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

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### May 12, 2004

**Electricity**

**60,000 Lose Power in Texas Storm Tuesday** Clouds are rolling through
Houston today, but it\'s unlikely they\'ll unleash the kinds of
thunderstorms that raked Southeast Texas yesterday. A tornado that
touched down in Conroe on Tuesday ripped through a line of businesses
along Interstate 45, taking parts of roofs with it and knocking down
trees and power lines. The twister was part of bands of heavy
thunderstorms that twice hit Southeast Texas. At the peak of Tuesday\'s
storms, CenterPoint Energy reported 60,000 customers without power
because of lines knocked down by heavy winds. No injuries were reported.
A tornado also derailed 15 cars of a freight train Tuesday in the Texas
Panhandle, sending the empty coal cars and two locomotives off the
tracks, officials said. No one was injured, but one of the cars from the
120-car train ended up about 300 to 400 feet away on U.S. Highway 385,
according to Hartley County Sheriff Franky Scott.
<http://www.nola.com/newsflash/weather/index.ssf?/newsflash/get_story.ssf?/cgi-free/getstory_ssf.cgi?a0881_BC_BRF--TornadoTrain-Der&&news&weather_feed>
<http://www.chron.com/cs/CDA/ssistory.mpl/front/2563929>

**Over 22,000 Lose Power in aftermath of Twin Cities Tornadoes**

More than 22,000 customers of Xcel Energy lost power in the Twin Cities
area on Sunday. Tornadoes and hail swept through west-central Minnesota
on Sunday toppling trees and causing damage. Washington Times, Page A10,
May 11, 2004

**Several Thousand Lose Power in Louisiana Due to Storms** There are
about 600 customers without electricity scattered throughout the
Alexandria and Pineville area. Cleco spokeswoman Susan Broussard said
throughout the night between 3,000 and 4,000 customers were without
power. Crews are working to get power restored. Another 1,300, primarily
in the Gretna and Terrytown areas, lost power for about an hour in
midafternoon, said Carl Rhode, an Entergy spokesman
<http://www.thetowntalk.com/update/1084371447.shtml>

<http://www.nola.com/search/index.ssf?/base/news-2/1084353993141800.xml?nola>

**Ariz. Palo Verde 3 Nuke Cut to about 40 Percent Power**

The 1,270 megawatt Unit 3 at the Palo Verde nuclear plant in Arizona was
holding around 40 percent power early Wednesday, a spokeswoman for
utility Arizona Public Service said. Output was reduced while operators
investigate a small leak in a pipe in the circulating water system on
the cooling, nonnuclear, side of the plant, she added. On Tuesday the
unit had been operating at full power. The spokeswoman said it was not
currently known how long it might take to repair the leak or whether it
might be necessary to take the unit completely off-line. Meanwhile, the
adjacent 1,270 MW Unit 1 continued to exit a maintenance and refueling
outage which began on April 5. The spokeswoman said it had risen to
around 29 percent power on Wednesday morning. Reuters, 1225 and 1252 May
12, 2004

**PacifiCorp's Wyodak in WECC Tripped Midday Tuesday**

The plant has since recovered and is running near 460 MW early
Wednesday. Genscape Overnight Update, May 12, 2004

# Commonwealth Edison Expects Rise in Peak Power Use in Chicago, Area A rebounding economy is expected to slightly increase peak electricity use in the Chicago area but not to the point of straining supply, Commonwealth Edison Co. officials said Tuesday. ComEd forecasted a 2004 peak summer demand of 22,225 megawatts, which is 0.8 percent higher than last year\'s peak demand, which set a record. One official noted that ComEd had spare electric capacity of 19 percent, which exceeded the 14 percent required by the region\'s reliability council, the Mid-American Interconnected Network. Responding to questions about the reliability of ComEd\'s high-volume transmission lines, raised in a recent report commissioned by Gov. Rod Blagojevich, Preston Swafford, Exelon\'s senior vice president for operations, said the lines are patrolled on foot and by helicopter to make sure they aren\'t sagging into trees. The state report highlighted the need for Illinois utilities to improve tree trimming. The U.S.-Canadian task force that investigated last summer\'s blackout in the Northeast identified overloaded power lines sagging into trees as a prime contributor to that massive outage. But ICC Chairman Ed Hurley noted with concern that it had been five years since ComEd\'s last massive meltdown. A series of power outages beginning on June 30, 1999, threw lives and businesses in the Chicago area into disarray. ComEd said it has completed about 80 percent of the improvements it promised to make in the wake of those blackouts. \"ComEd\'s system is in a lot better shape than it was five years ago, but customers still have reason to keep their fingers crossed,\" said Martin Cohen, executive director of the Citizens Utility Board, a Chicago-based utility watchdog group. \"In the last several summers, we have not seen the kind of sustained heat wave that would test the system,\" Cohen said. [**http://www.energycentral.com/centers/news/daily/article.cfm?aid=4850410**](http://www.energycentral.com/centers/news/daily/article.cfm?aid=4850410)

####### 

####### Petroleum

**Valero Krotz Spring Refinery Shut on Power Outage in Louisiana**

Valero Energy Corp., the third-largest U.S. oil refiner, said a power
failure forced a temporary shutdown at its refinery in Krotz Springs,
Louisiana, early today. Service from a transmission line that supplies
power to the

refinery was disrupted by bad weather shortly after midnight, leading to
shutdown of the fluid catalytic cracker, crude-oil reformer and other
units, Valero spokeswoman Mary Rose Brown said in an e-mailed statement.
The units were \`\`immediately\'\' started again, she said. \`\`There
will be virtually no impact to weekly production rates." The refinery
has capacity to process about 85,000 barrels of crude and other
components a day.

Bloomberg News, 1630 May 12, 2004

Reuters, 1303 May 12, 2004

**OPEC Crude Output Falls to 27.78-Mil b/d in April: IEA**

OPEC produced an average of 27.78-mil b/d of crude in April, down from
28.19-mil b/d in March, the International Energy Agency said Wednesday.
\"Export disruptions caused Iraqi supply in April to dip to 2.34-mil
b/d,\" the IEA said in its monthly report. Moves by OPEC producers to
enforce the new 23.5-mil b/d production ceiling were limited in April
given the benchmark crude prices which were during the period assessed
edging towards \$40/bbl. May production by the OPEC-10 should also prove
to be well ahead of target levels, the IEA said in its monthly report.
Excluding Iraq, the ten OPEC members bound by output quotas produced an
average of 25.43-mil b/d last month or 1.9-mil b/d above target.
\"\...initial signs are that May could see even these modest curbs
partially reversed. Saudi Arabia, Iran and the UAE all appear to have
made extra volumes available for May lifting for customers in Asia and
Europe,\" the IEA said. Qatar and Kuwait show no sign of curbing recent
production levels with indications of May supplies to Asia also
remaining high. OPEC ministers are due to meet again formally in June,
after holding informal talks in Amsterdam later this month.

<http://www.platts.com/Oil/News/9243362.xml?S=n>

**IPE Brent Zips to New High, US Gasoline also Skyrockets as Gasoline
Stocks Dip**\
IPE Brent futures hit fresh 13-year highs on Wednesday, as latest
official data from the U.S. energy department revealed that gasoline
inventories had bucked analysts\' expectations by showing a fall. The
Energy Information Administration (EIA) showed that gasoline inventories
\-- already more than two percent under year-ago levels \-- had fallen
by 1.5 million barrels last week to 202.5 million barrels, contrary to
the result of an analysts\' poll, which had predicted a 1.6 million
barrel rise. The American Petroleum Institute (API) echoed the EIA data,
saying gasoline stocks were down 1.6 million barrels. Stocks of cleaner
burning RFG gasoline, mandatory at a third of U.S. pumps \-- were seen
down 100,000 barrels by the EIA.
<http://biz.yahoo.com/rm/040512/markets_ipe_5.html> Reuters 1503, May
12, 2004

**Heavy Farm Demand Raises Diesel Fuel Flow on Explorer**

Strong agricultural demand in the Midwest has caused the Explorer
Pipeline to run higher rates this spring for low-sulfur diesel
shipments, which in turn has caused a slight slowing of flow on the
line, an Explorer officials said on Wednesday. The 660,000-barrels per
day (bpd) pipeline from the Gulf Coast refining center to the Midwest
has been running around 620,000 bpd with the higher diesel flow, said
Rod Sands, vice president of the pipeline. Reuters 1023 May 11, 2004

**Stocks of New U.S. Gasoline Grades Rising-IEA**\
Supplies are starting to swell of new U.S. fuel grades that have helped
drive up world oil prices, the International Energy Agency said on
Wednesday. \"The market focus has been on Northeast RFG stocks, which
have been falling sharply for some months. However, this has been offset
by the rise in blending stocks in the region, leaving the combined
inventory position reasonably healthy,\" the IEA said in its monthly Oil
Market Report. Traders have been concerned about supplies for U.S.
summer holiday driving demand in New York and Connecticut where
reformulated gasoline (RFG) blended with the additive MTBE has been
banned. This has helped push up U.S. gasoline prices to all-time highs,
in turn pushing U.S. crude above \$40 for the first time in 13 years.
New York and Connecticut must now blend another additive ethanol with
gasoline blendstock (RBOB) to make the new grades. \"Combined
reformulated gasoline and blending component stocks in the U.S.
Northeast rose in March and again in April, suggesting progress in the
move to ethanol-blended RFG supplies in New York and Connecticut,\" the
IEA said. \"Positive supply developments in RBOB for ethanol blending
are under way,\" the IEA said. \"Supply tightness in MTBE-free blends
appears less of an issue than it had earlier been feared.\" European
exports of summer specification RBOB were reported heading to the U.S.
in April, the IEA said. At the same time Venezuelan state oil firm
PDVSA, through its U.S. operations, was reported to be shipping a test
cargo in May, it added.
<http://biz.yahoo.com/rm/040512/energy_iea_gasoline_1.html>

**Kuwait Says Will Use Spare Oil Capacity to Cool Price**\
OPEC member Kuwait will use its spare oil production capacity to help
cool world oil prices, the country\'s oil minister said on Wednesday.
\"We still have some surplus capacity in Kuwait and we will make sure
that we will do our best to have overproduction,\" Kuwaiti oil minister
Sheikh Ahmad al-Fahd al-Sabah told reporters. OPEC is already producing
around two million bpd above a formal target of 23.5 million bpd in
place since April 1.
<http://biz.yahoo.com/rm/040512/energy_opec_kuwait_1.html>

**Saudi Offers More Oil to Non-major US Refiners**

Saudi Arabia has offered to increase crude supply to non-major U.S.
refiners in June, especially heavier grades, refiner sources said on
Wednesday. Traders said the Saudis don\'t have much extra capacity to
produce light and medium grades and that the offer mostly referred to
Arab Heavy oil, a crude that might be hard-pressed to find a home in a
U.S. refinery. Reuters, 1245 May 12, 2004

**Venezuela says OPEC Should Not Raise Output**

Venezuela disagrees with Saudi Arabia\'s proposal to raise OPEC\'s oil
output, Venezuelan Energy Minister Rafael Ramirez said on Wednesday.
\"Venezuela\'s position has not changed. (An output increase) would not
be convenient,\" Ramirez told Reuters during an official visit to
Argentina.

1000, Reuters, 2004

**OPEC Powerless to Stem Oil Price Surge**\
Oil prices burst to new 13-year highs above \$40 a barrel on Wednesday
on concern that OPEC may not pump enough oil to meet rapidly
accelerating world oil demand. U.S. light crude (CLc1) climbed to a peak
at \$40.38 a barrel, less than \$1 off the 41.15, all-time high for New
York crude futures, reached in October 1990 after Iraq invaded Kuwait.
London Brent crude (LCOc1) was up 14 cents at \$37.50 a barrel.
Importing nations are increasingly worried about the economic fallout of
higher energy costs. The price spike has come during the second quarter,
when world oil demand is at its lowest seasonal ebb, raising concerns
about prices later in the year as demand rises again. OPEC President
Purnomo Yusgiantoro of Indonesia said on Wednesday the cartel is already
pumping more than two million barrels daily in excess of official supply
limits in a bid to cool world oil prices. \"We have not discouraged our
members from producing more because we want to do everything we can to
stabilize prices,\" Purnomo was quoted as saying in a statement released
from OPEC headquarters.
<http://biz.yahoo.com/rb/040512/markets_oil_4.html>

#### ABB Evacuates More Staff From Saudi Arabia After Workers Killed

#### ABB Ltd., the world\'s largest maker of power transformers, said it evacuated about 130 staff and their families from Saudi Arabia after five of its workers were shot dead in a militant attack earlier this month. ABB, which was upgrading a petrochemical facility part-owned by Exxon Mobil Corp., evacuated the people from the Red Sea port of Yanbu where the attack took place on May 1, Mahmoud Shaban, ABB\'s manager in Saudi Arabia said. Shaban had said on May 4 that it\'s evacuating about 20 staff. Of the 130, 90 are staff and more than half are from Western countries, Shaban said in a telephone interview from the kingdom. The attack will make it more difficult to recruit Westerners to work in the kingdom. The attack, the first on an oil-related installation in the kingdom since a militant campaign to scare foreigners out of the country and undermine the ruling al-Saud family intensified last year, has helped push oil prices higher to more than \$40 a barrel, a 13-year high. ABB employed about 1,000 people in the kingdom before the attack, Shaban said. About 70 U.S. nationals working for Aramco have resigned since the Yanbu attack, said an Aramco employee, who didn\'t want to be identified. The state-run company employs 1,700 U.S. nationals, who have about 4,000 dependents, according to Aramco.

#### Bloomberg News, 0607 May 12, 2004

#### 

#### 

#### Natural Gas 

####### 

**LNG Opponents Take Case to the Governor of Maine** Opponents of a
possible liquefied natural gas terminal on Sears Island took their
concerns Monday to the State House, where Gov. John Baldacci emphasized
any decisions for a fuel storage plant would have to be made at the
municipal level. At least two companies are looking at potential sites
for a terminal in Maine, including at Sears Island in Searsport,
Eastport, Cousin\'s Island in Yarmouth and Hope Island in Cumberland
County. Baldacci said LNG is already a major player in the state\'s
energy mix, noting that the Sable Island line runs directly across
Maine. \"I support LNG as part of the mix because we have high energy
costs,\" the governor said. \"LNG actually reduces pollution in a lot of
coal-fired plants. \... Natural gas is part of the solution to the
energy mix and energy competition. It has been reviewed.\"
[http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8knpp%5EZikkilurTTfc%216C%29bfej%5B%21](http://powermarketers.netcontentinc.net/newsreader.asp?ppa=8knpp^ZikkilurTTfc!6C)bfej%5B!)

####### 

####### Other

**Senate Passes Scaled Down Energy Bill Package** The Senate approved
\$13 billion in energy tax breaks and financial incentives on Tuesday as
part of a corporate tax package, the first victory in months in
Republican efforts to overhaul U.S. energy policy. The incentives were
stripped out of a broad-ranging energy bill that has been stalled since
last fall. With the presidential and congressional campaign season at
hand, prospects were unclear for the overall bill, a White House
priority. The bill\'s energy language would, in part, extend tax credits
to companies that produce electricity from wind, solar and other
renewable energy sources. It would also encourage building new nuclear
power plants and provide federal financial support for a proposed Alaska
pipeline that would transport natural gas to the lower 48 States. The
energy tax package does not include a provision broadly supported by
farm-state lawmakers that would double the U.S. production of ethanol, a
fuel additive made from corn. House Republican leaders have demanded
that energy legislation include protection against product-defect
lawsuits for makers of methyl tertiary butyl ether, or MTBE, a fuel
additive and rival to ethanol, which is distilled from corn. Opposition
to the MTBE protection language has bogged down the energy bill in the
Senate.
<http://www.energycentral.com/centers/news/daily/article.cfm?aid=4850381>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (5        | Ago**     | Ago**      |
|                               | /12/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 40.30     | 39.66     | 27.34      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 6.41      | 6.09      | 5.91       |
|                               |           |           |            |
| **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