Follow

December 12, 2011 Energy Data Highlights Crude oil futures price 12/8/2011: $98.34/bbl down$1.86 from week earlier up$10.06 from year earlier Natural gas futures price 12/8/2011: $3.457/mmBtu down$0.191 from week earlier down$1.149 from year earlier Weekly coal production 12/3/2011: 22.106 million tons up1.299 million tons from week earlier up0.273 million tons from year earlier Natural gas inventories 12/2/2011: 3,831 Bcf down20 Bcf from week earlier up102 Bcf from year earlier Crude oil inventories 12/2/2011: 336.1 mmbbl up1.3 mmbbl from week earlier down19.8 mmbbl from year earlier

Natural Gas/ Power News

EIA Storage Release 12/8/11 (Actual): -20 Bcf Previous Week: -1 Bcf +2.7% Change from 1 Year Ago +8.7% Change 5-year Average Middle East can expect 'dash for gas', Shell exec tells Oman conference Shell anticipates a dash for gas in the Middle East to cope with increasing energy demand and expectations that some 60 million people are due to enter its jobs market over the next ten years. The forecast came from Mark Carne, Shell's Executive Vice President for the Middle East and North Africa, addressing the Gas Arabia conference in Muscat Monday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8687320

Novatek to double gas output by 2020, Total ups stake Novatek is in talks to acquire up to four partners to handle marketing and plans to double its annual gas output by 2020, its chairman said on Friday after France's Total said it had boosted its stake in Russia's biggest private gas company. http://www.reuters.com/article/2011/12/09/us-total-novatekidUSTRE7B80WV20111209

EU leaders commit to complete single energy market by 2014 National leaders from the EU's 27 countries on Friday signed up to a report from the current Polish presidency committing them to complete the EU's single market for electricity and gas by January 2014, conclusions from the European Council meeting in Brussels showed. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/8686978

Wyomings Tainted Water Puts Pressure on EPA to Act on Gas Fracking A U.S. Environmental Protection Agency report linking hydraulic fracturing for natural gas to groundwater contamination for the first time puts pressure on the agency to move sooner on efforts to regulate drilling. The Dec. 8 report that chemicals consistent with those used in drilling were found in groundwater samples in west-central Wyoming may be used by the agency to accelerate action, according to Ken von Schaumburg, a Washington-based attorney and former EPA deputy general counsel. The EPA is weighing three rules on fracturing, or fracking, the first of which is planned for April. Environmental groups say fracking, in which millions of gallons of chemically treated water are forced underground to shatter rock and let gas flow, is a threat to drinking-water supplies. The EPAs draft report on groundwater contamination in Pavillion, Wyoming, about 230 miles (370 kilometers) northeast of Salt Lake City, is the first to blame the drilling technique for spoiling water. http://www.bloomberg.com/news/2011-12-12/wyoming-s-tainted-water-pressuresepa-on-to-act-on-gas-fracking.html

Industry Study: 1.6M Shale Jobs by 2035 America's Natural Gas Alliance, an industry trade group based in Washington, D.C., says shale gas production will support more than 800,000 jobs nationwide by 2015 and 1.6 million jobs by 2035, and "generate more than $933 billion in federal, state and local government tax revenues and federal royalty payments over the next 25 years." The Alliance released the results of a report prepared by IHS Global Insight, Englewood, Colo. "At a time when our nation's economy is still suffering from a downturn and jobs are top-of-mind for many Americans, the impact of shale gas on employment is invaluable. Last year, shale plays supported

600,000 jobs, and by 2035, the study projects that shale gas will support more than 1.6 million jobs," said Regina Hopper, president of the Alliance. "Capital investment as a result of shale gas production is expected to total nearly $1.9 trillion between 2010 and 2035," she continued. "As natural gas prices remain low with increased shale gas production, electricity costs are lower and the overall stronger economy will bring to every American household a savings of $926 per year between 2012 and 2015." http://business-journal.com/industry-study-m-shale-jobs-by-p20581-1.htm

Gas drilling surge in Ohio spurs fear, brings jobs The drilling activity promises huge opportunity for energy firms and, said Republican Gov. John Kasich, for Ohio's struggling economy. The vast Marcellus and Utica shale formations already are paying off in thousands of wells in Pennsylvania and West Virginia, bringing great wealth to landowners and jobs throughout the region. "We're talking about a generation who have lived in poverty and this is an opportunity to pull them out," Kasich said in an Associated Press interview. What he views as an opportunity and Gorcheff and other residents view with skepticism are the 5 billion barrels of recoverable oil underneath them, making Ohio the latest battleground between companies eager to profit off of the oil and landowners who want a more measured look at the potential impact. Even before Kasich took office in January, his team worked on a strategy to exploit the energy riches embedded in the Marcellus and deeper Utica shale formations under eastern Ohio. http://www.freep.com/article/20111212/NEWS07/112120332/Gas-drilling-surge-inOhio-spurs-fear-brings-jobs

Green/ Alternative Energy News

HyperSolar's "No Fracking" Renewable Natural Gas Technology HyperSolar, Inc. , the developer of a breakthrough technology to make renewable natural gas using solar power, today announced that its technology can help reduce the need for hydraulic fracturing (fracking) used to access underground natural gas resources. The company's renewable natural gas is a clean, carbon neutral methane gas that can be produced above ground and used as a direct replacement for traditional natural gas to power the needs of the world. Even though the United States has vast natural gas resources, a majority of these reserves are only accessible through fracking, a potentially environmentallyhazardous process that many environmentalists claim could contaminate our water supplies and the air we breathe," said Tim Young, CEO of HyperSolar. "Rather than extracting difficult-to-reach fossil fuel reserves, we think that the focus should be on alternative technologies that can provide the world with affordable and clean sources of energy. We believe it is far better to consider

sources of energy that are renewable instead of limited depleting resources such as coal, oil or natural gas." http://www.marketwatch.com/story/hypersolars-no-fracking-renewable-naturalgas-technology-2011-12-12

Valero takes majority stake in Michigan cellulosic ethanol plant US refiner/marketer and ethanol maker Valero Energy has signed definitive agreements to fund most of the $232 million needed to build a cellulosic ethanol plant in Michigan, project partner Mascoma said Friday. The Department of Energy and the state of Michigan will help fund the plan, which calls for a 20 million gal/year plant to be built in Kinross by year-end 2013. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8686881

Crude Oil News

OPEC Daily Basket Price 12/9/2011- $107.45 (OPEC Daily Basket Price 12/8/2011- $108.98)

Oil Falls on Europes Debt Crisis as Moodys Readies to Review Oil fell in New York, extending last weeks decline, on concern the European debt crisis may spread and as Moodys Investors Service said it will review ratings for countries in the region. Futures dropped as much as 1.5 percent, adding to the 1.5 percent loss in the five days to Dec. 9. Last weeks European Union summit offered few new measures and doesnt diminish the risk of credit-ranking revisions, Moodys said today. EU leaders will have to quickly implement an agreement to strengthen budget rules to regain market confidence, according to German Finance Minister Wolfgang Schaeuble. We expect prices to stay under pressure as long as macro- fears stay high, Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by phone. At the moment its Europe, providing contagion that other countries will be dragged into it, thats keeping demand away. Chinas growth may disappoint if European jitters continue. http://www.bloomberg.com/news/2011-12-11/crude-oil-trades-little-changed-neartwo-day-high-in-new-york.html

U.S. Crude Oil Falls $1 on Euro Zone Gloom U.S. crude oil futures fell more than $1 a barrel on Monday on deepening concern over the prospects for the euro zone, despite a deal last week among European governments to work towards closer fiscal union. On Monday morning, the

benchmark January light, sweet crude oil contract was trading around $98.35, down $1.06 per barrel, having reached an intra-day low of $98.30. Investors worry the long-term EU steps may not be sufficient to avert a short-term funding crisis for one or more of the euro zone's most indebted economies. Tight budget control is also likely to imply lower economic growth in the medium term, economists say. http://www.cnbc.com/id/45633533 Rising Consumer Confidence and Fading Euro Fears Lift Oil Markets The refusal of the Untied Kingdom to go along with proposed euro treaty changes and Moodys credit rating downgrade to 3 of Frances major banks helped drive the oil markets lower in choppy overnight trading to begin todays final trading day of the week. Although Chinas announcement that it will create a $300 billion investment vehicle for the US and Europe helped drive oil and fuel prices higher initially in overnight trading, as the markets realized that the entire EU was not in agreement about the proposed EU treaty changes, prices quickly reversed and slid into negative territory as todays pit opening neared and the energy market continued to take direction from changing economic perception. Crude oil ranged from a low at $97.55 up to a high at $99.03 in moderate overnight trading volume before slipping back to near $98.00 as todays pit opening approached. http://www.theenergydesk.com/editorial.aspx?id=1134860 Oil falls below $99 ahead of OPEC meeting Oil prices fell below $99 a barrel Monday in Asia as traders looked to this week's OPEC meeting for clues about the cartel's future crude output. Benchmark crude for January delivery was down 79 cents to $98.62 a barrel in midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.07 to settle at $99.41 on Friday. http://www.sacbee.com/2011/12/11/4116067/oil-hovers-above-99-ahead-ofopec.html Credibility and unity at top of Opecs agenda The worlds largest oil producers meet in Vienna this week amid uncertainty over the outlook for crude markets next year. Delegates from the Organisation of Petroleum Exporting Countries, the cartel which accounts for about a third of the worlds oil production, will have to weigh conflicting issues, in particular the uncertain economic backdrop in Europe, heightened tensions with Iran over possible European Union sanctions and the increase in supply from Libya after the overthrow of Colonel Gaddafi. The cartel will also have to present a united front after its last meeting in June ended in disarray, with no agreement reached on production levels. Saudi Arabia, Opecs most influential member which had argued for an increase in output, called it: One of the worst meetings we have ever had. Saudi Arabia responded to the impasse, along with Kuwait and the United Arab Emirates, by unilaterally boosting its output in order to make up for the loss of Libyan production amid civil unrest. http://www.ft.com/intl/cms/s/0/edf6c46c-2415-11e1-bbe600144feabdc0.html#axzz1gK9HETBK

New Opec quota accord will fail amid wrangling' Opec may struggle to agree on a new quota this week, six months after its last meeting collapsed, as Saudi Arabia pumps the most crude in 30 years and Iran risks losing customers as a consequence of European sanctions

http://gulfnews.com/business/oil-gas/new-opec-quota-accord-will-fail-amidwrangling-1.948049

Saudi output points to healthier oil demand Saudi Arabia is by far the worlds largest oil exporter. Thus, when it raises its production, oil prices usually fall. Yet, when Ali Naimi, Saudi oil minister, said last week Riyadh was pumping more than 10m barrels a day, prices barely moved a few cents. Oil traders were in disbelief at the number. The International Energy Agency estimated that in October the kingdom pumped 9.45m barrels a day and Opec itself put Saudi production at 9.47 b/d in the same month. The level of production that Mr Naimi stated suggested a huge increase, in only a few weeks. Moreover, the 10m b/d is a psychological barrier a level the kingdom has not reached since the aftermath of the second oil crisis in 1979. The level of Saudi oil production has triggered a heated debate among oil traders, analysts and government officials. The discussion is twofold: on the one hand, about the level itself; on the other, about why it has boosted its output at a time when many are betting that oil demand growth is slowing down, not accelerating. http://www.ft.com/intl/cms/s/0/3bc35d9a-249d-11e1-ac4b00144feabdc0.html#axzz1gK9HETBK

Saudi Aramco to keep crude supply volumes to Asian buyers unchanged in Jan Saudi Aramco will supply full contractual volumes of crude loading in January to at least two term customers in Asia, unchanged from the previous month, sources at the two refineries said Monday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7851523 Oil group to dilute shares in Kazakh project An international oil group led by BG and Italys Eni is expected to sign an agreement with Kazakhstan this week to transfer a stake in the Karachaganak oilfield to the central Asian state and end a bitter dispute that has bedevilled the project for more than two years. Under the deal Kazakhstan will pay $1bn to acquire a 10 per cent interest in the Karachaganak Petroleum Operating company and withdraw legal claims against the foreign partners including a $1.1bn claim for back taxes. BG and Eni and its partners in KPO, including Chevron and Lukoil, the Russian oil group, will dilute their shares in the Karachaganak project on a pro rata basis to make room for KazMunaigas, the Kazakh state oil company. A person familiar with the group said negotiators were racing to put the finishing touches to the agreement that is expected to be signed this week when Kazakhstan celebrates 20 years of independence. http://www.ft.com/intl/cms/s/0/52d2fbda-2407-11e1-bbe600144feabdc0.html#axzz1gK9HETBK

Two-month deadline for Keystone XL embedded in US tax proposal A provision forcing a decision on the Keystone XL pipeline appeared in a key endof-year tax package introduced Friday by US House Republicans. The bill would give the Obama administration 60 days to approve TransCanada's Alberta-toTexas pipeline or declare it against the national interest. The latter finding would require the administration to submit to Congress within 15 days a report justifying the decision, "including consideration of economic, employment, energy security, foreign policy, trade and environmental factors." http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8686883

Recent Rig Counts Date of Last Year's Count 3 Dec 10 3 Dec 10 November 2010

Area U.S. Canada

Last Count 9 Dec 11 9 Dec 11

Date of Cou Change from Prior nt Prior Count Count 1987 504 -6 +20 -12 2 Dec 11 2 Dec 11 October 2011

Change from Last Year +264 +22 +55

Internatio Novemb 1185 nal er 2011

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

Weather 6 to 10 Day Outlooks

Temperature

Precipitation

8 to 14 Day Outlooks Temperature

Precipitation