-----Original Message----- From: Johnston, Robert Sent: Wednesday, September 12, 2001 5:12 AM To: Lay, Kenneth; Frevert, Mark; Mcconnell, Mike; Sherriff, John; Brown, Michael - COO London; Shankman, Jeffrey A.; McMahon, Jeffrey; Bowen Jr., Raymond; Lavorato, John; Kitchen, Louise; Seyfried, Bryan; Fiala, Markus; Kinneman, Jeff; Gonzales, Eric; Whitehead, Jonathan; Nowlan Jr., John L.; White, Bill; Schroeder Jr., Don; Maffett, Randal; Sekse, Per; Presto, Kevin M.; Belden, Tim; Heizenrader, Tim; Grigsby, Mike; Allen, Phillip K.; Kaminski, Vince J; Bradley, Michael; Kean, Steven J.; Robertson, Linda; Shapiro, Richard; Hirl, Joseph; Thirsk, Jeremy; O'Day, Nicholas; Greene, John; Fuller, Robert; Gordon, Michael; Tholan, Scott; Roth, Jim; Fitzsimmons, Brendan; Seigle, Clayton; Whitman, Britt; Aganon, Rommel; Landry, Kimberly; Holman, Kelly; Walsh, Kristin; Turner, Nancy; Lawlor, Dave; Kemp, John; Brindle, John; Cromley, David; Ewald, Laura; Scott, Eric; Reed, Andrea V.; Garner, Bruce Subject: Competitive Analysis Update #4- US Terrorism Attacks Importance: High Report is divided into Market Updates; Transportation/Infrastructure Updates; and Political Updates. For further information, contact: Robert Johnston x39934 Clay Seigle x31504 (oil/politics) Brendan Fitzsimmons x34763 (financial markets) Kelly Holman x39844 (gas/power infrastructure) A. Market Updates U.S. Markets ? NYSE and NASDAQ officially closed today. First time NYSE closed on consecutive days since WW2. Equity exchange officials to conference call later today to determine restart. ? NYMEX officially closed today. No new information on restart. ? CBOT and CME officially closed today. No new information on restart. ? The Group of Seven (G-7) major countries are in talks on emergency policy coordination to prevent further turbulence in global financial markets following the terror attacks against the United States. No official word yet on coordinated intervention. ? Lower Manhattan trading infrastructure devastated, but generally backed-up offsite. Clearinghouse Interbank Payment System (CHIP) continues to operate. ? Key World Trade Center losses affect insurance, metals trading, major financial houses. Biggest victims include MSDW, Cantor Fitzgerald, Mizuho Holdings, Bank of America, AON, Lehman Brothers ? Congress to resume budget debate today; new focus on defense and intelligence spending; likely calls for further fiscal stimulus to reassure consumers. ? AGA offices in DC to reopen today. AGA report on weekly storage data scheduled for today. Japan Overnight Nikkei ended down 6.6% at 9610; TOPIX down 6.4% at 990.80 Nikkei below 10,000 and lower than Dow for first time since 1950s, now at Dec 1983 levels (w/o accounting for Mar. 2000 tech re-weight); more importantly, the TOPIX went through and closed below 1000 breaking down to early 1998 financial crisis lows. Citibank market operations "normal," and no problem with settlements today despite evacuation of NY office Japanese officials report no discussion of FX intervention but that cooperative G-7 intervention available if necessary; BoJ injected Y2 trillion to provide liquidity Next regular BOJ policy meeting Sept. 18-19. Europe ? Currency trading is steady, with the dollar holding firm in European trading. ? European bourses experience volatility, but drift into negative territory on thin trading. Institutional investors are largely sidelined. US stocks cross-listed on European exchanges were hit hard, especially airlines, insurance, and financials. Oil Markets ? Some brokers think it likely IPE Brent trade willinish early, around 1630 GMT, Wed in the absence of Nymex. ? Bearish Factors: Suspension of commercial air travel and possible mass cancellations once resumed; Falloff in energy demand due to shut businesses; Possible decline in equity markets and renewed fears over recession ? Bullish Factors: Fear of increased Mideast instability; Possible stockpiling of jet fuel for military use ? As of this morning, bearish factors seem to have the edge, with Brent Crude trading lower in London. Bullish factors will depend on how the investigation/response develop Canada ? Provincial, territorial and federal mines and energy ministers cancelled the second day of their two-day meeting in Quebec City. ? Toronto Stock Exchange expected to remain closed today. B. Transportation/Infrastructure Updates Gas/Power Infrastructure ? The US Nuclear Regulatory Commission placed all nuclear power plants, research reactors, nuclear fuel facilities and gaseous diffusion plants on the highest level of security alert Tuesday. No companies have reported a curtailment of generation as a result of yesterday's attack. ? According to the NY ISO (Independent System Operator) the NY grid was functioning normally following the attacks on the WTC. ? ConEd went into a "thunderstorm alert", increasing in-city generation. Electricity, gas and steam service was suspended in an area in SW Manhattan. ? Natural Gas Intelligence is quoting a source that a force majeure could be declared by pipeline operators as a result of "confusion regarding accurate registration of nominations." No other confirmation was available. ? The Interstate Natural Gas Association of America, which represents the nation's interstate natural gas pipelines, sent out an advisory urging its members follow procedures to increase security. ? Kinder Morgan's Natural Gas Pipeline Company of America (NGPL) froze the status of its flowing gas volumes no longer accepting any changes to confirmed and scheduled volumes. Gas scheduled for Tuesday, Sept. 11 will roll forward and this situation will continue until further notice. ? Enbridge, Alliance, and TransCanada report increased security along pipeline facilities, but no expectations of supply/delivery interruption BPA operating on skeleton crew. All non-essential personnel was evacuated, however, no threats against the hydro generator have been issued. FERC cancelled regular Wednesday meeting, not rescheduled. Authorities in Chicago barricaded the entrances to power plants and pumping facilities with concrete blocks and heavy trucks. ? Grand Coulee Dam and powerhouse in Washington state operational, but locked down ? Hoover Dam on Nevada-Arizona line is locked down. Refineries/Crude/Products ? Tosco refinery in Linden NJ closed. ? Force Majeure likely to be declared by major crude product receivers in US ports; ? LA/Long Beach inspecting all incoming shipping-all incoming ships anchoring seven miles outside port. ? Louisiana Offshore Oil Port operations suspended pending security inspections. ? Reports ? Despite these problems, The American Petroleum Institute announced overnight that US energy markets were continuing to function smoothly, with oil deliveries "flowing normally" to the country's wholesale and retail markets. Telecommunications ? Verizon switch on 10th floor of World Trade Center gone; 50,000 Manhattan lines taken out; Sprint and Verizon report all other data system busy, but operating normally Air Travel ? FAA ban on outbound flights until noon EST today at the earliest. ? Huge logistics headaches and delays expected by airlines and air traffic controllers once US flights resume. ? Air cargo delays considerable due to rigorous inspections. Maritime Transportation Conditions ? St. Lawrence Seaway reopened. Coast Guard inspections stepped up. ? New York Port closed, not receiving refined projects- Colonial Pipeline deliveries expected to "catch big premiums." Border Crossings ? Security at all US-Canada border crossings on maximum alert. Bridges/tunnels closed. Freight forwarders reporting that freight movements over the border have slowed to a trickle. ? Rail freight moving normally across Canada-US border. ? US-Mexico border reopen, but subject to delays and inspections on US side. Mexican officials request that Mexican citizens delay trips to the US. Political Update International US Arab allies (Egypt, Saudi, Jordan, Kuwait, UAE) walking a fine line. Masses believe US got what it deserves, but leaders have to condemn attacks to maintain relations with Washington. Moderate Arab leaders are concerned that support for attacks at home -- and possible US reactions to strike -- will increase instability and could lead to major upheaval in their countries. Saudi sources expect "state of confusion" to exist for immediate period ahead. In the West, no intelligence or law enforcement agency has anything concrete yet. Everything is therefore speculation, albeit logical speculation. Most importantly, the sophistication means someone bigger than bin Laden was involved, even if he was the final perpetrator. Oil Politics OPEC's Rodriguez has reassured oil markets on supplies, but no high-level Saudi officials have officially echoed this sentiment (nothing from Oil Minister Naimi). Unofficially, we have reports that Saudi officials reporting that the terrorist incident "relieves pressure on us to make anti-US moves" in oil policy.