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December 15, 2011 Energy Data Highlights Crude oil futures price 12/13/2011: $100.14/bbl down$1.14 from week earlier up$11.53 from year earlier Natural gas futures price 12/13/2011: $3.279/mmBtu down$0.208 from week earlier down$1.141 from year earlier Retail heating oil price 12/12/2011: $3.866 /gal down$0.028 from week earlier up$0.624 from year earlier Crude oil inventories 12/9/2011: 334.2 mmbbl down1.9 mmbbl from week earlier down11.9 mmbbl 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/ 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 Fracking Has Formerly Stable Ohio City Aquiver Over Quakes When Youngstown, Ohio, shook on Sept. 29, Karen Fox thought her daughter was crashing down the stairs. It rumbled enough where you could hear the windows shaking, Fox said in a telephone interview. I ran downstairs and said, My God, are you OK? And she looked at me and she says, I was running upstairs to see if you were OK. Earthquakes werent recorded around Youngstown until D&L

Energy Inc. began injecting wastewater from drilling into a 9,300-foot disposal well in December 2010. From March through Nov. 25, there were nine in an area of about 4.5 square miles west of the shaft, according to the state-coordinated Ohio Seismic Network. As hydraulic fracturing produces natural gas by forcing chemically treated water and sand underground, groups such as the Natural Resources Defense Council question whether the risks of the process are worth it. A U.S. Environmental Protection Agency report Dec. 8 linked so-called fracking in Wyoming to contaminated groundwater. Now, with temblors in states including Ohio, Arkansas and Texas that researchers say may have been caused by wastewater wells, residents also have to worry about their houses falling apart, said Fox. http://www.bloomberg.com/news/2011-12-14/fracking-has-formerly-stable-ohiocity-aquiver-over-earthquakes.html Fracking revolution goes global Forget OPEC. By far the most important oil news is that Saudi Aramco and China's giant Sinopec and CNOOC energy firms are each in talks to buy up to a 30 percent stake in U.S. oil and gas services company Frac Tech International. Frac Tech's expertise in hydraulic fracturing makes it a major player in the fast-growing part of the oil and gas industry, which is set to radically alter the world's energy supply picture in the next decade. http://www.commodities-now.com/commodities-now-reports/power-andenergy/9290-fracking-revolution-goes-global.html West Virginia Legislature adopts Marcellus Shale bill Following four days of debate, the West Virginia Senate Wednesday gave final approval to legislation governing the state's Marcellus Shale reserves. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6768120

EU Energy Roadmap 2050 sees natural gas, renewables as 'critical' Natural gas and renewables have been identified as "critical" energy sources to 2050 in each of the seven scenarios outlined by the European Commission in its Energy Roadmap 2050 published Thursday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8703636 Arizona regulators approve $52.9 million Southwest Gas rate hike The Arizona Corporation Commission has approved a $52.9 million, or 7.7%, general rate hike for Las Vegas-based Southwest Gas. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6768124

ENN Energy Shares Tumble as China Gas Rejects Bid Shares of Chinese city piped gas distributor ENN Energy fell nearly 8 percent on Thursday as analysts expect it to raise its joint $2.2 billion unsolicited offer with

Sinopec for industry counterpart China Gas"The losses today for ENN are compounded by the decline in commodities-related sectors after a slump in the physical market," said Jackson Wong, vice-president of equity sales at Tanrich Securities in Hong Kong. "Otherwise, it's rather normal for the shares of a company looking to acquire another to dip." http://www.cnbc.com/id/45675961 Japans Big, Old Businesses Eye $200 Billion Power Market Post Fukushima Japans trading companies own enough electricity capacity to supply more than 40 percent of the countrys homes. Problem is, their generators arent in Japan. Mitsui & Co. (8031), the second-largest trading house, says that may change as the Fukushima nuclear disaster forces a review of electricity monopolies set up after World War II. Its an opportunity rivals Marubeni Corp. (8002) and Sumitomo Corp. (8053) are also looking at, along with Tokyo Gas Co. (9531) Japans 10 regional utilities dominate production, transmission and distribution of power throughout the country, generating combined annual revenue of 15.7 trillion yen ($200 billion), according to data compiled by Bloomberg. The government review of the industry includes plant sales and law changes to spin off transmission businesses from power plants. Its an investment opportunity for these guys and they are all interested, Penn Bowers, an analyst covering Japanese trading (8058) houses and utilities with CLSA Asia-Pacific Markets in Tokyo, said in an interview. Trading companies are big, old businesses. They see deregulation and they can throw a lot of capital on it. http://www.bloomberg.com/news/2011-12-14/japan-s-big-old-businesses-eye-200billion-power-market-post-fukushima.html

Green/ Alternative Energy News

Renewable energy industry urges US Senate to extend tax credits Representatives from across the US renewable energy industry on Wednesday urged members of the Senate Finance Subcommittee on Energy, Natural Resources and Infrastructure to extend tax incentives for wind, solar and biofuels that are scheduled to expire at the end of this year or next.

Crude Oil News

OPEC Daily Basket Price 12/14/2011- $106.88 (OPEC Daily Basket Price 12/13/2011- $107.65)

Oil Climbs From Five-Week Low After Technical-Support Level Trigger Buying Oil rebounded from a five-week low in New York on speculation that yesterdays drop, the biggest since September, was exaggerated. West Texas Intermediate futures gained as much as 1 percent after nearing the 50-day moving average, signaling yesterdays sell-off was overdone, according to data compiled by Bloomberg. The euro stabilized after dropping yesterday to the lowest level against the dollar since January. Chinas purchasing managers index data showed manufacturing recovered from its biggest contraction since March 2009. We had a huge sell-off yesterday, but today the euro is steady, and Chinas PMI data improved from the previous month, helping the markets, saidRobert Montefusco, senior broker at Sucden Financial in London. http://www.bloomberg.com/news/2011-12-15/oil-climbs-from-five-week-low-aftertechnical-support-level-trigger-buying.html

Oil Prices Recover Slightly as the Dollar Weakens Oil prices climbed towards $106 on Thursday, supported by a weaker dollar and renewed buying interest after the steepest plunge in nearly three months wiped four percent off crude markets in the previous session. Rekindled fears about Europe's debt crisis helped trigger a downturn across asset classes on Wednesday, while oil market losses were compounded by the lack of agreement by the Organization of Petroleum Exporting Countries (OPEC) on individual output allocations limiting oil supply. "The OPEC outcome will have little influence on policy and net supply but sentiment-wise contributed to the combination of events that led to weakness yesterday," said Gareth Lewis-Davies, a senior energy strategist at BNP Paribas. "This morning, oil is moving in response to a reversal in investor risk appetite in line with a move in currencies," he continued. http://www.cnbc.com/id/45675274

Oil rises to near $96 in Asia after plunging previous session amid Europe debt fears Oil prices rose to near $96 a barrel Thursday in Asia after plunging the previous session on investor pessimism that Europes debt crisis will trigger a recession on the continent next year. Benchmark crude for January delivery was up 95 cents to $95.90 a barrel in late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $5.19, or 5.2 percent, to settle at $94.95 on Wednesday. http://www.washingtonpost.com/national/falling-euro-pushes-oil-price-below-97for-first-time-this-month/2011/12/14/gIQAJIMwtO_story.html

NYMEX crude settles $5.19/b lower as euro dips to 11-month low NYMEX January crude futures settled $5.19 lower at $94.95/barrel Wednesday, falling sharply as the euro fell to an 11-month low as fears of European debt

contagion sent jitters through the marketplace. January heating oil settled 9.89 cents lower at $2.8299/gal and January RBOB settled 12.17 cents lower at $2.5037/gal. ICE January Brent, which dipped to a more than two-month low at $104.36/b, settled down $4.48 at $105.02/b. NYMEX crude settles $5.19/b lower as euro dips to 11-month low http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6768119

OPEC Oil Deal Puts Saudi Back in Charge OPEC oil producers on Wednesday sealed their first new output agreement in three years in a deal that settles a 6-month-old argument over supply policy firmly in Saudi Arabia's favor. The Organization of the Petroleum Exporting Countries agreed a target of 30 million barrels daily, ratifying current production near 3-year highs. It did not discuss individual national quotas. The deal vindicates Saudi Arabia after its proposal to raise output in June to stem rising prices was rejected by price hawks led by Iran, Algeria and Venezuela. "For the Saudis it's a fantastic decision," said Jamie Webster of Washington consultancy PFC Energy. Saudi said it pumped 10 million barrels a day last month, 25 percent above its old OPEC quota, in what Gulf delegates said was a demonstration of strength to the price hawks ahead of the meeting. http://www.cnbc.com/id/45679094 Return to Gulf: Big Oil Grabs Leases The oil-and-gas industry took another step from the shadows of the Deepwater Horizon disaster on Wednesday when federal officials unsealed more than $330 million in winning bids for drilling leases in the Gulf of Mexico, the first offered there since the deadly April 2010 accident. Some 21 million acres of federal watersan area roughly the size of South Carolinastretching hundreds of miles off the Texas coast were up for bid. The auction attracted $337.6 million in winning bids for 191 available blocks that could eventually lead to more than 400 million of barrels of oil production. Twenty companies placed 241 bids for the right to explore for oil and gas, including a $103.2 million winning bid on a deep-water block by ConocoPhillips Co. that elicited gasps from the more than 200 attendees. Conoco made the most winning bids with 75, while Exxon Mobil Corp. placed 50 winning bids. http://online.wsj.com/article/SB1000142405297020389340457709877328121159 2.html?mod=WSJ_Commodities_LEFTTopNews Brazil sues over oil spill Brazils federal prosecutors have filed suit against Chevron and Transocean for R$20bn ($10.6bn) in damages and demanded that both companies shut their operations in the country, in the strongest response yet to an oil spill off the coast of Rio de Janeiro last month. At around 3,000 barrels, the spill in Rios Campos basin was relatively small and has been plugged, but Brazilian officials have sought to make an example out of the US oil companies as a warning to other foreign companies looking to profit from the regions lucrative new-found reserves. Prosecutors late on Wednesday said the companies had shown a lack of planning and environmental management in their attempts to control the spill, asking that both Chevron and Transocean be banned from Brazil or face daily fines of R$500m.

http://www.ft.com/intl/cms/s/0/54077ca0-26ab-11e1-91cd00144feabdc0.html#axzz1gVwD3kfJ Heating Fuels to Miss Cold of Past Two U.S. Winters The biting cold of the past two winters in the U.S. may be delayed until January, if it comes at all, easing demand for heating fuels during their peak season. While cold weather may make brief appearances in much of the U.S. this month, overall December temperatures will be above-normal and that may be a pattern for the winter of 2011- 2012, said Jim Rouiller, senior energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania. http://www.bloomberg.com/news/2011-12-14/u-s-winter-to-miss-biting-cold-ofpast-two-seasons.html Oil Rich America There is a revolution going on in America. But it is not part of the Tea Party or the loud Occupy Wall Street protests. Instead, massive new reserves of gas, oil, and coal are being discovered almost everywhere in the United States, due to revolutionary methods of exploration and exploitation such as fracking and horizontal drilling. Current prices of over $100 a barrel make even complex efforts at recovery enormously profitable. There were always known to be additional untapped reserves of oil and gas in the petroleum-rich Gulf of Mexico, off Americas shores, and in the American West and Alaska. But even the top energy experts never imagined just how vast the energy there was or that it was also beneath far more unlikely places such as South Dakota, Pennsylvania, Ohio, and New York. Some studies suggest the United States has now expanded its known potential gas and oil reserves tenfold. The strategic and economic repercussions of these new finds are staggering, and remind us how a once energy-independent and thereby confident American economy soared to world dominance in the early 20th century. http://www.victorhanson.com/articles/hanson121211.html Rising prices main clue to Iran sanctions impact Tehran does not look like a city under siege. Its shops and markets are full of goods and customers; signs that international sanctions are ravaging Iran's economy are hard to detect. With global oil prices above $100 a barrel, the world's fifth biggest oil exporter is proving it can cope with trade and financial restrictions that the United States and Europe hope will force a halt to its controversial nuclear programme, which is suspected of seeking to build an atomic bomb. http://in.reuters.com/article/2011/12/14/iran-sanctions-economyidINDEE7BD0F020111214 Recent Rig Counts Area Last Count Cou Change from Date of nt Prior Count Prior Count Change from Last Year Date of Last Year's

Count U.S. Canada 9 Dec 11 9 Dec 11 1987 504 -6 +20 -12 2 Dec 11 2 Dec 11 October 2011 +264 +22 +55 3 Dec 10 3 Dec 10 November 2010

Internatio Novemb 1185 nal er 2011

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

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