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October 6, 2011

Energy Data Highlights

Crude oil futures price 10/4/2011: $75.67/bbl down$8.78 from week earlier down$5.80 from year earlier Natural gas futures price 10/4/2011: $3.638/mmBtu down$0.189 from week earlier down$0.092 from year earlier Retail heating oil price 10/3/2011: $3.688 /gal NA from week earlier up$0.778 from year earlier Crude oil inventories 9/30/2011: 336.3 mmbbl down4.7 mmbbl from week earlier down24.7 mmbbl from year earlier Weekly coal production 9/24/2011: 21.193 million tons down0.015 million tons from week earlier down0.611 million tons from year earlier http://www.eia.gov/

Natural Gas/ Power News

EIA Storage Release 9/29/11 (Actual): +111 Bcf Previous Week: +89 Bcf -2.7% Change from 1 Year Ago +0.2% Change 5-year Average Anadarko Petroleum scores again in Mozambique Anadarko Petroleum Corp. said it has substantially increased its estimate for the amount of natural gas offshore fields in Mozambique may hold in the wake of additional exploration success there by a partnership it leads. The Woodlandsbased oil and gas company said an exploration well at its Camarao prospect

encountered a 240 -foot-deep section of gas-rich rock in a deeply buried reservoir that shares geologic properties with earlier discoveries called Windjammer and Lagosta. An additional 140-foot section of gassy rock was also found in shallower zones in the Camarao well that had not been discovered in previous wells in the region, Anadarko said. http://fuelfix.com/blog/2011/10/05/anadarko-petroleum-scores-again-inmozambique/ US shale gas bonanza: New wells to draw on Within the past two years, the industry has woken up to the prospect that the rock layer stretching across the north-east of the continent from Kentucky to Ontario is rich in oil, gas and the natural gas liquids such as ethane and propane that are used as feedstock for the chemicals industry. Leading companies including Chesapeake Energy, ExxonMobil and Hess have between them spent billions of dollars building land holdings with drilling rights. Estimates of the Utica shales reserves are imprecise but Aubrey McClendon, Chesapeake chief executive, has said he thinks the region could hold 25bn barrels of oil and gas: almost as much as the entire proved reserves remaining in the North Sea. Chesapeake is already reporting very strong initial drilling results from its first Utica wells in eastern Ohio and western Pennsylvania. http://www.ft.com/intl/cms/s/0/067a0a38-ef39-11e0-918b00144feab49a.html#axzz1ZuBxVeXb Mostly praise for Texas draft frac fluid rules at hearing Public comments on the Texas Railroad Commissions draft hydraulic fracturing fluid disclosure rules were brief and largely positive during a one hour hearing in Austin on Wednesday. Just a handful of speakers representing academia, industry and the environmental community spoke at the hearing. The rules based on a law passed by Texas lawmakers this past legislative session require companies to list on a public website all the ingredients in the mix of fluids pumped under high pressure into shale formations to break them apart to release natural gas and oilDuring the hearing Rice University chemistry professor Andrew Barron said the rule requires more disclosure than the Food and Drug Administration requires for consumer product ingredients. For example, sodas arent required to disclose whats in flavoring listed on their labels, he said. Once you understand what is being used in a frac job is similar to what youre consuming every day, it becomes demystified, Barron said. http://fuelfix.com/blog/2011/10/05/mostly-praise-for-texas-draft-frac-fluid-rules-athearing/

Darwin LNG to undergo planned maintenance starting end April 2012 Australia's Darwin LNG will undergo a scheduled maintenance at its 3.6 million mt/year complex, which is expected to begin in the last week of April 2012, Paul Dubuisson, vice president of operations drilling and supply chain at ConocoPhillips, said on the sidelines of the 2011 South East Asia Australia Offshore Conference Thursday ConocoPhillips operates and holds 57.2% of the Darwin LNG project, which started up in 2006, processing gas from the Bayu-Undan offshore field. Santos holds 11.4% of the plant, alongside Japan's Inpex (11.3%), Italian major Eni (11%), and Japanese term LNG customers Tokyo Electric Power Company and Tokyo Gas (9.2%). http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7482876

Green/ Alternative Energy News

California Hot Rocks Probed for Energy For decades, energy companies have tapped steam from deep in the earth to make electricity. Now, at least five American power producers are testing a simple idea that may dramatically expand the industrys reach: Bring your own water. Instead of producing power only in places where steam flows naturally, these companies are drilling deeper to inject water into superhot, dry rocks and create the vapor needed to generate power. The technology offers the opportunity of creating additional reserves, said Mark Walters, a senior geologist at Calpine Corp. (CPN), the biggest U.S. geothermal power producer. The heat is a resource in areas around existing plants, but right now we really cant get at it. The Houston-based company is expected to begin testing this process today. There are hundreds of sites worldwide where the technology may be used to generate electricity. In the U.S., such plants could supply 100 gigawatts of power by 2050, said Ernest L. Majer, an energy geophysicist at Lawrence Berkeley National Laboratory. Thats the equivalent of 100 nuclear reactors and would boost geothermals share of the countrys power supply to 10 percent, from less than 1 percent now. Theres a lot of hot rock out there, Majer said. That would replace our nuclear power plants. http://www.bloomberg.com/news/2011-10-06/california-s-underground-hot-rocksprobed-for-energy-of-100-nuclear-plants.html Rice competition adds clean energy prize In a move that dovetails with Houstons push to transform itself from the Energy Capital of the World to the Clean Energy Capital, Rice University is giving away $100K to entrepreneurs who come up with innovative green businesses. The prize is a new addition to Rices annual business plan competition. Its paid for by the U.S. Department of Energys Office of Energy Efficiency and Renewable Energy and is one of three awards Rice now offers for clean energy projects: the Waste Management Think Green Investment Prize and the KPCB Prize for Clean Tech Innovation, sponsored by the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.

http://fuelfix.com/blog/2011/10/05/rice-competition-adds-clean-energy-prize/

Crude Oil News

OPEC Daily Basket Price 10/5/2011- $99.90 (10/4/2011- $98.59)

Recent Rig Counts Change from Prior Count -1 5 +33 Date of Prior Count 23 Sept 11 23 Sept 11 July 2011 Change Date of from Last Last Year's Year Count +331 +197 +81 1 Oct 10 1 Oct 10 August 2010

Area U.S. Canada

Last Count

Cou nt

30 Sept 1990 11 30 Sept 510 11

Internatio August 1183 nal 2011

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

Crude Oil Trades Near Four-Day High on Shrinking Supplies, U.S. Job Growth Oil rose for a second day in New York as shrinking U.S. crude supplies, betterthan-expected economic data and signs Europe can control its debt crisis allayed concerns that fuel consumption will suffer. Futures gained as much as 1.8 percent after rising the most in almost five months yesterday. Crude inventories fell 4.7 million barrels, the Energy Department reported yesterday. The Labor Department may say tomorrow employment growth in the U.S. resumed last month after stagnating in August. European officials are working on plans to boost bank capital, an International Monetary Fund official said. Oil prices have been quite resistant to the turbulence in the U.S. and Europe, said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo who expects Brent to remain at $100 a barrel for the next few weeks and average $110 this quarter. The latest macro figures have not been as disappointing. Itll take something worse to bring prices down. http://www.bloomberg.com/news/2011-10-05/crude-oil-trades-near-four-day-highon-shrinking-supplies-u-s-job-growth.html

Saudi Arabia Increases Premiums for Crude Exports to Asia

Saudi Arabian Oil Co., the worlds largest crude exporter, set prices for two grades of crude to be sold to Asia at the highest premiums in at least 11 years and cut other for the U.S., Europe and the Mediterranean. The state-owned producer, known as Saudi Aramco, increased the pricing formula for its Arab Light crude to Asia by $1.05 a barrel to $2.70 a barrel above the average price assessment for Oman and Dubai grades, it said in an e-mailed statement yesterday. That is the highest premium in Bloomberg records going back to June 2000. Oman and Dubai assessments published by Platts are used as pricing benchmarks for Middle Eastern oil. Dhahran-based Saudi Aramco raised the price for its Arab Medium variety to $1.15 a barrel over the Oman-Dubai average, according to the statement. Thats also a record based on Bloomberg data and is up from a 30-cent discount to the benchmark in October. http://www.bloomberg.com/news/2011-10-06/saudi-arabia-sets-record-premiumsfor-two-crude-grades-exported-to-asia.html

Oil Wager Looks to Be on Wane Oil prices rallied 5.3% on an unexpected decline in crude stockpiles, damping prospects for a popular bet tied to a rival benchmark. Front-month oil for November delivery jumped $4.01, to $79.68 a barrel on the New York Mercantile Exchange on Wednesday, with much of the gain coming after the Department of Energy reported that oil inventories last week fell by 4.7 million barrels. Brent crude for November delivery, a benchmark oil price cited widely in Europe, closed up $2.94, or 3%, at $102.73 a barrel on the ICE futures exchange. A majority of the world's physical barrels are priced off Brent. The $23.05 difference in prices between the two still is high by historical standards, but is down 14% from a September high. http://online.wsj.com/article/SB1000142405297020347680457661259035411716 6.html?mod=WSJ_Commodities_LEFTTopNews Worst Oil Industry Slump Since Lehman May Herald Takeovers The oil and gas industrys worst slump since the financial crisis heralds a surge of takeovers for Goldman Sachs Group Inc. and Sanford C. Bernstein Co. as Asia buyers put $150 billion in cash to work. The market valuation of U.K. and North American exploration company reserves has dropped 23 percent this year to the lowest since 2008, Bloomberg data shows, while Brent crude prices gained 8 percent to $102 a barrel. The dislocation between crude and company valuations is extreme and may lead to twice as many deals as usual, Goldman said last month. Asian buyers may spend $150 billion by 2016 to secure energy resources for their faster-growing economies and targets could include Tullow Oil Plc (TLW), Canadian Oil Sands Ltd. and Kosmos Energy Ltd., according to Bernstein. Londonlisted Premier Oil Plc (PMO) said it will seek more acquisitions after buying EnCore Oil Plc for $340 million yesterday. The valuations are pretty compelling if you believe in $100 oil, said Christopher Wheaton, who manages RCM Ltd.s $140 billion Energy Fund in London. Once the economic uncertainty clears, we should

see a pickup in deals. Asia still has the appetite because the security of supply issues havent gone away. http://www.bloomberg.com/news/2011-10-05/oil-industry-s-worst-slump-sincelehman-may-herald-takeover-wave.html

Marathon Oil may sell stake in deepwater Gulf assets Marathon Oil Corp. is evaluating the possible sale of a minority stake in its deepwater Gulf of Mexico assets as the company, which recently spun off its refining arm, seeks to boost shareholder returns and strengthen its portfolio, a spokeswoman with the Houston oil company said today. Consistent with this plan, and given the significant prospect inventory weve built in the Gulf and our focus on capital discipline, we are evaluating the opportunity to farm down a minority working interest in our Gulf of Mexico portfolio, Marathons Lee Warren said in an e-mailed statement. http://fuelfix.com/blog/2011/10/05/marathon-oil-may-sell-stake-in-deepwater-gulfassets/

Green groups seek injunction to stop Keystone XL preparations Environmental groups opposed to the Keystone XL pipeline sued the US government Wednesday to halt TransCanada's preparations for building the increasingly controversial project. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6557861 Venezuela stations are hit by shortages of gasoline, diesel For the past week, Venezuela has experienced shortages of fuel supplies such as gasoline and diesel, sources and local news reports indicated Wednesday. In Caracas, for example, lines of automobiles have formed at service stations since last Thursday as motorists stock stock up on gasoline. And other stations have been partially or completely closed while waiting for additional supplies for their pumps. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6557873

Weather

Philippe Close to Hurricane Strength in Atlantic, Storm Forms Off Mexico Tropical Storm Philippe is nearing hurricane status in the Atlantic southeast of Bermuda though it poses no threat to land, the National Hurricane Center said. http://www.bloomberg.com/news/2011-10-06/philippe-close-to-hurricane-strengthin-atlantic-storm-forms-off-mexico.html

Tropical Storm PHILIPPE http://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/290842.shtml

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