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December 15,2011

Energy Data Highlights

Crude oil futures price12/13/2011: $100.14/bbldown$1.14 from week earlierup$11.53 from year earlier

Natural gas futures price12/13/2011: $3.279/mmBtudown$0.208 from week earlierdown$1.141 from year earlier

Retail heating oil price12/12/2011: $3.866 /galdown$0.028 from week earlierup$0.624 from year earlier

Crude oil inventories12/9/2011: 334.2 mmbbl

down1.9 mmbbl from week earlierdown11.9 mmbbl from year earlier

Weekly coal production12/3/2011: 22.106 million tonsup1.299 million tons from week earlierup0.273 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 weren’t recorded around Youngstown until D&L

Follow

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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-ohio-

city-aquiver-over-earthquakes.html 

Fracking revolution goes global Forget OPEC. By far the most important oil news is that Saudi Aramco and China'sgiant Sinopec and CNOOC energy firms are each in talks to buy up to a 30 percentstake in U.S. oil and gas services company Frac Tech International. Frac Tech'sexpertise 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 supplypicture in the next decade.http://www.commodities-now.com/commodities-now-reports/power-and-energy/9290-fracking-revolution-goes-global.html

West Virginia Legislature adopts Marcellus Shale bill  

Following four days of debate, the West Virginia Senate Wednesday gave finalapproval 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

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Sinopec for industry counterpart China Gas…"The losses today for ENN arecompounded by the decline in commodities-related sectors after a slump in thephysical market," said Jackson Wong, vice-president of equity sales at TanrichSecurities in Hong Kong. "Otherwise, it's rather normal for the shares of acompany looking to acquire another to dip."http://www.cnbc.com/id/45675961 

 Japan’s ‘Big, Old Businesses’ Eye $200 Billion Power Market Post 

Fukushima

 Japan’s trading companies own enough electricity capacity to supply more than 40

percent of the country’s homes. Problem is, their generators aren’t 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. It’s an opportunity rivals Marubeni Corp. (8002) and Sumitomo Corp.

(8053) are also looking at, along with Tokyo Gas Co. (9531) Japan’s 10 regional

utilities dominate production, transmission and distribution of power throughoutthe 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. “It’s 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-200-

billion-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)

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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 yesterday’s

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 yesterday’s 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. China’s 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 China’s 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-after-

technical-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 andrenewed buying interest after the steepest plunge in nearly three months wipedfour percent off crude markets in the previous session. Rekindled fears aboutEurope's debt crisis helped trigger a downturn across asset classes onWednesday, while oil market losses were compounded by the lack of agreementby the Organization of Petroleum Exporting Countries (OPEC) on individual outputallocations limiting oil supply. "The OPEC outcome will have little influence onpolicy and net supply but sentiment-wise contributed to the combination of events

that led to weakness yesterday," said Gareth Lewis-Davies, a senior energystrategist at BNP Paribas. "This morning, oil is moving in response to a reversal ininvestor 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 Europe’s 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-97-

for-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

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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 ChargeOPEC oil producers on Wednesday sealed their first new output agreement inthree years in a deal that settles a 6-month-old argument over supply policy firmlyin Saudi Arabia's favor. The Organization of the Petroleum Exporting Countriesagreed a target of 30 million barrels daily, ratifying current production near 3-yearhighs. It did not discuss individual national quotas. The deal vindicates SaudiArabia after its proposal to raise output in June to stem rising prices was rejectedby price hawks led by Iran, Algeria and Venezuela. "For the Saudis it's a fantasticdecision," said Jamie Webster of Washington consultancy PFC Energy. Saudi said itpumped 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 hawksahead 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 DeepwaterHorizon disaster on Wednesday when federal officials unsealed more than $330million in winning bids for drilling leases in the Gulf of Mexico, the first offeredthere since the deadly April 2010 accident. Some 21 million acres of federalwaters—an area roughly the size of South Carolina—stretching hundreds of milesoff the Texas coast were up for bid. The auction attracted $337.6 million inwinning bids for 191 available blocks that could eventually lead to more than 400million of barrels of oil production. Twenty companies placed 241 bids for the rightto explore for oil and gas, including a $103.2 million winning bid on a deep-waterblock 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 50winning bids.http://online.wsj.com/article/SB10001424052970203893404577098773281211592.html?mod=WSJ_Commodities_LEFTTopNews 

Brazil sues over oil spill Brazil’s 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 Rio’s 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 region’s 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.

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http://www.ft.com/intl/cms/s/0/54077ca0-26ab-11e1-91cd-00144feabdc0.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, overallDecember 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-of-

past-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 torevolutionary 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 

America’s 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-economy-

idINDEE7BD0F020111214

Recent Rig Counts

Area Last

Count

Cou

nt

Change from

Prior Count

Date of 

Prior

Count

Change

from Last

 Year

Date of 

Last

 Year's

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Count

U.S. 9 Dec11

1987 -6 2 Dec 11 +264 3 Dec 10

Canada 9 Dec11 504 +20 2 Dec 11 +22 3 Dec 10

International

November 2011

1185 -12 October2011

+55 November2010

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

Weather

6 to 10 Day Outlooks

Temperature

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Precipitation

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8 to 14 Day Outlooks Temperature

Precipitation

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