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Appendix E2

Appendix A

Samuel A. Van Vactor

3004 SW First Avenue
Portland, Oregon 97201
(503) 222-2425
Fax: (503) 242-2968
e-mail svv@econ.com

Professional Experience

President, Consulting Economist, Economic Insight, Inc. (EII), Portland, Oregon, 1981 to present, and Researcher at the University of Cambridge, UK.

EII publishes the Energy Market Report on the electric power market and provides economic consulting services. The firm averages about ten employees. It collects and organizes economic data, conducts research, undertakes policy analysis and provides expert witness services for anti-trust, tax and regulatory hearings. Recent projects have included analysis of crude oil royalty obligations in the United States for Texaco, Unocal and Exxon; analysis of natural gas market developments in Asia for the Asia Pipeline Research Society of Japan; testimony on behalf of the California Power Exchange before the Federal Energy Regulatory Commission (FERC); and analysis for the California Power Exchange on bilateral power trading, the structure of the Western Power Market, and the development of the exchange’s new products and services.

Research Associate,Portland State University, October 1979 to December 1981.

Mr. Van Vactor taught two courses in energy economics and managed several federal grants related to energy and economic issues in the Pacific Northwest.

Director of Planning, Oregon Department of Energy, October 1978 to October 1979.

Mr. Van Vactor managed a group of six engineers and economists evaluating energy policy options for the State of Oregon.

Senior Economist, International Energy Agency (IEA) of the OECD, Paris, France, October 1975 to October 1978.

Mr. Van Vactor helped design and implement the agency's country studies program.

International Economist, U.S. Treasury Department, August 1973 to October 1975.

Mr. Van Vactor was a policy analyst for the Secretary of the Treasury, and advised him on issues related to oil pricing and energy demand. Mr. Van Vactor also assisted in the development of a series of domestic energy policy documents, and was a member of the negotiating team for long-term energy cooperation between the U.S. and other industrialized countries.

Education

Ph.D. Candidate, Cambridge University, U.K.
Research, London School of Economics, U.K.
M.A., Economics, University of Washington, U.S.A.
B.S., Economics, University of Oregon, U.S.A.

Significant Publications

I. Contributions were made to the following government publications and reports, including primary authorship of some:

Energy Conservation in the International Energy Agency, 1976 Review, OECD, Paris, September 1976.

World Energy Outlook, OECD, Paris, 1977.

Energy Policies and Programs of IEA Countries, 1977 and 1978 Reviews OECD, Paris

Oregon's Energy Future, January 1979.

"Oil Shortages," Oregon Department of Energy, May 1979.

The United States Exerts Limited Influence on the International Crude Oil Spot Market, Report to the Congress by the Comptroller General, US General Accounting Office, August 21, 1980.

Gasoline Demand in the Pacific Northwest, The Pacific Northwest Supply System and Petroleum in the Pacific Northwest: Disruption or Transition, NW Energy Policy Workshop, 1980.

Alaska's Long-Term Energy Plan, Division of Energy Power and Development, Alaska Department of Commerce, April 1981.

An Energy Emergency Contingency Plan for Alaska, Division of Energy Power and Development, Alaskan Department of Commerce, September 1981.

Fuel Prices in the Northwest, Long-term oil and gas price Forecast for the Northwest Power Planning Council, September 1982.

II. Author or co-author for the following books, articles and speeches:

Competition in the Oil Industry, (NSF funded project at George Washington University,) January 1976, with William A. Johnson and Richard E. Messick.

"Energy Conservation in the OECD, Progress and Results," The Journal of Energy and Development, Spring 1978 and International Comparisons of Energy Consumption, Resources for the Future, 1978.

"OPEC in Crisis," a paper delivered at the November 1982 annual meeting of the International Association of Energy Economists.

"World Oil Markets," a paper delivered at the January 1984 annual meeting of the International Association of Energy Economists, with Arlon R. Tussing.

"Mergers and Acquisitions in the Petroleum Industry," published in Papers and Proceedings of the Eighth Annual North American Conference, IAEE, at MIT, November 1986.

"Retrospective on Oil Prices," a paper for delivery at the Western Economic Association Meeting, July 1986 and published in Contemporary Policy Issues, July 1987 with Arlon R. Tussing.

"Evolution of Bulk-Power Markets," A paper for delivery at the International Association of

Energy Economists, Annual Meeting, Calgary Alberta, July 1987.

"U.S./Canada Trade and Energy: Learning from Past Mistakes," Forces, Winter 1988 with Arlon R. Tussing.

"The International Oil Market in 1988," Presentation to The Conference Board of Canada's

Business Outlook 1988 Conference, Calgary Alberta, May 1988.

"Is an Oil Tariff Justified? An American Debate: I. Reality Says No," The Energy Journal, July 1988 with Arlon R. Tussing.

"Spot and Contract Markets in the Petroleum Industry," with Ronald D. Ripple, a paper delivered at the International Association of Energy Economics, Annual Meeting, Caracas, June 1989.

"Prospective on World Energy Markets: Real Costs Will Continue to Fall," published in the OPEC Review, Summer 1990 with Arlon R. Tussing.

PADD V in Transition: Strategic Evaluation of Oil Industry Prospects in the 1990s, November, 1992 published with Energy Security Analysis, Inc.

"Time to End the Alaska Oil Export Ban," published by the Cato Institute, May 1995.

"Natural Gas Deregulation in South Africa: A Wolf in Sheep's Clothing," 1995-1996 with William A. Johnson. Presentation May 1996, Budapest Hungary, International Conference of the IAEE.

"Power Trading: The Race is On," April 1996, with Dona K. Lehr. Speeches in San Diego for Executive Enterprises, Denver for Infocast, and Washington DC and Los Angeles for the IAEE.

"The Demand for Gas in a Coal-Based Energy Economy." with Ronald D. Ripple. Paper for the Northeast Asian Natural Gas Pipeline: Possibilities and Prospects, Beijing, China, September 1996.

"Evolution of Wholesale Power Price Structures in the Western Power Market," with Dona K. Lehr. in The Evolving U.S. Power Market, Risk Publications, June 1997.

"Commoditisation" in The Evolving U.S. Power Market, Risk Publications, June 1997.

"Natural Gas Projects in Asia and the Development of Asian Gas Trunk Pipelines," for the Financial Times Conference on Asian Gas, June 5-6 1997, Singapore, with Arlon R. Tussing.

"South Korea’s Thirst of Gas," with Arlon Tussing, Financial Times Energy Economist, March 1998.

"Enhancing Private Investment in the Natural Gas Industry in Asia," in Natural Gas in Asia: Facts and Fiction, for PECC Energy Forum, November, 1998.

"Power Exchanges," Presentation and analysis for the Electric Power Research Institute’s Senior Executive Management Roundtable, November 2, 1998.

"Electricity Restructuring in North America," Financial Times Energy Economist, December, 1998.

Appendix C

Gravity Price Adjustments for Adjacent Fields

The examples listed below are comparisons of crude oil fields not of the same gravity, but located adjacent to one another or within ten miles of one another so that transportation should not be an issue in price differences. Gravity price differentials were applied to see if a gravity price adjustment is able to account for all differences in price. For crude oil prices, gravities, and gravity adjustments, the Tosco/Union posting bulletin for September 3, 1998 was used.

Example 1

Midway Sunset 13ç $ 8.75
Buena Vista 26ç $11.00
Adjusted to 26ç / $0.15 for every degree
Midway Sunset 26ç $10.70
Buena Vista 26ç $11.00

Unaccounted for Difference = $0.30

Example 2

Wilmington 17ç $ 9.25
LB (Signal Hill) 29ç $11.65
Adjusted to 29ç / $0.15 for every degree
Wilmington 29ç $11.05
LB (Signal Hill) 29ç $11.65

Unaccounted for Difference = $0.60

Example 3

Newhall Potrero 32ç $12.00

Del Valle 33ç $11.45
Adjusted to 33ç / $0.15 for every degree
Newhall Potrero 33ç $12.15
Del Valle 33ç $11.45

Unaccounted for Difference = $0.70

Example 4

Yorba Linda 15ç $ 8.75
Brea Olinda 20ç $10.60
Adjusted to 20ç / $0.15 for every degree
Yorba Linda 20ç $ 9.50
Brea Olinda 20ç $10.60

Unaccounted for Difference = $1.10

Example 5

Cat Canyon 11ç $ 5.60
Orcutt 25ç $ 8.55
Adjusted to 25ç / $0.15 for every degree
Cat Canyon 25ç $ 7.70

Unaccounted for Difference = $0.85

Appendix D

Sources of Crude Oil Spot Prices

Reuters Methodology

Reuters prices are collected by a reporter on a daily basis. The Reuters reporter contacts market participants inquiring about current prices and ranges. The data is collected and is published as a daily high and low. The closing price for the crude oils is the mean of the daily high and low.

Reuters provides West Coast crude oil spot price information for the following crude oils:

Line 63, with gravity 28.0 degrees API, and sulfur 1 pct.

ANS delivered to the West Coast, with gravity 29.0 degrees API and sulfur 1.1 pct.

Wilmington, with gravity 17.0 degrees API and sulfur 1.5 pct.

Kern River, with gravity 13.0 degrees API and sulfur 1.2 pct.

Reuters also reports on spot price differentials and spot price in terms of premium to posting:

Line 63 vs. Differential
ANS vs. Last Repeated Bid
Wilmington Premium to Posting
Kern River Premium to posting

Platt’s Methodology

There are general principles that underlie Platt’s approach to market reporting. For example, Platt’s generally looks for fixed-price spot transactions, confirmed bids and offers, market talk and relationships, if any, with other markets. Platt’s reporters also generally look at the characteristics of individual markets and the foregoing methodology may be adapted especially in cases where fixed-price liquidity is lacking.

Platt’s prices are published in three daily publications:

Platt’s Oilgram News, Platt’s Oilgram Price Report and Platt’s Crude Oil Marketwire. A high and low range of prices is published daily in the Platt’s Crude Oil Marketwire. Prices are reported in a five-day rolling average format in the Platt’s Oilgram Price Report (a weekly publication). Also Platt’s puts out a monthly crude oil supplement, Platt’s Crude Oil Supplement, which reports a simple average for the month of the daily low, high and mean prices.

Platt’s provides West Coast crude oil spot price information on the following crude oils:

Alaska North Slope (ANS): California barrels are for delivery to Long Beach, California. API Gravity is 29-29.5 and sulfur content is 1.1 pct.

Line 63: The assessment is for a blend of crude at 28-30 degrees API gravity and sulfur content of 1.02 pct. Delivered at Hynes station on Four Corners’ pipeline line 63.

P-Plus Line 63: The assessment reflects the price of Line 63 sold into Hynes Station on Four Corners’ pipeline on the basis of "Posting Plus." P-Plus deals are invoiced at a later date on the basis of a differential to an average of one or more crude postings for Buena Vista.

Thums: The assessment is for barrels of Wilmington delivered to Long Beach, California at 17 degrees API and sulfur content of 1.5 pct.

Kern River: The assessment is for barrels delivered commonly to Texaco’s station 31 in Kern County, California, at 13.4 degrees API gravity with sulfur content of 1.1 pct. Synonymous with San Joaquin Valley (SJV) heavy.

Telerate Methodology

Spot prices are assessments – subjective by their nature – published under the Telerate Energy banner by Bridge News and by Dow Jones Newswires jointly with Telerate Energy. Assessments are the results of reporters’ wide survey of market participants and likely include, depending on market conditions, elements of transactions, bids, offers, "indications," "talking levels," or differentials vs. other active grades. Assessments typically conform to standard calendar periods, quantities and qualities.

Telerate reports on the following spot crude oil prices:

Kern River, This is San Joaquin Valley Heavy crude oil and is typically the spot price for Kern River or Midway Sunset. The gravity is 13 degrees API and the sulfur is 1.0 pct.

Thums, This is typically a spot assessment of Wilmington crude oil at a gravity of 17 degrees API and a sulfur of 1.5 pct.

Line 63 CIF LA, This is a spot assessment of Line 63 crude oil at 28 degrees API and sulfur of 1.0 pct.

ANS CIF LA, This is a spot assessment of ANS crude at a gravity of 29 degrees API and sulfur of 1.1 pct.

Also attached is a table comparing ANS spot prices from Reuters with spot prices from Platt’s. The average difference between these two price series is $0.01.