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December 6, 2011 Energy Data Highlights Retail gasoline price 12/5/2011: $3.290/gal down$0.017 from week earlier up$0.332 from year earlier Retail diesel price 12/5/2011: $3.931/gal down$0.033 from week earlier up$0.734 from year earlier Crude oil futures price 12/2/2011: $100.96/bbl up$4.19 from week earlier up$12.96 from year earlier Natural gas futures price 12/2/2011: $3.584/mmBtu up$0.042 from week earlier down$0.759 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/ 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 Drilling to Add 870,000 U.S. Jobs Producing natural gas from shale will support 870,000 U.S. jobs and add $118 billion to economic growth in the next four years, according to a report from IHS

Global Insight. Gas from shale, which accounts for 34 percent of U.S. output, also will contribute $57 billion in federal, state and local taxes by 2035, or $933 billion in the next 25 years, according to todays IHS report, commissioned by Americas Natural Gas Alliance, a Washington-based industry group. Shale gas is extracted using hydraulic fracturing, a process in which millions of gallons of chemically treated water and sand is forced underground, breaking up the rock to free trapped gas. Industry expansion is adding jobs in an otherwise disappointing economy, said John Larson, a vice president at Lexington, Massachusetts-based IHS, a management consulting company for the energy industry. Shale gas combines a capital-intensive industry with a broad domestic supply chain, Larson said in an interview. We think that these jobs through 2015 are net new jobs because of high unemployment. http://www.bloomberg.com/news/2011-12-06/shale-gas-drilling-to-add-870-000-us-jobs-by-2015-report-says.html

EU energy regulators, traders, brokers unite in fight against VAT fraud European regulators, trading firms, exchanges and brokers in the energy sector have committed to make full use of the EU's Regulation on Energy Market Integrity and Transparency (REMIT) to clamp down on VAT fraud in power and gas trades. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8666876 German, French exchange-traded power volumes fall 29% on year in November Total German, French and Swiss power volumes traded on the EPEX Spot and EEX energy exchanges in November changed little from the previous month, but fell 29% year-on-year to 101.4 TWh, data from the exchanges showed Monday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/8661714

Green/ Alternative Energy News

New policy approaches key to scale up renewable energy Governments should consider scaling up of renewable energy as part of their robust economic development strategy, rather than as an environmental strategy with the secondary benefits of job creation. Such an approach is fundamental for attracting new private-sector investment to finance renewable projects at a scale that is needed to address climate change. Proven mechanisms should not be abandoned, but new policies have to target ways to reduce the risk-to-reward ratio in order to enhance private sector investor confidence for investment in large-scale renewable energy. http://www.commodities-now.com/commodities-now-reports/environmentalmarkets/9122-new-policy-approaches-key-to-scale-up-renewable-energy.html

Crude Oil News

OPEC Daily Basket Price 12/5/2011- $110.35 (OPEC Daily Basket Price 12/2/2011- $109.66)

Oil Recovers on Speculation Impact of S&P Ratings Reviews May Be Limited Oil traded near its highest in three weeks in New York, recouping earlier losses as a surge in German manufacturing tempered concerns that Standard & Poors may downgrade the credit ratings of European nations. West Texas Intermediate was little changed after recouping a loss of 0.6 percent. German factory orders rose the most in 19 months in October after three straight declines. Standard & Poors said yesterday it may strip Germany and France of AAA credit ratings as it weighs downgrades for 15 nations. U.S. gasoline and distillate stockpiles rose last week while crude supplies shrank, according to a Bloomberg News survey. http://www.bloomberg.com/news/2011-12-06/oil-snaps-two-day-gain-as-s-pthreatens-european-credit-rating-downgrades.html Crude Seesaws With EU Oil futures jumped above $102 a barrel for the first time in more than two weeks, boosted by optimism over progress on Europe's debt crisis and the prospect of additional sanctions on Iran. Those gains were largely wiped out after reports of a possible downgrade of European sovereign debt undercut the rally.Light, sweet crude for January delivery rose as high as $102.44 a barrel, its highest level since Nov. 17, after French President Nicolas Sarkozy and German Chancellor Angela Merkel said they agreed to firm up financial discipline in the euro zone. In the end, U.S. crude futures settled up only three cents at $100.99 a barrel on the New York Mercantile Exchange. Brent crude settled down 13 cents, or 1.0%, at $109.81 a barrel. The Sarkozy-Merkel proposal is expected to be discussed at a meeting of European Union in Brussels Thursday and Friday. http://online.wsj.com/article/SB1000142405297020490380457708014242782994 0.html?mod=WSJ_Commodities_LEFTTopNews Spread between WTI and Brent prices narrows on signs of easing transportation constraints Between October and November, the spot price of West Texas Intermediate (WTI) crude oil increased $23 per barrel partly on signs that transportation constraints out of the U.S. Midwest, the main market for WTI, are beginning to ease. At the same time, the price of European benchmark Brent crude oil was up much less, only about $7 per barrel. As a result, the WTI-Brent crude oil price difference has narrowed. The WTI-Brent crude oil price difference was smaller earlier in the year. While the WTI-Brent oil price narrowed, gasoline prices continue to track the price of Brent as they have for much of the year. The average price for gasoline moved

about 6 cents a gallon from early October through mid November and then fell 13 cents during the last two weeks of November. http://www.eia.gov/todayinenergy/detail.cfm?id=4170 Big Oil Heads Back Home Big Oil is redrawing the energy map. For decades, its main stomping grounds were in the developing worldexotic locales like the Persian Gulf and the desert sands of North Africa, the Niger Delta and the Caspian Sea. But in recent years, that geographical focus has undergone a radical change. Western energy giants are increasingly hunting for supplies in rich, developed countriesa shift that could have profound implications for the industry, global politics and consumers. Driving the change is the boom in unconventionalsthe tough kinds of hydrocarbons like shale gas and oil sands that were once considered too difficult and expensive to extract and are now being exploited on an unprecedented scale from Australia to Canada. The U.S. is at the forefront of the unconventionals revolution. By 2020, shale sources will make up about a third of total U.S. oil and gas production, according to PFC Energy, a Washington-based consultancy. By that time, the U.S. will be the top global oil and gas producer, surpassing Russia and Saudi Arabia, PFC predicts. http://online.wsj.com/article/SB1000142405297020447950457663873160019138 2.html?mod=WSJ_hps_RIGHTTopCarousel_1 Oil's Growing Thirst for Water Water has always been a concern for 65-year-old Joe Parker, who manages a 19,000-acre cattle ranch here in South Texas. "Water is scarce in our area," he says, and a scorching yearlong drought has made it even scarcer. What has Mr. Parker especially concerned are the drilling rigs that now dot the flat, brushy landscape. Each oil well in the area, using the technique known as hydraulic fracturing, requires about six million gallons of water to break open rocks far below the surface and release oil and natural gas. Mr. Parker says he worries about whether the underground water can support both ranching and energy exploration. http://online.wsj.com/article/SB1000142405297020452820457700993022284724 6.html?mod=WSJ_Commodities_LEFTTopNews Russian Oil Frontier: Nowhere Land There's the middle of nowhere, and then there's here. The place is Verkhnechonsk, an oil field in eastern Russia operated by TNK-BP Ltd. that is one of the remotest spots on the planet. To get there you have to fly to Siberia, take an aging turboprop plane deep into the taiga, or subarctic forest. Then hop on a helicopter heading north. From Moscow, the journey takes a day, including layoverslonger if there are snowstorms. It is so far from anywhere that TNK-BP, a joint venture of BP PLC and a group of Soviet-born billionaires, runs operations via video link from an office in Irkutsk, some 600 miles away. "It's like living on an island," says Albert Gilfanov, the oil field's deputy manager. Russia is an energy superpower, with 13% of the planet's oil resources and a quarter of its natural gas. Having declined steeply after the collapse of the Soviet Union, oil production has come back strongly, hitting a new post-Soviet high of 10.3 million barrels a day in

October. Yet the mainstay of Russia's hydrocarbon wealththe big Soviet-era oil fields of Western Siberiais in decline. To keep production stable, Russia has no choice but to expand into new areas like Eastern Siberiawhere oil reserves are less plentiful, production costs higher and the logistical challenges mind-boggling. http://online.wsj.com/article/SB1000142405297020376480457706020007367412 4.html?mod=WSJ_Commodities_LeadStory Brazil acts fast to clear up oil spills It was about a month ago when Chevron workers first noticed small bubbles of oil emerging through cracks in the seabed near one of their wells, 230 miles off the coast of Rio de Janeiro. Over the next four days, those bubbles spewed more than 2,000 barrels of oil into the Atlantic, leading to a temporary ban of the US company, a police investigation, millions of dollars in fines, the shutdown of another of its wells and now threats of regulatory change in one of the worlds most promising oil industries. Speaking to the Financial Times, Carlos Minc, Rios environment secretary and the countrys former environment minister, says he is now pushing for tougher rules for companies looking to profit from Brazils oil boom. We may be a tropical country but were not a banana republic, he says. Everyone wants to come to Brazil and if were not strict with [Chevron], this place is going to turn into a pool of oil. http://www.ft.com/intl/cms/s/0/dabd7c7a-1e6f-11e1-bae400144feabdc0.html#axzz1flBF0c5J

ParisandLondon to press EU for Iran oil ban France and the UK will use a gathering of European Union leaders this week to push forward their plan to approve a full embargo on oil imports from Iran. The meeting will be dominated by efforts to shore up the single currency. But diplomats in Brussels say France is also pushing to use the occasion to advance its case for strong measures against Iran over its nuclear weapons programme. EU foreign ministers agreed last week to start work on a ban, with the aim of imposing sanctions at their next meeting in January, in a move that could put significant new pressure on Tehrans foreign currency receipts. British and French diplomats say Greece, which receives between 25 and 30 per cent of its oil from Iran, is the only state raising serious objections to a ban on Iranian oil imports but those objections should be overcome by the January meeting. http://www.ft.com/intl/cms/s/0/823241ca-1f5b-11e1-ab4900144feabdc0.html#axzz1flBF0c5J

Oil rises above $101 as Iran tensions rise Oil prices rose above $101 a barrel Monday in Asia amid growing tensions between Iran and Western powers and signs the U.S. economy is improving. Benchmark crude for January delivery was up 50 cents to $101.46 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 76 cents to settle at $100.96 on Friday. http://www.taiwannews.com.tw/etn/news_content.php?id=1779220

End of Easy Mideast Oil Means Work for Exxon, BP: Energy Markets The Middle East will need more help from international investors to keep the title of worlds biggest oil and gas producer because its remaining deposits are harder to get at. Technology is the key to prolonging the life span of the reservoirs, and weve been doing this with our partners for a long time, Mohamed Al-Hamli, oil minister of the United Arab Emirates, said yesterday at the World Petroleum Congress in Doha, Qatar. We are forced to go down the road of enhanced oil recovery and using more advanced technology. http://www.bloomberg.com/news/2011-12-05/end-of-easy-mideast-oil-meanswork-for-exxon-bp-energy-markets.html

Peak oil debate losing relevance due to new upstream technology: Repsol CEO The debate over whether the world's reserves of hydrocarbons have now peaked and are in decline has lost relevance over recent years as new technology allows oil companies to find and exploit new hydrocarbon sources, the CEO of Repsol Antonio Brufau said Tuesday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8666877 Recent Rig Counts Date of Last Year's Count 24 Nov 10 24 Nov 10 September 2010

Area U.S. Canada

Last Cou Change from Count nt Prior Count 2 Dec 1993 11 2 Dec 11 484 -7 Unchanged

Date of Prior Count 23 Nov 11 23 Nov 11 Septembe r 2011

Change from Last Year +280 +35 +98

Internatio October 1197 nal 2011

+23

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

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