Summary
Crude Oil Quality Association
Mid-Continent Subcommittee
New Orleans, LA
February 7, 2002

The meeting agenda was distributed to those in attendance.

Pipeline Quality Letter – A letter was sent to all pipelines that connect into the Basin Pipeline system requesting that each of these carriers adopt the Basin Pipeline specifications for Domestic Sweet crude oil.  The letter also requested that the carriers consider additional specifications such as metals and High Temperature Simulated Distillation.  The responses received so far have been favorable: 

• Per a previous phone conversation, ExxonMobil is initiating changes to their tariffs specifying the Basin parameters.
• Jeff Northing (BP Pipeline) indicated at the meeting that BP Pipeline runs a gathering system with numerous connection points.  They do have field sulfur analyzers and follow up on leases that may be outside normal parameters.  Jeff was requested to draft a written response and will consider doing so. 
• Doug Arrick (TEPPCO Crude Oil Pipeline), also at the meeting, indicated that, as an owner, TEPPCO follows the published specifications and also has published Cushing and Midland specifications of its own. 
• Marathon Ashland Pipeline responded favorably to the letter with a written response.  Michael Czeskleba (Marathon Ashland) and John Hunt (Marathon Ashland Pipeline) summarized the response, indicating that they would like to participate but the current scope of the specifications is upstream of their holdings.  Marathon Ashland raised several questions in their memo to which the COQA Facilitator will respond.
• The facilitator noted that discussions with Plains Marketing had indicated that they too have quality specifications currently in their tariff structure.

 If you would like a copy of the letter that went out to the pipelines or of Marathon Ashland's response, please contact the facilitator.

Basin Specifications Implementation - Ms. Patti Edens of Equilon Pipeline reiterated that they are currently not strictly enforcing the 0.40% specification in place as of last May.  They monitor the streams and make phone calls when the sulfur drifts over 0.40%, but have not actually needed to shut down any connecting carriers yet.  Strict enforcement will hopefully not be required until after the NYMEX specifications at Midland go into effect.  NYMEX is apparently having system problems and is not yet on-line with their new program.  Patti indicated that most of the connecting carriers are meeting the 0.40%, even though no enforcement is in place.

Next Steps – The issue of how the trading arms of the oil business influence the effectiveness of any quality program has been brought up many times.  Michael Czeskleba led a discussion on how the COQA might expand its quest for quality to include trading.  Aaron Dillard (Conoco) proposed that we eliminate the Mid-Continent subcommittee in favor of a subcommittee to discuss how best to incorporate quality into contacts.  All accepted that proposal.  Therefore, there will no longer be a Mid-Continent subcommittee.

Tom Kittle  (ExxonMobil) suggested that a study be done of LLS quality, past and present.  Are the specifications having a positive effect on the value and / or are they having negative effects on supply or availability?  Putting monetary numbers to such questions will be invaluable when we try to expand our sphere of influence.  The COQA Facilitator will look into the feasibility of quantifying the LLS specification program.

Harry Giles
COQA Facilitator
TishBill@compuserve.com