**[QUESTIONS & ANSWERS]{.underline}**

**[DE-RP96-03PO54500]{.underline}**

1\. In section A.5.a. of the Request for Offers, it states that the
receipt capability may decline as caverns are filled. As this rate may
decline significantly, will the DOE pay any demurrage that is incurred
when this happens, or must contractor take this risk?   DOE is not
liable for demurrage charges in regard to this issue.  Contractor is
responsible for this risk.

2\. Are DOE credits available for use at Sun Terminal as in the past, or
is the contractor responsible to pay Sun for all tankage costs?  
Contractor is responsible for all terminal costs at Sun including
tankage. 

3\. If Title transfer is at Sun dock meter, does Contractor have to pay
the terminal fees?   Yes. Reference A.5.b. which states contractor is
responsible for all fees up to the point at which title transfers;
C.5.b. which states that title transfers at measurement locations; and
C.2.a. where Sun dock meters is one possible point of
measurement.  Amendment 1 to the solicitation will eliminate reference
to the point of title transfer in Section A.5.b.

4\. Under F.2.a, the DOE has specified certain requirements for
establishing delivery windows for marine deliveries. If a Contractor
delivers within the agreed window, but the DOE or Sun is unable to
accept the vessel when NOR is tendered, will the DOE be responsible for
demurrage costs?   No, contractor is responsible for all risk and should
factor any such contingency into its offer. 

5\. It sounds like DOE will no longer absorb the terminalling and
tankage costs at Big Hill, is this right? Yes. Will we still be using
DOE tanks to discharge exchange crude into? If so, will there be a fee?
The tanks to be utilized are set aside by Sun for incoming SPR crude. We
don't lease them. The RIK contractor is responsible for all costs
associated with crude oil delivery to the sites.

6\. Regarding Inventory Closeout Reconciliation, how will DOE determine
market value for crudes like Zafiro and Kole that are not quoted in
Platts? We arrive at a value with the utilization of consulting
expertise and then conduct negotiates with the contractor. Failure to
arrive at a settlement is subject to the "Disputes" provision.

7\. If the last exchange crude discharged October 31st, does that mean
that the cost value established for the exchange crude would be the
Platts quote for Oct 31st? Yes.

8\. If the cost value of Royalty Oil is established at the end of the
royalty oil delivery period, does that mean if September is the last
month for royalty oil, the average of September Platts trading month
quotes are used to establish the cost value? Yes.

9\. Is it acceptable to use multiple banks to establish the performance
letters of credit? Yes.

10\. Mars is listed as a deliverable sour crude. If the quality of Mars
deteriorates and no longer meets the minimum API or maximum sulfur
specifications for sour crude, will the DOE continue to accept Mars
deliveries for the term of the contract?    No   There was some
discussion at the MMS/DOE sponsored industry meeting that the DOE may
choose to take Mars for the entire term of the contract even if the
quality changed.   Yes and you are correct in that there was some
discussion on this subject at the industry meeting. 

11\. We are not sure what a Data Universal Numbering System number
is\.....if you

> let us know more about it and where we can get it, we will pursue
> getting
>
> the information for you. This is in association with Dun and
> Bradstreet Information Services should financial background of an
> Offeror be required. Contact 1-800-333-0505 to obtain a number for
> your corporation.

12\. In the last solicitation Poseidon was an acceptable crude for SPR
delivery.

Is this still the case? Yes

13\. A.5. of the solicitation states that receipt capabilities may
decline as SPR

caverns are filled. What is the expected receipt rate at each location

> during the timeframe of this solicitation? The receipt rate for the
> sites participating in this requirement is 225,000 bbls per day as
> stipulated in the provision.

14\. Is Zafiro an acceptable crude for SPR delivery? Yes.

15\. Would it be possible to take delivery of a \'sour\' royalty crude

oil (e.g. Mars / Poeidon) and re-deliver \'sweet\' crude to SPR ? Yes.
Or is the

case that the type of exchange oil delivered to the SPR, must match the
type

of royalty oil delivered to BP. i.e. .sour for sour and sweet for sweet.
No.

Obviosuly the Y factor that BP would submit, would be different if BP
were

to take delivery of a sour crude and return sweet, rather than a
straight

> sweet for sweet exchange. Any acceptable crude oil meeting the SPR
> specifications illustrated in Exhibit F of the solicitation may be
> delivered as exchange oil.

16\. In Section C1, reference is made to the offeror taking delivery of
any

oil additional to the contracted volume at market centre and the
exchange

delivery amount being adjusted accordingly. It may well be the case that
the

offerer, is not logistically able to make up the additional volume in
the

following month\'s delivery and may only be able to make up the
additional

volume in the second month following delivery of royalty oil. How would
the

DOE propose to deal with this situation, is delivery in M+2 or later

> acceptable ? In accordance with Provision A.5.c. of the solicitation
> the contractor must submit and receive approval of a ratable delivery
> schedule. This schedule is binding unless royalty receipts indicate
> the schedule needs to be revised to preclude a sufficient imbalance at
> the end of the contract delivery period.

17\. Section A5, part d refers to interest payable in oil if the offeror
fails

to deliver 90% of the approved schedule volume. Is there a penalty or

interest payable by the offeror if they deliver over the 90% threshold
but

under 100% of the scheduled volume, as long as the offeror was able to
make

up this under-delivered volume by the end of the contract period (April

2004)? No.

18\. Section F2a. states: \"For marine deliveries, the Contractor shall

nominate a delivery program to the DOE not later than the fifteenth day
of

the second month prior to the month in which deliveries will be made
(e.g.

by September 15 for November deliveries). The nomination will include a

three-day delivery date range for each cargo, the type of oil, and the

approximate delivery volume.\" This is a very early time frame to be

narrowing to a 3-day window. What is the ramification if the window is

> missed? Usually demurrage that is for the contractor's account.
> Industry standard would typically be a 5-day window for a nomination
> that far in advance. Amendment 002 makes revisions to Section F.2
> extending to a five-day window, which narrows to a three-day window
> seven business days prior to the month of delivery.

19\. Which title transfer at the dock meters should the exchange
contractor be responsible for tank loss? No, unless it's contractor
provided tank then title transfer is at the tank (see Section C of the
solicitation)