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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### March 4, 2004

**Electricity**

**Nuclear Regulators Investigate Safety at New York\'s Indian Point
Plant**

Confusion about the routing of electric cables inside a reactor at the
Indian Point nuclear power plant raises concerns about whether backup
equipment and systems would function in an emergency, a former Entergy
employee charges. Tuxedo resident William Lemanksi, who retired from
Entergy in November, has alerted the FERC to the problem and was
scheduled to meet Thursday with agency representatives. Lemanksi says
the problem surfaced two years ago, when Entergy changed the computer
program that tracks a vast network of cables powering equipment in the
plant in Buchanan, Westchester County. A test of the new program in May
2002 generated "tens of thousands" of data errors, filling 329 pages,
says Lemanski, one of two employees who oversaw the software conversion.
One especially critical system, he said, is the array of equipment that
operates the control rods, which regulate the reaction rate in the
reactor. NRC spokeswoman Diane Screnci said the agency will investigate
Lemanksi\'s concerns the same way it responds to any other safety
complaints. She declined to comment on the merits of the issues he
raised. "The fact that we\'re talking further is not indicative of
seriousness," Screnci said. Entergy spokesman Jim Steets said yesterday
that the problem Lemanksi described to the NRC in a Feb. 20 letter is
merely a computer issue, with no safety implications. "We\'re very
confident that we don\'t have significant or even minor safety issues
with regard to cable separation," he said.

The Times Herald-Record, Mar 2, 2004, Middletown, N.Y.

[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8knpp%5EZhknqqruYSge%216%3C%22bfej%5Bv](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8knpp^ZhknqqruYSge!6<"bfej%5Bv)

**Nuclear Industry Must Guard Against Complacency Says Regulator**

The partial meltdown of a Three Mile Island reactor in central
Pennsylvania 25 years ago caught the nuclear industry off guard and
spurred regulators to improve communications, emergency procedures and
worker training, members of the U.S. Nuclear Regulatory Commission (NRC)
said Wednesday. Still, regulators and companies must remain vigilant and
continue fighting complacency, which contributed to both that accident
and to the more recent problems at the Davis-Besse reactor in Ohio, the
commissioners said. "I do believe programs need to be systematically
monitored, and industry must play a role in preventing complacency from
creeping in," NRC Chairman Nils Diaz said. The meltdown at Three Mile
Island Unit 2 on March 28, 1979 was preventable and caused by a
combination of human and technological errors. Since then, the industry
has tried to prepare control room operators for unusual events by using
simulators, developing clear procedures for certain conditions and
limiting the number of overtime hours they can work, the commissioners
said. The NRC said it has also worked to improve its internal and
external communication system.

DHLS, Jones Business News, March 3, 2004

Source: <http://biz.yahoo.com/djus/040303/1515000815_2.html>

**Dearth of Financing Shorts Out Power Plan**

**Albany Conjunction project to send energy to NYC left in doubt**

A plan to run electric transmission lines from the Capital Region to
power-hungry New York City is on the ropes, stymied by market fears.
Albany-based Conjunction LLC canceled a Friday auction that would have
contracted out the power line's capacity and opened the door for \$500
million in bond financing needed to begin construction. Conjunction had
planned to begin building the 140 miles of line in early 2005. But
strong interest in the project has not come with cash, said Steve
Mitnick, a Conjunction principal.

The project, known as the Empire Connection, would allow upstate and
Canadian power producers to send excess electricity to New York City,
where demand and prices are high. Producers would benefit from higher
rates, but the supply simultaneously would cut power costs for New York
City residents by up to \$600 million, Mitnick said. The Empire
Connection would have a capacity to transmit 2,000 megawatts of
electricity, about a quarter of what the city uses on average. According
to a January report by the New York City Energy Policy Task Force,
increasing demand means that by 2008 the city needs 2,600 megawatts of
new electricity to ensure reliability. The situation shows how difficult
it is to raise money for energy projects, and calls into question
government policies in the area, said Mitnick, a longtime supporter of
industry deregulation.

Energycentral -- Times Union-Albany NY, March 3, 2004

**Big Sandy** - Riverside in ECAR continues to run at reduced levels
early Thursday after tripping Wednesday.

Genscape Overnight Report, March 4, 2004

### SoCal Edison Plans \$1.1 Billion for New, Upgraded Power Plants 

In a filing to federal Securities and Exchange Commission Tuesday,
Rosemead, CA-based Southern California Edison Co. confirmed what it had
divulged earlier: that it plans to spend about \$1.1 billion for a
combination of the partially completed Mountainview power plant and for
installing new steam turbines in the San Onofre Nuclear Generating Plant
along the coast in the far north end of San Diego County. Using the SEC
filing as a guide, Edison\'s estimated costs for Mountainview approach
\$600 million. In a statement released late Tuesday regarding
Mountainview, an Edison spokesperson said the utility now believes the
modifications ordered last week by the Federal Energy Regulatory
Commission will \"not impose adverse rate impacts,\" and a proposed
decision from a California regulatory commission administrative law
judge (ALJ) issued Monday concurs with the FERC conditions.

NGI\'s Power Market Today, March 4, 2004

**US Southeast Power Steady, Texas Up on Outage Talk**

Spot power prices in the Southeast remained mostly steady on Thursday
amid mild weather forecasts, but prices in Texas edged higher on talk of
a large power plant outage, industry sources said. Despite calls to
local utilities, no new outages could be confirmed in Texas, but prices
rose more than \$2 per megawatt hour in the northern part of the state
where a large coal plant was rumored to be offline. "The clearing prices
came in high. There was some talk late yesterday that the Limestone
plant was offline and prices are high in that region again today,
especially when we\'re trading for Friday," one Texas trader said. The
two-unit, 1,612 megawatt Limestone plant is 120 miles north-northwest of
Houston.

Reuters, March 4, 2004

**Southern\'s Alabama Farley 1 Nuke Back At Full Power**

Southern Co.'s 888 megawatt Farley 1 nuclear unit in Alabama was back at
full power early Thursday, up from 36 percent early Wednesday, the U.S.
Nuclear Regulatory Commission said in its power reactor status report.
The unit, in Dothan, Alabama, tripped off line on Monday due to a
feedwater system problem, the company said previously.

Reuters, March 4, 2004, 07:18:51

**Petroleum**

**OPEC to Guarantee Oil Supply to Support its Price Band: Purnomo**

OPEC will ensure enough supply to the markets to maintain its crude
basket price in the target \$22-28/bbl range, the cartel's president and
Indonesian oil minister Purnomo Yusgiantoro said Thursday. OPEC will
"apply a leakage system," Purnomo said, implying members unofficially
producing above their quotas. "We will evaluate market production. If
the price is higher than \$28/bbl for a few days, we will increase
supply," Purnomo told reporters on emerging from a meeting with the
lower house of parliament. (The OPEC basket price had been above the
\$22-28/bbl target range for 61 straight trading days as of Mar 3).

Purnomo had told reporters Monday that OPEC was not planning any
emergency meetings, and would not be reviewing its production policy
before the next meeting scheduled for Mar 31 in Vienna, despite the
current high crude prices.

Platts, March 4, 2004.

[*http://www.platts.com/Oil/News/OPEC%20to%20guarantee%20oil%20supply%20to%20support%20its%20price%20band%20Purnomo.xml?S=n*](http://www.platts.com/Oil/News/OPEC to guarantee oil supply to support its price band Purnomo.xml?S=n)

**Shell Lifts West Coast Gasoline Restrictions**

Shell Oil has lifted restrictions it had placed on gasoline lifted at
the majority of its West Coast supply points. Some restrictions remain
but they are isolated to markets in Fresno and Bakersfield, customers
told OPIS. Even in these two markets, however, customers are able to get
100 percent of contracted volumes.\
Earlier, OPIS reported that Chevron had also lifted its gasoline
restrictions that emerged as a result of supply shortages due to a
myriad of refinery problems. Most suppliers had instituted some type of
restrictions that began in February and extended through most of the
month.   Several refining units continue to face production difficulties
but the extent of the problems has lessened considerably over the past
week. Additionally, the price of spot gasoline in Los Angeles has
started to drop.\
Oil Price Information Service, March 4, 2004

**Valero Shuts Gasoline Unit at Louisiana Plant**\
Valero Energy Corp. shut a fluid catalytic cracker at its St. Charles,
Louisiana, refinery due to a mechanical failure, sources with knowledge
of the plant\'s operations said. The gasoline-making unit at the 155,000
bpd refinery was expected to restart within 48 hours once repairs are
made, the sources said. The refinery has a cat cracking capacity of
105,000 bpd.
<http://biz.yahoo.com/rc/040304/energy_valero_refinery_1.html>

#### Natural Gas 

**Bearish EIAs Pressure U.S. Spot Natural Gas**

U.S. spot natural gas fell Thursday on a bearish weekly EIA gas
inventory report released today showing U.S. operators last week
withdrew less gas from storage facilities than market players had
projected. "Fundamentally we\'re weak. The weather is mild. Thursday's
report was bearish and next week should be even more bearish. But crude
is strong and technicals look a bit bullish and that\'s keeping prices
in check," one trader said.

Reuters, March 4, 2004, 14:02:44

**Preliminary Gas-In-Place Estimate of 65 Billion Cubic Feet Announced
at Dynatec Coal-Bed Methane Project**

Dynatec Corporation announced Thursday a preliminary gas-in-place (GIP)
estimate of 65 Bcf at its Anthem coal-bed methane project in West
Virginia. The project involves the leasing of coal-bed methane rights to
42,053 acres in an area of West Virginia known to be a quality source of
coal-bed methane. The preliminary GIP estimate was calculated by Questa
Engineering Corporation, the project"s independent reservoir engineer,
based on total coal tonnage and the average of a range of test well
results. Dynatec's plan is to drill our first pilot production pattern
during the second quarter, with additional pilot patterns to follow in
the latter half of the year. Production results from these pilot wells
will then be used to design and establish full-scale operating well
patterns. Dynatec expects to commence pipeline deliveries of methane gas
from at least the pilot patterns before the end of 2004. The GIP
estimate disclosed in this press release does not constitute a resource
or reserve as defined under the newly adopted National Instrument (NI)
51-101 and the Canadian Oil and Gas Handbook. Under provisions of NI
51-101, establishing a prospective gas resource requires demonstration
that production is technically viable and the gas is economic to
recover. Dynatec expects to be in a position to announce a coal-bed
methane resource as defined under NI 51-101 during the second quarter,
after completion of a further series of field tests and individual well
pump testing.

Energycentral -- Canada NewsWire, March 4, 2004 via COMTEX

####### Other

**US Probe Spots 9 Terror Suspects in Merchant Marine**

A 14-month investigation by the U.S. Coast Guard and FBI has uncovered
nine merchant mariners with possible terrorist links, raising renewed
concerns that U.S. ships and ports are vulnerable to attack. Coast Guard
spokeswoman Jolie Shifflet said on Thursday that "Operation Drydock,"
prompted by national security concerns after the Sept. 11 attacks, had
also led to the arrest of about a dozen others whose active arrest
warrants for crimes from minor misdemeanors to attempted murder had long
gone unnoticed. The Coast Guard said it investigated the records of more
than 200,000 people who hold U.S. merchant mariner credentials. Shifflet
would not disclose what had happened to the nine mariners suspected of
possible terror links, only saying, "We\'ve taken steps to mitigate the
potential risks posed by these individuals." She would not give the
nationality of the nine, but said merchant mariners were required to be
U.S. citizens or permanent resident aliens. Shipping experts have long
said the U.S. maritime industry is vulnerable to attack. They say porous
borders, global logistics chains, limited funds and the trade-off
between security and commerce make fail-safe protection impossible.
Concerned about possible national security threats from fraudulent
merchant mariner documents, the Coast Guard said it had strengthened its
background checking process for commercial seamen and began issuing more
tamper-resistant credentials in February 2003.

Reuters, March 4, 2004, 13:23:34

**Panel Chairman Insists on MTBE Liability Protection**

There will be no energy bill this year, unless it protects producers of
the gasoline-additive MTBE against lawsuits, said Rep. Joe Barton
(R-Texas), the new chairman of the House Energy and Commerce Committee.
In a meeting with reporters Thursday to discuss reorganization of the
committee, Mr. Barton noted that the House had passed an energy bill
with MTBE producer protection but the Senate had dropped the provision
from a bill now pending. \"If there isn\'t language saying MTBE has safe
harbor, there won\'t be a bill,\" Mr. Barton said. His district is home
to MTBE producers. Mr. Barton said the House language doesn\'t protect
manufacturers from negligent handling or defective manufacturing
processes. But it does protect them from lawsuits stemming from the
chemical composition of the product, which he said was manufactured
because Congress required it.

<http://biz.yahoo.com/djus/040304/1359001014_1.html>

Nothing to report.

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (         | Ago**     | Ago**      |
|                               | 3/4/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 36.81     | 37.28     | 36.95      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.17      | 5.10      | 7.71       |
|                               |           |           |            |
| **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