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Oil-News Roundup

May 11, 2006

Crude-oil futures surged to nearly $73 a barrel on the New York Mercantile Exchange — though today's supply-problem spots included Nigeria and Texas, rather than just Iran, which has been the biggest source of market anxiety in recent weeks. Here is today's well of news about oil and fuel prices.

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DEATH IN NIGERIA: Nigerian militants shot and killed an employee of Houston oil-services company Baker Hughes in the southern city of Port Harcourt. Though several Nigerian troops and civilians have died during months of militant attacks on foreign oil facilities in the Niger Delta, this was believed to be the first foreign death in the campaign. Baker Hughes didn't identify the victim, but the BBC reported that he was a U.S. national. The best-known militant group in the region, the Movement for the Emancipation of the Niger Delta, told the Associated Press it wasn't responsible for the killing. MEND, which has been fighting for more local involvement in Nigeria's lucrative oil industry, had earlier this week warned of more attacks on foreign oil facilities. The militant attacks have shut down about a fifth of Nigeria's total daily production, putting upward pressure on global crude prices.

REFINERY WORRIES: Also spurring crude's gain were problems at a refinery in Texas and rumors of a refinery shutdown in the Gulf of Mexico. Valero Energy said maintenance would force it to cut production at its Texas City, Tex., refinery for about a week. Traders also whispered about a rumored shutdown of a Gulf-coast refinery, and ConocoPhillips said it wouldn't be able to get its Bayway refinery up to full speed until Sunday. Though the supply shortage was hardly monumental, and though the Energy Department reported another week of rising gasoline inventories, crude and gasoline prices rose.

New Ethanol Plant: Archer Daniels Midland said it planned to build a new ethanol plant in Cedar Rapids, Iowa. Scheduled for completion in the second half of 2008, the plant is expected to produce 275 million gallons of ethanol a year.

Support for Offshore Drilling: The House Appropriations Committee voted to lift a ban on drilling for oil and natural gas on the U.S. Outer Continental Shelf. But the panel's wishes will probably not be realized; the drilling moratorium has staunch support in Congress, and President Bush has said he does not want to see it lifted.

Establishing the H-Prize: The full House, meanwhile, overwhelmingly passed a measure that would award prizes of up to $10 million to scientists, inventors and entrepreneurs who come up with ways to use hydrogen as an alternative fuel. The Senate is scheduled to consider a similar “H-Prize” bill later this week.

Central Power: Oil and gas concern OMV will continue its recent buying spree by acquiring Austrian electric company Verbund AG for about $16.5 billion. The combined power company will serve an estimated 100 million customers in Central Europe.

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