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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### May 25, 2004

**Highlights / Major Developments**

**Update \-- Olympic Pipeline Restart Expected by 6 p.m. PDT**\
Washington State\'s utility regulator expects Olympic Pipeline Co. to
restart its 285,000 barrel per day (bpd) oil products pipeline in the
U.S. Northwest by 6 p.m. PDT Tuesday (0100 GMT Wednesday), said an
agency official. "It shouldn\'t take too long,\" said David Lykken,
senior pipeline safety engineer for the Washington Utilities and
Transportation Commission. \"It should restart between 5 and 6 p.m.\" A
Tuesday evening restart would come well in time to stave off a shortage
of jet fuel at SeaTac, said an airport spokesman. \"If everything goes
OK, we will be fine,\" said airport spokesman Bob Parker. SeaTac has
asked aircraft using the airport to take on only enough fuel to reach
their next destination so the on-hand fuel supply will not be drawn too
low. That restriction would remain in effect at least through Tuesday
night, Parker said. \"We definitely would need them to do that through
this evening in case there is a glitch,\" he said. Olympic has said the
pipeline can reach full capacity in a few hours after it restarts. One
reason the pipeline can quickly restart is the main lines were not
affected by the leak and subsequent fire, Lykken said.
<http://biz.yahoo.com/rc/040525/energy_olympic_pipeline_2.html>
<http://biz.yahoo.com/rm/040524/energy_pipeline_seattle_2.html>

**Electricity**

####### 

#### Wash. State Columbia Nuke Holds at 60 Percent Power

The 1,158 megawatt Columbia Generating Station nuclear plant in
Washington state was holding at 60 percent power on Tuesday while a
condenser tube leak was repaired, a plant spokesman said.

Reuters, 1514 May 25, 2004

**Two Wisconsin Utilities Plan to Build 500 MW Plant**\
Wisconsin energy companies Alliant Energy Corp. and WPS Resources Corp.
said Tuesday two of their regulated subsidiaries plan to jointly build a
500 megawatt power plant to meet rising energy demand. A spokeswoman at
Alliant, Risa Shipley, told Reuters the subsidiaries \-- Madison-based
Alliant\'s Wisconsin Power and Light Co. and Green Bay-based WPS\'
Wisconsin Public Service Corp. \-- have not yet selected a site for the
plant. She said the plant would likely burn coal, but the utilities were
also looking at other fuel sources. The companies said in a statement
they wanted to build the plant to meet their forecast demand growth by
2010. <http://biz.yahoo.com/rf/040525/utilities_alliant_wps_1.html>

####### Petroleum

**OPEC \'Majority\' Against Raising Oil Output: Venezuela\'s Chavez**

Venezuelan President Hugo Chavez said Tuesday that the \"immense
majority\" of OPEC countries backed Venezuela\'s position not to
increase oil output to bring down prices. \"Even though there is a lot
of pressure on OPEC to raise production, we have been very firm in our
opposition,\" Chavez said during a nationally televised speech in
Caracas. \"We are supported by the immense majority of OPEC countries,\"
he added. Chavez\'s comments came shortly after Venezuelan Energy
Minister Rafael Ramirez returned from an informal meeting with OPEC
members in Amsterdam, where Saudi Arabia proposed an increase of 2-mil
b/d to help ease crude prices, which have remained over \$40/bbl.
Consumer nations have called on OPEC members to open the taps for more
oil but

Chavez said Venezuela would \"not bend over in favor of some foreign
power.\" Chavez also said he favored prices of around \$30/bbl for
Venezuela\'s oil. Venezuela\'s basket of crude and products, which
usually trades around

\$3-\$4/bbl lower than Brent crude, last week averaged \$35.20/bbl.
<http://www.platts.com/Oil/News/8780968.xml?S=n>

**Valero to Get Up to 3 Million bbls Extra Saudi Crude**\
Independent U.S. oil refiner Valero Energy Corp. said on Monday it will
receive 1.5 to 3 million extra barrels of crude outside of term
contracts loading next month from top OPEC producer Saudi Arabia. The
barrels, coming in three to six cargoes, will be a mix of heavy grades
and medium grades and load sometime in the \"June time frame,\" said
Valero spokeswoman Mary Rose Brown. The cargoes are in addition to
Valero\'s regular term barrels from Saudi Arabia. \"We have everything
we need through June and these will be additional crude that we just
purchased,\" said spokeswoman Mary Rose Brown. \"This is unique, it
doesn\'t happen every month.\" On spot shipments, Saudi Arabia has
booked a very large crude carrier to the United States for loading in
mid-June, lifting spot shipments to 12 million barrels, shipping brokers
said in London on Monday.
<http://biz.yahoo.com/rc/040524/energy_saudi_valero_1.html>

#### Past US Oil Stockpile Releases Cut Gasoline Prices

The Bush administration\'s policy of not releasing crude oil from the
nation\'s emergency stockpile to lower gasoline prices may deny
consumers some relief at the pump based on two past government decisions
to tap the reserve.

With the national retail price for gasoline topping \$2 a gallon and
much higher in many parts of the country, the Bush administration is
under pressure to dip into the 660 million barrel Strategic Petroleum
Reserve (SPR). President George W. Bush and other administration
officials have rejected calls to tap the reserve that was created in the
mid 1970s after the Arab oil embargo, arguing the crude must be saved in
case of a disruption in supplies. However, two previous major releases
of the reserve\'s oil in January 1991 and September 2000 resulted in
gasoline prices falling over several weeks by levels equivalent to
shaving 20 cents to 29 cents a gallon off current pump costs. It is
unclear how much prices might fall if the White House released 30
million barrels of oil from the reserve over a month\'s time as recently
urged by Senate Democrats. Reuters, 1523 May 25, 2004

#### Natural Gas 

**US FERC Chairman Wood Envisions 8 or 9 LNG Terminals by 2008**

US Federal Energy Regulatory Commission Chairman Pat Wood III on Monday
expressed confidence that eight or nine new liquefied natural gas
terminals will be built by 2008, just as the National Petroleum Council
recommended in a report issued last fall. \"We will get this done. We
need them and we\'ll get them,\" Wood told a Deloitte & Touche-sponsored
energy conference in Washington, D.C. Noting that about 40 LNG projects
are currently on the

drawing board, he allowed that the commission probably will grant \"more
approvals than we will see get built

issue an order on rehearing \"very soon\" and it\'s likely the dispute
will end up in the courts. \"We have to have a court resolve the
conflict,\" he said. He said FERC is moving ahead with a draft
environmental impact statement for the

LNG project but noted that \"uncertainty is absolute poison at the
root.\"
[http://www.platts.com/Natural%20Gas/News/5457052.xml?S=n](http://www.platts.com/Natural Gas/News/5457052.xml?S=n)

**Prices Prompt Producers to Keep Impurities in Natural Gas** As the
price of natural gas surpasses \$6 per mcf, natural gas liquids such as
ethane, butane and propane, typically removed from the gas stream and
sold to chemical companies, are now often left in. Power plant operators
dependent on natural gas are concerned about the potential effects of
those impurities on generating equipment and industry officials are
analyzing the potential impact on gas turbines and other equipment. (Gas
with higher impurity levels may burn hotter or cooler, which may create
a situation with flashbacks in a turbine would affect power plant
operations), Although there have also been some reports of concern about
impurity levels posing a hazard to residential consumers Peggy Laramie,
spokeswoman for the Washington D.C.-based American Gas Association, a
trade organization representing 192 energy and utility companies around
the United States. There is no reason for consumers to adjust their
natural gas appliances or to be concerned about improper operation.
However, she also said "The issue may become a concern in the future
unless companies establish protocols to ensure predictable quality
levels in natural gas."
<http://pro.energycentral.com/professional/news/gas/news_article.cfm?id=4880236>

[**Companies Fail to Replace Reserves in US as Finding Costs
Rise**](http://www.energyintel.com/DocumentDetail.asp?document_id=122577)\
Drillbit additions to oil and natural gas reserves in the US fell short
of production volumes for a second straight year in 2003 while finding
costs continued their relentless ascent, according to a report by Bear
Stearns analyst Ellen Hannan.

Oil Daily, May 25, 2004

####### Other

**Houston firm to build 1.3 Bcf LNG import terminal in Mexico**

Sonora Pacific Liquefied Natural Gas, a wholly owned subsidiary of
Houston-based DKRW Energy, has signed a cooperation agreement with the
government of Sonora, Mexico, to build a 1.3 Bcf/d LNG regasification
terminal

at Puerto Libertad on the Gulf of California to supply markets in the
Southwest US, DKRW said Tuesday. Signed agreements include an option for
Sonora Pacific to purchase the land for the terminal from the state
government, DKRW said. The project includes pipelines to distribute gas
throughout Sonora and an interconnection with the El Paso Natural Gas
pipeline system east of Tucson, Arizona, to serve the Arizona and
California markets. Construction is expected to begin in mid-2005, with
the facility becoming fully operational by mid-2008, the company said.
[http://www.platts.com/Natural%20Gas/News/2533760.xml?S=n](http://www.platts.com/Natural Gas/News/2533760.xml?S=n)

**Venezuela Port Halts Gasoline Loading, Oil Unhurt**\
Venezuelan state oil firm PDVSA has halted shipments of natural gasoline
for domestic use from Las Salinas after a fire but crude loadings were
unaffected, a company official said on Tuesday. \"(The affected
shipments are) natural gasoline for our operations, not for exportation.
Crude production has not been affected, or loadings,\" PDVSA spokesman
Mario Socorro.
<http://biz.yahoo.com/rm/040525/energy_venezuela_lassalinas_3.html>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (5        | Ago**     | Ago**      |
|                               | /25/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 41.45     | 40.32     | 29.74      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 6.73      | 6.28      | 5.92       |
|                               |           |           |            |
| **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