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December 17, 2011 Energy Data Highlights Crude oil futures price 12/15/2011: $93.87/bbl down$4.47 from week earlier up$5.25 from year earlier Natural gas futures price 12/15/2011: $3.127/mmBtu down$0.330 from week earlier down$1.095 from year earlier Weekly coal production 12/10/2011: 21.664 million tons down0.442 million tons from week earlier down0.112 million tons from year earlier Natural gas inventories 12/9/2011: 3,729 Bcf down102 Bcf from week earlier up154 Bcf from year earlier Crude oil inventories 12/9/2011: 334.2 mmbbl down1.9 mmbbl from week earlier down11.9 mmbbl from year earlier

Natural Gas/ Power News

EIA Storage Release 12/15/11 (Actual): -102 Bcf Previous Week: -20 Bcf +4.3% Change from 1 Year Ago +10.3% Change 5-year Average Shale's Bounty Goes Beyond Oil and Gas The U.S. shale-oil and natural-gas boom has cracked open another lucrative marketgas liquids used to make plastics. The same drilling technologies that have unlocked vast amounts of crude and natural gas from previously unproductive shale formations across the U.S. also are reaping large stores of ethane, propane and butane, known as natural-gas liquids. This growing bounty

has resuscitated the U.S. petrochemical industry, which just a few years ago was being strangled by the high costs of the raw materials... To free up the flow of natural-gas liquids, about 12,000 miles of pipeline needs to be built by 2035, costing $14.5 billion, according to data from the Interstate Natural Gas Association of America, a trade association. Until those pipelines are built, higher production will make the market volatile as short-term fixes such as rail transport are used, traders said. Even so, over-the-counter trading for NGLs has grown, said William Paul, head of natural-gas-liquid trading at Macquarie Energy. "Over the last two years, the market has really evolved where you can trade further out on the curve," Mr. Paul said. "The bulk of that is driven by producers looking to hedge." http://online.wsj.com/article/SB1000142405297020405840457710659258191265 0.html?mod=WSJ_Commodities_LeadStory

Report: Natural gas exports wouldnt move prices much Exporting liquefied natural gas wont have a major effect on the fossil fuels low average price, which has plummeted due to the oversupply unleashed by the shale gas boom, according to a report by consulting firm Deloitte. The report, released Thursday, addresses how future demand for natural gas will effectthe commoditys price and makes the case for stemming the nations natural gas glut by exporting it. According to the reports authors, exporting 6 billion cubic feet per day of liquefied natural gas, would increase demand by 10 percent over two decades. But the average domestic price of natural gas would rise by less than 2 percent, the report projected. http://fuelfix.com/blog/2011/12/15/report-natural-gas-exports-wouldnt-moveprices-much/ Gas use for power generation leads increase in natural gas use in 2010 Natural gas use for power generation rose 7%, or about 515 billion cubic feet (Bcf), between 2009 and 2010, according to EIA. Most of the gains in the power sector were in the Eastern half of the country (see map above left). Total natural gas deliveries to consumers in the United States grew about 4 % to around 22 trillion cubic feet (Tcf) for 2010. Use of natural gas in the industrial sector was up by 6% in 2010 but from a lower base than in the electric power sector. Natural gas deliveries to residential and commercial consumers, on the other hand, were relatively unchanged from their 2009 levels. The biggest changes in natural gas use occurred in the Southeast United States, where state-level natural gas deliveries from 2009 to 2010 increased by between 5% and 24% (see map above right). Historically low natural prices, coupled with weather-driven demand in the Southeast, increased natural gas deliveries for electricity generation. This region, which is highly dependent on natural gas-fired generation for electricity, experienced 17% higher heating degree days in the winter and 23% higher cooling degree days in summer compared to 30-year normal ranges. In the Western United States, natural gas deliveries decreased in most states. Increased hydroelectric generation in the Pacific Northwest along with a cooler-than-normal summer weather contributed to reduced natural gas demand for electricity generation in the region. http://www.eia.gov/todayinenergy/detail.cfm?id=4350

Green/ Alternative Energy News


Quebec steps closer to forming cap-and-trade pact with California Quebec's adoption of greenhouse gas cap-and-trade regulations on Thursday moved the Canadian province a step closer to forming a regional program linked to California, according to Jeff King, Toronto-based head of environmental markets at Scotia Bank. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/6778239

Crude Oil News

OPEC Daily Basket Price 12/16/2011- $103.57 (OPEC Daily Basket Price 12/15/2011- $104.60)

Crude Oil Rebounds From Near Six-Week Low in New York as Equities Advance Oil rebounded from near its lowest in more than six weeks in New York as advancing equity markets eased concern that European government measures will be unable to stem the debt crisis. Oil erased earlier losses of as much as 1.1 percent to trade up 0.5 percent near $94 a barrel as the Stoxx Europe 600 Index reversed opening losses. European Union finance ministers will hold a conference call today addressing a self-imposed deadline for drawing additional aid and creating new budget rules. Bank of America Corp. said an Iranian production halt could boost prices as much as $40 barrel. There are enough contradictory pressures on the oil market to go into the holidays with a neutral position, said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, who correctly predicted earlier this month that prices would slide. On the bearish side there is the risk of European downgrades, but theres also the risk of tougher rhetoric against Iran. http://www.bloomberg.com/news/2011-12-19/oil-trades-near-six-week-low-in-newyork-as-hopes-for-europe-solution-fade.html Crude Oil Prices Firm as the Dollar Pares Its Gains Oil prices rose on Monday, reversing earlier losses as the dollar reversed direction after gains made earlier in the day on news of the death of North Korean leader Kim Jong il. Ongoing concerns that the euro zone sovereign debt crisis will weaken demand kept a lid on prices, however. Brent crude futures was up 58 cents to $103.93 a barrel. Last week the front-month contract fell by 4.85 percent, its biggest percentage drop since the week to Nov. 18. U.S. crude futures were 43 cents firmer at $93.96 a barrel. The benchmark lost 5.9 percent in the previous week. "There was some ovenight pressure in tandem with the Asian stocks down

on the death of Kim Jong il, but I am not sure that the oil markets will maintain much of a North Korea risk,'' Petromatrix's Olivier Jakob said. http://www.cnbc.com/id/45717501 Commodities tumble on news from China, Europe Commodity prices slumped this week on increasing worries about the future of the eurozone, the possibility of a fresh recession in major economies and a Chinese manufacturing slowdown, analysts said. Traders meanwhile reacted to news that the US Federal Open Market Committee left interest rates near zero percent. http://www.taipeitimes.com/News/biz/archives/2011/12/18/2003521005 Oil rebounds to near $94 in Europe after falling on death of North Korean leader Oil inched closer to $94 a barrel Monday as markets recovered after falling on news of the death of North Korean leader Kim Jong Il. By early afternoon in Europe, benchmark crude for January delivery was up 44 cents to $93.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 34 cents to settle at $93.53 on Friday. http://www.washingtonpost.com/business/markets/oil-falls-below-93-in-asia-asdeath-of-north-korean-leader-drags-down-stockmarkets/2011/12/19/gIQAJ6ZZ3O_story.html Crude Continues Its Steep Slide Crude-oil futures edged lower, capping a week of steep declines spurred by intensifying concerns about slowing oil demand. The decline marks the third downward session in a row for benchmark U.S. crude and its lowest finish in six weeks. Futures fell 5.9% this week alone. Light, sweet crude for January delivery on Friday settled down 34 cents, or 0.4%, to $93.53 a barrel on the New York Mercantile Exchange. Crude-oil futures spent the week buffeted by signs that the anemic global recovery is weighing on crude-oil demand. A report showing weak gasoline demand in the U.S. spurred a steep selloff on Wednesday that continued for two consecutive days. The latest data from the Department of Energy showed an unexpectedly large increase in U.S. gasoline inventories last week. Oil demand in the U.S., the world's largest oil consumer, fell 1.8 million barrels a day in the week, while oil imports fell 1.1 million barrels. http://online.wsj.com/article/SB1000142405297020373330457710279268469211 0.html?mod=WSJ_Commodities_LEFTTopNews

Russian Drilling Rig Carrying 67 Sinks; Death Toll Rises to 5 Russian rescue workers recovered five bodies from icy waters north of Sakhalin Island after a drilling platform with 67 people on board sank in a storm, according to the Far East division of the Emergency Ministry. Fourteen were saved yesterday, Sergey Viktorov, a spokesman for the ministry, said by phone. The search operation is continuing, he said. As many as 16 dead have been sited in the area, Interfax reported, citing Rosmorrechflot, the Federal River and Marine Transportation Agency. The Kolskaya jack-up rig had completed a job off the Kamchatka Peninsula for OAO Gazprom, the worlds biggest natural-gas producer, when it capsized early yesterday in the Sea of Okhotsk, OAO

Arktikmorneftegazrazvedka, the Murmansk, northern Russia-based owner of the rig, said in a statement on its website. The platform was being towed to Sakhalin. http://www.businessweek.com/news/2011-12-19/russian-drilling-rig-carrying-67sinks-death-toll-rises-to-5.html US approves Shells plan for Arctic drilling Royal Dutch Shell, the oil and gas group, has secured a crucial approval from the US government for its long-delayed plan to drill in the Arctic waters off Alaska, which has been fiercely opposed by environmental campaigners.The move is the latest sign of the Obama administrations attempt to encourage more offshore oil and gas production, which was severely disrupted after the BP Deepwater Horizon disaster last year. The Bureau of Ocean Energy Management, the US government agency that runs offshore leasing said it had concluded that Shells planned exploration in the area would cause no significant impacts to fish and other wildlife or to local communities.However, Shell warned that conditions imposed by the government could severely impact its plans. Shell, which is Europes largest oil company by market capitalisation, first acquired leases to drill in the Chukchi Sea off the north-west coast of Alaska in 2008, but has repeatedly been prevented from drilling by legal action, a government moratorium in 2010 and failing to secure the necessary permits. http://www.ft.com/intl/cms/s/0/117c7bf8-283e-11e1-91c700144feabdc0.html#axzz1gyyTRTCu Shell moves closer to Westward Ho pipeline project Shell Pipeline Co. said today it received customer support for a new pipeline that would move crude oil from St. James, La. to the refining hubs around Beaumont and Port Arthur, Texas. The Westward Ho should allow refineries to access the growing supply of domestic and foreign crude oil coming through St. James, the company said. The new pipeline would also complement new storage and logistics infrastructure that are currently being built in the St. James and Clovelly, La. areas. The new pipeline would allow for the distribution of about 600,000 bbls per day of crude across the region depending upon crude types shipped, and it could begin service by early 2015. http://fuelfix.com/blog/2011/12/16/shell-moves-closer-to-westward-ho-pipelineproject/ Anadarko gives green light to Lucius project in Gulf Anadarko said today it plans to begin drilling in the Lucius project in 2012, tapping what the company has touted as its most economic project in its stable. The Houston-based company estimates Lucius, in the Gulf of Mexico, holds more than 300 million barrels of oil equivalent, the company said in a statement today. We are very pleased to achieve this important milestone in the development of the deepwater Lucius project, said Anadarko President and Chief Operating Officer Al Walker. We expect Lucius to be among the most economic projects in our portfolio. http://fuelfix.com/blog/2011/12/15/anadarko-gives-green-light-to-lucius-project-ingulf/

Recent Rig Counts Date of Last Year's Count 17 Dec 10 17 Dec 10 November 2010

Area U.S. Canada

Last Count

Date of Cou Change from Prior nt Prior Count Count +32 +27 -12 9 Dec 11 9 Dec 11 October 2011

Change from Last Year +310 +31 +55

16 Dec 2019 11 16 Dec 11 531

Internatio Novemb 1185 nal er 2011

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

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