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November 2, 2011

Energy Data Highlights

Crude oil futures price 10/31/2011: $93.19/bbl up$1.92 from week earlier up$11.76 from year earlier Natural gas futures price 10/31/2011: $3.934/mmBtu up$0.330 from week earlier down$0.106 from year earlier Retail gasoline price 10/31/2011: $3.452/gal down$0.010 from week earlier up$0.646 from year earlier Retail diesel price 10/31/2011: $3.892/gal up$0.067 from week earlier up$0.825 from year earlier Weekly coal production 10/22/2011: 21.159 million tons down0.227 million tons from week earlier down0.111 million tons from year earlier http://www.eia.gov/

Natural Gas/ Power News

EIA Storage Release 10/27/11 (Actual): +92 Bcf Previous Week: +112 Bcf -0.7% Change from 1 Year Ago +4.4% Change 5-year Average Tennessee Gas Pipeline Places 300 Line Project in Service El Paso Corporation today announced that its wholly owned subsidiary, Tennessee Gas Pipeline Company, L.L.C. (TGP), has placed its 300 Line Project in service, marking the completion of one of the largest natural gas infrastructure projects

currently under way in the Northeast United States. http://www.marketwatch.com/story/tennessee-gas-pipeline-places-300-lineproject-in-service-2011-11-01 Fracking probable cause of Lancashire quakes The controversial hydaulic fracking technique to extract oil and gas from underground bedrock was the "highly probable" cause of earth tremors which hit Lancashire's Fylde coast earlier this year, a report concluded today. Cuadrilla Resources, the British company exploring for natural shale gas in the Bowland Basin in Lancashire, has today released the findings of the report that was commissioned following unusual seismic activity near Poulton-le-Fylde in April and May 2011. http://www.commodities-now.com/commodities-now-news/power-andenergy/8628-fracking-probable-cause-of-lancashire-quakes.html Infrastructure could stall China shale gas production for years: analyst China needs nearly a decade to build the roads, pipelines and other infrastructure to bring its considerable shale gas reserves to market, an analyst predicted Wednesday in Singapore. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7635392

Green/ Alternative Energy News

US EPA, greens extend GHG talks; agency promises schedule 'shortly' The US Environmental Protection Agency said Monday it remains in talks with advocates seeking limits on greenhouse gas emissions from the power sector and planned to soon have a schedule to release the first federal regulations to curb global warming pollution from existing fossil fuel units. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/6631563 Governor Deval Patrick dismissed clean-energy setbacks Massachusetts Gov. Deval Patrick reaffirmed his commitment to taxpayer investments in the clean-energy industry, despite setbacks such as the Evergreen Solar and Beacon Power bankruptcies and outrage over federal support for the failed Solyndra. http://www.bostonherald.com/business/general/view.bg? articleid=1377668&srvc=business&position=recent

Crude Oil News

OPEC Daily Basket Price 1/1/2011- $106.35 (10/31/2011- $107.12)

Crude Gains on European Debt Crisis Talks as U.S. Fuel Stockpiles Decline

Oil rose in New York for the first time in four days on speculation European leaders will push Greece to accept their rescue plan, reducing the chances the regions debt crisis will worsen and curb economic growth. Futures rose as much as 1.1 percent, reversing a decline of 1.3 percent, as European leaders prepared to tell Greece there is no alternative to budget cuts in their bailout plan. Gasoline and distillate-fuel stockpiles in the U.S., the worlds biggest oil consumer, probably fell for a fifth week, according to a Bloomberg News survey before an Energy Department report today. Goldman Sachs Group Inc. recommended investors buy long-dated crude futures in New York and London. http://www.bloomberg.com/news/2011-11-02/crude-gains-on-european-debt-crisistalks-as-u-s-fuel-stockpiles-decline.html

Brent Bounces on Fed Hopes, Gains Fragile Brent crude bounced on Wednesday after three days of losses, supported by hopes that the Federal Reserve may hint at more measures to boost the U.S. economy, though it was seen vulnerable to more euro zone debt worries. http://www.cnbc.com/id/45125835 Arab Spring drives up Middle East break-even oil price The International Monetary Fund has just provided a timely update on the socalled break-even oil prices: the price at which the fiscal balance of Middle East oil producers is zero given the level of expenditure and non-oil revenues. In its twice yearly Regional Economic Outlook: Middle East and Central Asia report, the IMF estimates that the break-even oil price for UAE has now risen above $80 a barrel, up more than $60 a barrel from 2008. For Saudi Arabia, it is now at just $80 a barrel, up nearly $30 a barrel from three years ago. Even Kuwait, traditionally the richest emirate in the Gulf, has seen a hefty increase. http://www.ft.com/intl/cms/s/0/713b9568-0527-11e1-b8f4-00144feabdc0.html? ftcamp=rss#axzz1cS8jOZvh

Riding the Dakota Oil Boom A surge in crude-oil production in North Dakota is fueling a railroad boom in one of the nation's most remote regions, as producers bet that trains will be a quick and lucrative way to break a transportation bottleneck... North Dakota's output has grown in the last three years from a trickle to nearly 450,000 barrels a day trailing only Texas, Alaska and Californiaand could double by the middle of the decade, according to analyst and industry projections. But pipelines in the region already are operating at capacity, and major new lines aren't expected to start going into service until 2013. In response, companies are building rail terminals. Rail terminals can be developed quickly, giving them an advantage for now over pipelines. The North Dakota Pipeline Authority estimates a doubling in rail-terminal capacity next year alone to more than 700,000 barrels a day. http://online.wsj.com/article/SB1000142405297020370750457701046393423449 8.html?mod=WSJ_Commodities_LeadStory

Oilfield jobs boom in U.S. despite recession Jobs related to oil and gas drilling account for more than one in eight of all net new non-farm jobs in the United States since 2003, and almost one in five in the private sector, according to an analysis of data from the Bureau of Labor Statistics (BLS). Oil and gas drilling is one of the fastest growing sectors of employment, as near-record prices spur a massive expansion in activity and employment. The number of jobs related to oil and gas drilling has risen by almost 200,000 (80 percent) since 2003, and the sector now employs about 430,000 workers, according to BLS. http://www.commodities-now.com/commodities-now-reports/power-andenergy/8625-oilfield-jobs-boom-in-us-despite-recession.html Scraping the Barrel Pays for Oil Majors The oil majors' headline output fell 5% year-on-year, according to Ed Westlake at Credit Suisse. However, a third of that was down to disposals, and another quarter was due to production-sharing contracts curbing some output accruing to the majors when energy prices rise. In any case, it isn't just how much you produce but how much profit you make on each unit (something the Soviet tractor factories didn't get). On this basis, clear differences emerge. The standout is Chevron, whose exploration and production business earned $26.53 a barrel of oil equivalent produced in the third quarter, according to IHS Herold, an energy research firm. That was 87% above BP's level and even 17% above the mighty Exxon Mobil. Indeed, on IHS's data, Chevron has led the pack for the past two years. http://online.wsj.com/article/SB1000142405297020439480457701230134575265 4.html?mod=WSJ_Commodities_LEFTTopNews Nebraska senator introduces bill for state siting of oil pipelines Nebraska state Senator Annette Dubas on Tuesday introduced a bill giving oil pipeline siting authority to a state agency in what many read as an effort to change the current route of TransCanada's controversial Keystone XL oil pipeline project. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/3766135 Marathon Petroleum profits soar, growing on cheap oil Marathon Petroleum Corporation more than quadrupled its third-quarter earnings as the newly independent refining company capitalized on higher margins offered by sour and heavy crudes, the company announced Tuesday. http://fuelfix.com/blog/2011/11/02/marathon-petroleum-profits-soar-growing-oncheap-oil/ Frontline to Sell Three Crude Oil Tankers, CEO Jensen Martin Jensen Says Frontline Ltd., the oil tanker operator led by Norway-born billionaire John Fredriksen, said its looking to sell three more 1990s-built ships as the company modernizes its fleet while earnings plunge. The Front Alfa, Front Beta and Front Delta, all built in 1992 or 1993 and capable of hauling 1 million barrels of crude,

are on the market, Jens Martin Jensen, Singapore-based chief executive officer of the companys management unit, said by phone today. http://www.bloomberg.com/news/2011-11-02/frontline-to-sell-three-crude-oiltankers-ceo-jensen-martin-jensen-says.html

Sinopec Said to Be in Talks to Buy $2.7 Billion Stake in Galp Brazil Unit China Petrochemical Corp., which paid $7.1 billion for Repsol YPF SAs Brazilian unit, is in talks to buy a stake in Galp Energia SGPS SA (GALP)s division in Latin Americas second-biggest oil producer, according to people with knowledge of the matter. http://www.bloomberg.com/news/2011-11-01/galp-energia-said-to-be-in-talks-withsinopec-to-sell-stake-in-brazil-unit.html Recent Rig Counts Date of Last Year's Count 5 Nov 10 5 Nov 10 September 2010

Area U.S. Canada

Last Count 28 Oct 11 28 Oct 11

Cou nt 2021 499

Change from Prior Count 8 2 -9

Date of Prior Count 21 Oct 11 21 Oct 11 August 2011

Change from Last Year +349 +66 +54

Internatio Septemb 1174 nal er 2011

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

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