from an LNG
fire could scorch the flesh of people several miles away. During a
catastrophic event at an LNG terminal, others say the release of methane
\-- the main component of the cooled gas mixture \-- would make it
impossible to breathe. These are concerns BP will face as the energy
giant moves forward with a \$500 million plan to construct an LNG import
terminal on 40 acres of a 175-acre parcel in Logan Township, (New
Jersey), along the Delaware River, south of the line in the river
separating Pennsylvania, New Jersey and Delaware waters. The site is
just north of the Salem County border. Four such terminals operate in
the U.S., and about 55 function worldwide. About three-dozen other LNG
terminals are being proposed nationwide.\
[http://www.nj.com/news/sunbeam/local/index.ssf?/base/news-3/
1081066828285200.xml](http://www.nj.com/news/sunbeam/local/index.ssf?/base/news-3/1081066828285200.xml)

####### 

####### Other

######## New Energy Bill Strategy

As expected, the Republican-controlled Senate will carve out the \$15
billion tax component

from a broad energy bill and attach it to the Foreign Sales Corporation
tax legislation in a last-ditch effort to get the energy bill passed
this year in a piecemeal fashion. "Today, we are implementing a new
strategy for getting the energy bill through the Senate," Energy and
Natural Resources Committee

Chairman Pete Domenici (R-N.M.) said Monday. Domenici has expressed
frustration over the stalled energy bill, but until now had opposed
efforts to move pieces of it as part of other legislation. Domenici said
passing the tax package was important, as it would help build an Alaska
natural gas pipeline. In addition, the tax package provides a new credit
for the production of crude oil and natural gas from marginal wells,
offers accelerated depreciation for natural gas gathering lines and
allows small refiners to claim an immediate deduction for up to 75% of
the qualified capital costs to comply with diesel sulfur rules. Oil
Daily April 6, 2004

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (         | Ago**     | Ago**      |
|                               | 4/6/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 35.06     | 36.15     | 28.41      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.70      | 5.40      | 4.86       |
|                               |           |           |            |
| **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