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December 5, 2011 Energy Data Highlights Crude oil futures price 12/1/2011: $100.20/bbl up$4.03 from week earlier up$13.45 from year earlier Natural gas futures price 12/1/2011: $3.648/mmBtu up$0.188 from week earlier down$0.621 from year earlier Weekly coal production 11/26/2011: 20.807 million tons down0.411 million tons from week earlier up0.324 million tons from year earlier Natural gas inventories 11/25/2011: 3,851 Bcf down1 Bcf from week earlier up43 Bcf from year earlier Crude oil inventories 11/25/2011: 334.7 mmbbl up3.9 mmbbl from week earlier down24.9 mmbbl from year earlier

Natural Gas/ Power News

EIA Storage Release 11/23/11 (Actual): -1 Bcf Previous Week: +9 Bcf +1.1% Change from 1 Year Ago +7.3% Change 5-year Average Shale gas opens door to U.S. LNG exports A decade ago, a global glut of clean, cheap natural gas bred big plans to import liquefied natural gas to the energy-hungry United States. Thats all changed. Nowadays, energy companies are tapping into previously untouched North American gas reserves, prompting them to take a hard look at ways to sell their new-found gas to the rest of the world. This sudden shift from gas importer to

possible exporter is the result of innovative drilling technology that frees gas trapped in vast shale rock formations that until recently had been dismissed as non-commercial. For the U.S. to become a serious natural gas exporter requires building a costly infrastructure, which will only happen if the right market conditions exist in coming years. Nevertheless, several companies already have plans to build liquefied natural gas, or LNG, export terminals while others are well into the evaluation process, raising the prospects of a billion-dollar construction boom for these highly specialized facilities. http://www.marketwatch.com/story/shale-gas-opens-door-to-us-lng-exports-201112-05?reflink=MW_news_stmp

As Gas Riches Remake Plains, Lawmaker Shares in Bounty Gas money is transforming vast stretches of Oklahoma. Here, 40 miles west of the state capital, crews work through the night drilling new wells deep into the earth, and a small army of laborers rips through just-planted fields of winter wheat to install miles of gas pipeline. Across the state in tiny Atoka, a Cadillac and a Jaguar park next to pickups outside the local store that sells cowboy boots and overalls; in nearby Coalgate, the natural gas industry has created six overnight millionaires. http://www.nytimes.com/2011/12/04/us/politics/dan-boren-oklahoma-lawmakershares-in-gas-field-bounty.html

Pipeline safety, line replacement top priorities of new AGA chairman Larry Borgard, the 2012 chairman of the American Gas Association, said Friday that his top three priorities for the year are promoting pipeline safety, taking advantage of new business opportunities like natural gas vehicles, and protecting the industry's interests during congressional deficit negotiations. "Number one on our agenda will always be pipeline safety and making sure that we don't lose the confidence of our customers to deliver our product safely to the 70 million homes and businesses throughout the US that have natural gas service," he said. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6730668

Outlook for UK natural gas The traditional contango of the UK natural gas curve has smoothed out in recent weeks, with summer seasons now at parity and the winters either on a par or even dipping into backwardation. Tom Woolley investigates the trend and its likely impact on consumers. http://www.risk.net/energy-risk/feature/2129764/outlook-uk-natural-gas

Green/ Alternative Energy News

First Reserve in $1bn wind farm venture First Reserve, one of the largest energy-focused private equity investors in the world, is set to announce a $1bn wind farm joint venture with Spains Renovalia Energy on Monday. The long-term agreement will see the US private equity group investing $150m in a joint company called Renovalia Reserve that will own and operate wind farms in Spain and Hungary, and develop a pipeline of projects in Canada, Romania and Spain. The move will mark the US private equity groups first foray into onshore wind farms. We ended up with a deal that we are very happy with and they ended up with more capital to work with, said John Barry, director at First Reserve...The family-owned Spanish renewable energy group will bring 244 megawatts of wind-generating capacity in Spain and a further 15 megawatts in Hungary into the joint venture. It will also add a pipeline of projects in Canada, Romania and Spain with a total capacity of 300 megawatts. http://www.ft.com/intl/cms/s/0/84717b14-1e65-11e1-bae400144feabdc0.html#axzz1ffBOkuw5

Crude Oil News

OPEC Daily Basket Price 12/2/2011- 109.66 (OPEC Daily Basket Price 12/1/2011- $109.41)

Oil Rises for Second Day on Iran Tension, European Efforts to Ease Crisis Oil rose for a second day in New York on concern that tension in the Middle East threatens supplies and as investors bet that European leaders will take steps to tame the regions debt crisis. West Texas Intermediate oil gained as much as 1 percent, after posting the first weekly rise in three. Iran said crude will surge to more than $250 a barrel if nations threaten to ban its exports, according to the Shargh newspaper. European leaders meet this week as U.S. Treasury Secretary Timothy F. Geithner visits the region. Italian Prime Minister Mario Monti yesterday announced 30 billion euros ($40 billion) of austerity measures. Iran is contributing to the strength today, said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London who predicts Brent, the European benchmark, will rise to $115 by the end of the year. As long as you dont think about Europe, there are plenty of reasons to envisage higher prices in the first quarter. Demand from developing economies makes a price collapse unlikely. http://www.bloomberg.com/news/2011-12-05/oil-rises-for-second-day-on-irantension-european-efforts-to-ease-crisis.html

Economy Avoiding Death Spiral Boosting Bullish Fund Wagers: Commodities

Net-long positions in crude oil rose 2.6 percent from a week earlier to 194,695 contracts, according to CFTC data. Futures climbed 4.3 percent to $100.96 a barrel on the New York Mercantile Exchange last week, the most since midNovember. The most widely held option gives holders the right to buy oil at $150 by November, exchange data show. http://www.bloomberg.com/news/2011-12-04/economy-avoiding-death-spiralboosts-bullish-fund-wagers-commodities.html

Oil Up Near $111 on Iran Supply Risk Concerns Oil prices rose on Monday with Brent crude futures up near $111, extending gains from last week as rising tensions between Iran and the West increased the risk of disruption to crude shipments by the world's fifth-largest oil exporter. Iran warned the West on Sunday that any move to block its oil exports would more than double crude prices with devastating consequences for a fragile global economy. Brent crude was up 89 cents at $110.83 a barrel, after posting a weekly gain of more than 3 percent, its best since mid-October. Earlier Brent had pushed to an intraday high of $111.22 a barrel. U.S. crude was up 81 cents to $101.77 a barrel, having posted a gain of 4.3 percent last week. Christopher Bellew, an oil trader with Jefferies Bache in London, said that worries about Iran and Syria were helping to buoy oil prices. http://www.cnbc.com/id/45545103 U.S. Urges Seoul to Reduce Trade With Iran A senior U.S. official on Monday urged South Korean officials to put more pressure on Iran to end its nuclear program, suggesting that Seoul halt imports of petrochemicals and reduce imports of crude oil from Iran. Robert Einhorn, the U.S. special adviser on nonproliferation and arms control, stopped short of asking South Korea to completely stop buying oil from Iran, citing tight market conditions. South Korea gets about 10% of its crude oil from Iran. As production capacity increases, it would be possible for countries to reduce their purchases of Iranian crude and to make up the shortfall by acquiring from other countries," Mr. Einhorn said at a news conference. "But we're very conscious of the energy-security needs of countries like South Korea and we don't want to interfere with those needs." http://online.wsj.com/article/SB1000142405297020477040457707982376611616 2.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsThird Weighing Loss of Iran's Oil European refiners are weighing the impact of a possible embargo on Iranian oil, the spokesman for their Brussels-based industry group said Friday, a day after the EU broadened sanctions on Iran but stopped short of an embargo. "We are consulting our members to evaluate" it, a spokesman for European refiners association Europia said, a sign that the oil industry is starting to take precautionary steps in case an embargo is implemented. EU foreign ministers broadened sanctions against Iran on Thursday due to "serious and deepening concerns" about the country's nuclear program. While the meeting didn't result in an oil embargo, EU officials emphasized that such a move had strong support in Brussels. EU foreign policy chief Catherine Ashton said an oil embargo was still "being debated," and diplomats said some restrictions on Iranian oil imports were likely to be imposed in the coming months.

http://online.wsj.com/article/SB1000142405297020490380457707816290839629 8.html?mod=WSJ_Commodities_LEFTTopNews Fuel exports up, and so is the cost at the pump Faced with sluggish sales at home, American refineries are shipping their gasoline, diesel and other petroleum products abroad in record amounts, turning the country into a net exporter of fuel. And thats one of the reasons why gasoline now costs more than ever for this time of year. The United States, long the worlds most voracious consumer of fuel, still imports almost half of its crude oil, the raw material for gasoline and diesel. But starting in 2008, the country began exporting more refined petroleum products than it imported. And the gap keeps growing. In the first nine months of this year, the United States exported 655 million barrels of finished petroleum products, including 121 million barrels of gasoline, while importing 264 million barrels of finished petroleum products, including 32 million barrels of gasoline, according to the U.S. Energy Information Administration. http://fuelfix.com/blog/2011/12/02/fuel-exports-up-and-so-is-the-cost-at-the-pump/ Sparks fly at US House hearing on Keystone XL pipeline proposal A US congressional hearing on the proposed Keystone XL pipeline extension grew somewhat testy Friday over the issue of keeping the products refined from Canadian oil sands within the US. The House of Representatives' Subcommittee on Energy and Power held the hearing to highlight the job creating potential of the 1,700-mile pipeline that would carry diluted bitumen from Alberta, Canada to refiners on the US Gulf coast. Alex Pourbaix, president of Energy and Oil Pipelines at TransCanada, the company that wants to build the pipeline, testified that another issue the pipeline would address is energy security. "When you boil down the debate on this project, I believe it comes down to a simple question for Americans: do they want secure, stable oil from a friendly neighbor in Canada or do they want to continue importing high priced conflict oil from unfriendly regions such as the Middle East or Venezuela?" Pourbaix said. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6730658

Iran says oil would go over $250 if exports banned Iran warned the West on Sunday any move to block its oil exports would more than double crude prices with devastating consequences on a fragile global economy. http://www.reuters.com/article/2011/12/04/us-iran-sanctions-oilidUSTRE7B305L20111204

Recent Rig Counts Date of Last Year's Count

Area

Last Cou Change from Count nt Prior Count

Date of Prior Count

Change from Last Year

U.S. Canada

2 Dec 1993 11 2 Dec 11 484

-7 Unchanged

23 Nov 11 23 Nov 11 Septembe r 2011

+280 +35 +98

24 Nov 10 24 Nov 10 September 2010

Internatio October 1197 nal 2011

+23

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

Weather
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